text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
we began to gradually phase out some of our extraordinary liquidity measures, taking account of improvements in financial markets. in particular, we scaled back the number, frequency and maturity of longer - term refinancing operations. but we have committed to maintaining fully accommodating liquidity support to the euro area banking system until at least october this year. the governing council is of the opinion that the current monetary policy stance is appropriate, and that the continued firm anchoring of inflation expectations bodes well for price stability in the medium term. 2. specific issues raised in the european parliament β s draft resolution let me now turn to some of the issues you raise in your draft resolution. on the issues of accountability and transparency, we very much appreciate the regular dialogue with the european parliament and the constructive spirit with which this exchange is conducted. i therefore welcome the econ committee β s repeated support for our quarterly monetary dialogue. an independent institution like the ecb, which is accountable to the european people, has to be in close contact with their elected representatives. we consider the ecb to be one of the world β s most transparent central banks. our practice of holding a press conference immediately after the governing council meeting on monetary policy each month remains a pioneering initiative that has not yet been replicated by our major sister institutions. with the publication of our comprehensive introductory statement in real - time, we explain policy decisions and their underlying rationale. during the crisis, we have further intensified our communication efforts and thereby helped to smooth financial market reactions, to build confidence and to lay the foundations for recovery. you also requested the views of the ecb on the establishment of a clearing house for instruments such as credit default swaps ( cdss ) within the euro area. i would like to say that the robustness of euro - denominated cds markets is of direct relevance for the eurosystem as regards control over its currency and financial stability in the euro area. central counterparty clearing is very important not only for delivering transparency, but also for diversifying and sharing risk exposures and reducing the incentives to take excessive risks. certain financial instruments, which were introduced for hedging, should not be misused for speculation. regulators should be able to undertake effective investigations into possible improper conduct. 3. the outlook for emu during challenging times mr president, honourable members of the european parliament, an economic recovery is in progress, but this does not mean that the crisis is over. for one thing, we know | efficiency gains with technology - enabled financial inclusion ; and c. third, having a clear picture of the policymakers β role in promoting an enabling environment for financial innovation and technology. putting on a new lens : exploiting mainstream innovations with a financial inclusion focus today, financial innovations have penetrated, and continue to permeate almost every aspect of financial activity. this has been driven by faster computing speed, lower cost of storage and faster problem - solving capabilities. bis central bankers β speeches technology is being used by financial institutions to improve operations β from improving customer experience to constructing better models to manage risks more efficiently and effectively. in many cases, strategic partnerships with fintech companies have been established to achieve similar outcomes. the advent of robo - advisers and algorithmic underwriting are some of the examples. these developments have largely evolved within the mainstream customer segments and have proven to be effective. clearly, opportunities exist to leverage on capabilities that are already in place to create specific applications for financial inclusion. with proven application, the prospects for achieving greater scalability, faster time to market and increased take - up are correspondingly greater. for years, financial institutions have invested heavily in technology that has helped improve the collection and mining of financial and non - financial data to gain richer insights into customer preferences and behaviours. these same capabilities create immediate opportunities to identify specific barriers to financial inclusion for different target groups whose needs are shaped by very different priorities, experiences, values and norms. for example, cultural biases can be an important factor that is not fully appreciated and understood as a factor that limits higher levels of financial inclusion among women. among lower income groups, a more granular level of analysis on income patterns is needed to structure solutions that address the irregularity in loan repayments. financial inclusion for the ageing population is another critical area that requires more understanding. it is important that new products, delivery channels and technologies also work well for our senior citizens that are financially excluded. many financial products and services offered today have age limits that create barriers to access financial services. this ought to be changed to ensure inclusive financial systems for the ageing population segment. technologies that enable better data collection and analytics can support deeper research to fill this gap while mitigating the risks to providers of financial solutions. beyond data applications, opportunities exist in other areas. for example, distributed ledger technology eliminates the need for centralised transaction validation and shortens the settlement chain, effectively lowering costs of real - time remittances. by incorporating adequate | 0 |
european developments, includes an average increase in bond yields of 75 basis points unevenly distributed across countries ( no increase for germany and more than 200 for some more vulnerable countries ), accompanied by an average drop of 10 % in equities. the outcome of the two scenarios indicates a negative impact on banks β common equity tier 1 ( cet1 ) capital hovering around 200 basis points in terms of deviation from the baseline scenario. this impact has to be considered against the comfortable present average cet1 ratio of 14 % enjoyed by the euro area banks. it is also important to recall that market sentiment towards euro area banks has continued to improve, despite some gyrations that broadly reflect developments in interest rate expectations ( figure 16, lhs ). while contagion from the recent events of bank resolution and liquidation remained contained, these events have also highlighted the important challenges regarding the resolvability of weak banks. notwithstanding some recent progress in non - performing loan ( npl ) disposals, the large stock of npls remains a key structural concern in several countries. in addition, overcapacity and cost inefficiencies continue to weigh on bank profitability in certain banking markets. 16 / 20 bis central bankers'speeches the economic recovery, the expected steepening of the yield curve and even the progress being made in reducing the npl level from the average peak of 8 % in 2013 to the more recent average of 5. 5 %, have improved the market assessment of future banks β profitability. analysts β earnings forecasts for 2017 and 2018 have been revised upwards since the u. s. elections, even if net interest income expectations have changed only marginally, despite improving economic conditions ( volume effect ) and ( prospective ) higher long - term interest rates ( price effect ). analysts revised their earnings forecasts between october 2016 and january 2016 ( see figure 16 black dot in left bar ) and between august 2017 and november 2016 ( black dot in right bar ) with the respective contributing factors. while forecasted net interest income was a drag on net income in the first period it contributed positively in the second period. forecasted loan loss provisions contributed positively in the second period because they became less negative over the period november 2016 β august 2017 while forecasted operating expenses increased. macroprudential policy let me now turn to the role of macroprudential policy in this risk environment. the objective of macroprudential policy is to prevent and mitigate systemic risk by strengthening the res | and human trafficking. crime and money laundering is indeed a global problem which requires a concerted global response. in order to protect our respective financial systems from the destabilizing effects of crime and money laundering, it is imperative that we act and respond to this scourge with unprecedented resolve and commitment to combating it. everybody has, therefore, a responsibility to combat money laundering, because its negative impact has a unique way of creating far ranging negative consequences. by tackling money laundering we would be attacking the criminals at their weakest and most vulnerable point - their money sources. in the past years since the start of the criminalization of money laundering and the enforcement of anti money laundering laws in the 1970s and more vigorously in the 1980s and 1990s, evidence from court cases and reported suspect transaction has given an indication that the most common money laundering typologies has been in the realm of drug trafficking, organized crime, corruption, illicit dealing in weapons, human trafficking, fraud and theft. the act of successful money laundering fuels the perpetration of the above crimes by providing the criminals with avenues to conceal their deeds from law enforcement agencies and ultimately provides them with the rewards for their criminality in the form of money which would then appear to be legitimate. the concealment cycle for the proceeds of money laundering involves, firstly, the distancing of the criminals from the illegal proceeds ( money or property ), the obscuring of the money trail, hiding of the origins to eventually posses what would appear as clean money. the role played by globalization and ict in the concealment process in money laundering has been aptly described by the following quote from a central banking thriller β nest of vipers β by linda davies : β the money screamed across the wires, its provenance fading in a maze of electronic transfers which shifted it, hid it, broke it up into manageable wads which would be withdrawn and re - deposited elsewhere, obliterating the trail β. the linkage between money laundering and crime denotes that everybody as individuals is affected by money laundering. crime erodes basic individual liberties in that it threatens their rights to life and entitlement to property. the consequences of crime and money laundering are bad for business, development, and the general rule of law. governments have therefore got real reasons for spearheading the combating of money laundering. another reason why money laundering should be combated is that if left unchecked, it would lead to the accumulation of economic power to | 0 |
i am committed to making decisions objectively and based on the best available evidence. in doing so, i would be guided solely by our mandate from the congress and the long - run interests of the american public. thank you. i would be happy to respond to your questions. 2 / 2 bis central bankers'speeches | monetary policy is not on a pre - set path, and i will be closely monitoring the incoming data and their implications for the economic outlook. i will be looking for evidence that inflation is on a consistent and meaningful downward path as i consider whether further increases in the federal funds rate will be needed, and how long the federal funds rate will need to remain at a sufficiently restrictive level. i know that high inflation has been a hardship, especially for lower - and middle - income families, who spend the majority of their income on necessities. returning inflation to two percent will help american families focus on important decisions other than 1 / 3 bis - central bankers'speeches inflation. addressing high inflation will ensure that it is no longer a factor for spending and investment decisions and will help put the u. s. economy on a course of ongoing economic growth and rising standards of living. but i also know that higher interest rates have made it more difficult for many to get a loan, to buy a home or a car, and for businesses to invest and expand. i am interested to hear the ways in which inflation and higher interest rates are affecting the day - to - day lives of our participants today. i am also looking forward to learning about how the economy and the fed's policies are affecting lower - income workers and small businesses, the two subjects of today's fed listens event. over the past few years, for many, wage and salary increases have not kept up with inflation, and while that general pattern has improved recently, most workers still have not seen wage increases equal to price increases. for workers at the lower end of the wage spectrum, wage gains have been the strongest seen in decades. however, because necessities like groceries and gasoline make up a large share of their household expenses, lower - wage workers have been experiencing the effects of higher prices more acutely than others. we also know from history that a slower economy, with higher unemployment, tends to hit lower - income workers the hardest, so we must remain attuned to the fact that our efforts to reduce inflation have the potential to undermine wage gains and job security for lower - wage workers. should inflation remain at today's level, or increase again, lower - wage workers would continue to bear the brunt of these effects. small businesses are also more vulnerable in an economic slowdown than larger businesses, and i am watching carefully to see how they are dealing with both inflation and higher interest rates. despite high inflation and | 0 |
gent sejko : region's financial and monetary stability, ten years since the crisis outbreak speech by mr gent sejko, governor of the bank of albania, at the regional summit on " region's financial and monetary stability, ten years since the crisis outbreak ", governor's panel " monetary policy and the stability of the banking systems in the countries of the region β a decade after the lehman brothers'bankruptcy ", becici, montenegro, 18 june 2018. * * * dear guests, fellow colleagues, it is a pleasure to be amongst you today and to be able to share opinions on some of the most pressing challenges we are facing at the moment. i would like to focus my remarks on the topic of exchange rates. in particular, i would like to focus on how the monetary policy reaction should be based in the exchange rate movements. i take my premise from the rapid appreciation episode we experienced recently in albania, which forced us to launch an fx purchase program as a last line of defence towards ensuring medium term price stability. to cover this topic, first i intend to briefly discuss on various monetary policy regimes. i will then discuss on the implications of exchange rate movements for inflation targeting central banks. to conclude, i will give you a short overview of recent exchange rate developments in albania and our reaction towards them. 1. the choice and implications of exchange rate regimes a useful starting point on this topic would be to discuss the different options we have. we are fully aware that small open and financially integrated economies have to choose between running an independent monetary policy aiming to preserve macroeconomic stability, usually defined in terms of an inflation target, and fixing the exchange rate. both these options have their benefits and drawbacks. the first option β i. e. that of running an independent monetary policy β means central banks can adjust domestic interest rates and domestic liquidity conditions, in order to preserve macroeconomic stability and to accommodate potential shocks to their economies. furthermore, exchange rate movements and corrections act as a shock absorber to various external shocks. but on the other hand, central banks give up from the option of pursuing exchange rate stability, both as a nominal anchor and as an instrument of promoting international trade. the choice of the second option β i. e. that of fixing your exchange rate β revolves around two main assumptions. the first is that exchange rate stability promotes external trade. the second is that importing credibility from the anchor foreign central bank, such as the ecb, | source of finance for larger companies in the event that markets are disrupted. the scheme has lent Β£19bn to 68 companies. more importantly, it has also authorised borrowing limits amounting to Β£80bn to 199 companies accounting for nearly 2. 3 million jobs. the knowledge that this backstop to funding markets is there removes the need for larger companies to run to the banks to insure themselves against market disruption. by standing ready to lend to larger companies, we have protected the space banks have to lend to the wider population of companies. financial response ii : support for bank lending the package of measures to support bank lending has gone much further than just protecting their capacity to lend. [ see slide 4 of accompanying deck ] banks have been given the funding for new lending. the term funding scheme with additional incentives for smes ( tfsme ), provides 4 year funding for banks, at rates very close to bank rate, to match any increase in lending. the scheme provides additional incentives for lending to small and medium sized businesses, with Β£5 of cheap funding for every Β£1 increase in such lending. crucially, the government has provided banks with guarantees on new lending. the coronavirus business interruption loan schemes guarantee 80 % of new lending by banks. the bounce back loan scheme all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice guarantees 100 % of loans of up to Β£50, 000 to small businesses. banks are taking little risk with their own funds when they lend now. with the space to lend, the funding to lend, and the credit guarantees to lend, banks have every assistance to help businesses finance cash - flow deficits. and unlike in the financial crisis, the banking system has the strength to lean into this crisis, to refinance existing loans and meet the demand for new ones. banks will face losses in coming months on loans made in the past as some businesses and households struggle to meet repayments. due to the reforms of the past decade, banks have the buffers of their own shareholders β capital to absorb those losses on existing loans without cutting back on support for new lending. 6 the final element of the support for bank lending has been to allow banks to use their buffers of capital without fear of regulatory actions. buffers of capital are there to be used in stress to absorb losses while continuing to lend. we expect them to be used as needed. 7 in fact, with government guarantees and | 0 |
much smaller than usual. indeed, many of the structures seemed to be created to satisfy investors'strong demand for securities that carried investment - grade ratings but that might provide slightly higher yields than other investment - grade securities, such as corporate bonds. in many cases, however, investors seem to have been attracted to these structured securities without a thorough understanding of the underlying risk profiles. although mbs and cdos had been around for many years, the more recent structures were significantly different and more complex than their earlier counterparts. investors'earlier experience with cdos, for example, was mainly limited to cases in which primary securities, such as corporate bonds, business loans, or other simple securities, formed the underlying collateral. in contrast, the more recent cdos frequently were themselves backed by structured securities, resulting in so - called two - layer securitizations in which structured products are used to fund other structured products. these two - layer securitizations are inherently more complex and are more exposed to tail risk than their earlier one - layer counterparts. indeed, in its recent report on credit - risk transfer, the joint forum β an international collaboration of financial supervisors β noted a cliff effect that is associated with the distribution of returns that can be realized on the more senior tranches of two - layer securitizations. 1 simply put, the cliff effect refers to the fact that investors of higher - rated tranches of complex securities can expect to receive a small positive return in most circumstances, but they are vulnerable to extremely large losses in those rare events of widespread financial stress. despite the greater complexity, it seems that many investors assumed that the evaluations of credit - rating agencies would work well and be sufficient for the new structured securities. investors ended up relying too heavily on those assessments rather than requiring ample information about the underlying assets and demanding extra transparency in order to estimate projected risk - return trade - offs. role of information and transparency in corporate bond market to illustrate how important information and transparency will be in the recovery and repair process of the securitization markets going forward, it might be helpful to review a case in which, on the whole, market functioning has held up relatively well. i'm thinking specifically about the market for corporate bonds issued by investment - grade nonfinancial firms. to be sure, over the past year, growing concerns about individual firms'earnings and about the overall macroeconomic outlook have contributed to significantly wider risk spreads on corporate bonds. nonetheless, investment - grade | report to the congress. in addition, the federal reserve system has expanded our economic research into issues of consequence to community banks and has worked to encourage similar research efforts at academic institutions. several years ago, a group of economists from across the system formed an informal working group to share ongoing research related to community banking. encouraging results from this internal forum led, in 2013, to an inaugural research and policy conference titled β community banking in the 21st century, β sponsored jointly by the federal reserve system and the conference of state bank supervisors. the conference provided a unique opportunity for researchers, community bankers, and bank supervisors to come together to hear some of the latest research on topics related to community banking and discuss the practical implications of this research. the 2013 conference was so successful that we decided to make it an annual event. the third annual conference will take place this coming fall at the federal reserve bank of st. louis, and chair yellen is scheduled to provide opening remarks. i had the pleasure of participating in the first two conferences and found the presentations and conversations to be extremely enlightening. many of the researchers who presented at these conferences said that the feedback they received from bankers and bank supervisors was valuable in helping them shape their future research endeavors. the conference organizing committee has launched a new website with the url β www. communitybanking. org, β which they hope will become a focal point for all who are interested in community banking research. the website provides links to the papers and presentations from the previous conferences, news about future conference plans, and other information that might be of interest to community banking researchers. although research is an important avenue for improving our understanding of the community bank business model and the effects of changing market and regulatory conditions on the viability of that model, understanding is further enhanced through direct interactions between regulators and community bankers. for this reason, the federal reserve system has taken a number of steps to expand its outreach to community banks. as you probably know, in 2010 the board created the community depository institutions advisory council, which includes representatives from community banks, credit unions, and savings associations from each federal reserve district. 4 the board of governors meets twice each year to hear the council β s valuable insights into the most pressing concerns of community bankers from across the country. there is also a council for each of the 12 reserve banks, which meets regularly with its reserve bank leadership. more on the community depository institutions advisory council is available on the board β s website at www. federalres | 0.5 |
ms. rivlin reports on the positive perfomance of the us economy and the policies needed to sustain growth in the future testimony of the vice chairman of the board of governors of the us federal reserve system, ms. alice m. rivlin, before the committee on banking and financial services of the us house of representatives on 23 / 7 / 97. i would like to begin by expressing my appreciation to the committee for holding this hearing to solicit a wide range of views on appropriate monetary policy at this extremely favorable moment in our economic history. all too often congressional hearings are called when something bad is happening. in a deteriorating situation, congress finds it necessary to survey the damage, assess responsibility and call for better policies in the future. at the moment, however, the economy as a whole is functioning amazingly well. employment is high and rising, unemployment is low, incomes are increasing, profits are high, the federal budget deficit is plummeting, state and local finances are increasingly strong, and inflation is benign. the overriding economic objective - - shared by all participants in the economy - - is to keep the good news flowing. we all want the economy to grow at its highest sustainable rate, to keep unemployment and inflation low, and above all, to avoid recession as long as possible. thoughtful people, at the federal reserve and elsewhere, have somewhat different views about why the economy is doing so well and how best to keep it going. your invitation to share those views is timely, constructive and welcome. i would like briefly to discuss three questions : 1. 2. 3. why is the economy performing so well - - and, in particular, why do we have so little inflation with such low unemployment? why is it so important, especially right now, to keep the economy growing at its highest sustainable rate and to avoid recession? what policies - - monetary and other economic policies - - are most likely to keep economic performance high and sustained? why is the economy doing so well? most economists are frankly surprised that the economy has been able to grow fast enough to push unemployment rates below 5 percent without generating accelerating inflation. until recently, most students of the economy thought that unemployment rates below 5. 5 - 6. 0 percent ( estimates differed ) for an appreciable period would lead to rising labor costs that would be passed on in higher prices and start a self - perpetuating wage - price spiral that would be hard to reverse. true, unemployment had been lower | in the 1960s while inflation remained low, but the structure of the economy and the characteristics of the labor force subsequently changed in ways that seemed to make the economy more inflation - prone for given levels of unemployment. the experience of the period since about 1970 appeared to confirm that inflationary pressure emerged at unemployment rates appreciably higher than those of the 1960s. five years ago, most economists would have thought the federal reserve irresponsible and derelict in its duty if it had not used monetary policy to slow an economy operating at such a high level that unemployment remained under 5. 5 percent for more than a short time. the inflation might not appear immediately, but it was thought to be inevitable, and allowing it to get up a head of steam before acting was taking a high risk of having to react more strongly, perhaps strongly enough to bring on a recession. nevertheless, the unemployment rate has been below 5. 5 percent for over a year and below 5. 0 percent in 1997 while inflation has shown no signs of picking up - - indeed, producer prices have actually been falling. the federal reserve, except for a quarter point tightening of the federal funds rate in march ( after months of inaction ), has left the monetary levers alone. is the federal reserve ignoring risks of future inflation? the answer depends on whether the coexistence of higher growth and lower unemployment with benign inflation is explained by a fundamental improvement in the structure of the economy making it less inflation - prone, or by temporary factors that might return to β normal β and kick - off an inflationary wage - price spiral, or by some combination of the two. the honest answer is : we don't know yet. one surprise has been that such tight labor markets have not resulted in more rapid increases in wages and other labor compensation. part of the explanation, as chairman greenspan noted in his testimony on july 22, may lie in less aggressive behavior on the part of workers. workers may be more reluctant than previously to bargain for higher compensation or to take drastic action, such as striking or quitting to look for a better job. they may be reluctant because they are insecure in the face of rapidly changing technology, for which they fear they may not have the right skills, because they have recent memories of company β downsizing, β or because they are less likely than in previous tight labor markets to be members of a union. these explanations of less aggressive worker behavior are plausible, but likely to be temporary. workers | 1 |
##pinned this trend to argue that a new capitalist system would progressively emerge, with the relevance of nation states as economic actors dwindling in importance. in contrast, other observers saw the growing internationalisation of the world economy as part of a broader and longer - dated trend where sharp intensifications in trade and financial exchanges underpinned by growing economic liberalism were not without historical precedent ( for example during the period ranging from 1870 to 1913 ) 5. these observers were thus more bullish as regards the ability of nation states to retain their economic power going forward, consolidating this inter alia through strategic alliances in economic blocks6. in spite of these nuances, the common thread between the two views was that the underlying economic forces were seen as inevitable in the international ( or global ) domain. complementarities between globalised economic performance and policymaking second, following the broad acceptance of the premise that the globalised world would be durable in nature, academics and policymakers devoted their attention to fleshing out the practical implications of globalisation in different policy environments. insofar as monetary policy was concerned, the debate was broadly captured by the relative weight of improved policymaking versus globalised factors in accounting for successful economic outcomes. a first dimension in this regard was backward looking in nature and stemmed from the sharp reduction in the variability of both inflation and output during the 1990s. this phenomenon, which became known as β the great moderation β, coincided with both the intensification of according to wto data, the average growth of world merchandise export volumes per annum was 15 % from 1960 to 1990 inclusive, as compared to average real gdp growth per annum of 8 % over the same period. according to unctad data, the world stock of outward fdi increased from usd 564 billion in 1980 to usd 1763 billion in 1990. see the end of history and the last man, book by f. fukuyama ( 1992 ). see the borderless world ( 1990 ) and the end of the nation - state ( 1995 ), books by k. ohmae see for example globalisation, history and development : a tale of two centuries, article by d. nayyar ( 2006 ). the author notes that export shares in gdp for selected industrialised countries ( e. g. uk, germany, japan ) were broadly comparable in 2000 relative to 1913, and that the relative increase in export shares to gdp for these same countries between the periods 1900 β 1913 and 1973 β | monetary developments continue to be fostered by portfolio shifts, reflecting a sustained preference on the part of investors for liquid and secure assets in an environment of high uncertainty. however, the low level of interest rates has also contributed to strong monetary growth. when interpreting monetary trends, particular account needs to be taken of the portfolio shifts towards increased demand for monetary assets for precautionary reasons. the reduction in geopolitical tensions should support an unwinding of these portfolio shifts. a reversal in monetary trends would in any case dampen the concerns regarding the medium to long - term implications of recent monetary dynamics. as a consequence, monetary developments will continue to be monitored closely. overall, it currently appears that inflation rates should decline to below 2 % over the medium term, in particular given the outlook for economic activity and the significant appreciation of the euro. it also appears that the strong expansion of m3 should not adversely affect this outlook, as portfolio shifts have played a prominent role ; in particular, the build up of liquidity should not translate into inflationary pressure as long as economic growth remains modest. hence, cross - checking the information from the two pillars leads us to conclude that the risks to price stability over the medium term remain limited. regarding fiscal policy, developments in 2002 were generally not satisfactory. in particular, countries that had not achieved sound fiscal positions in earlier years when the economic conditions were more favourable are now struggling to keep their budgets under control. looking ahead, it is crucial to underpin the fiscal policy framework with decisive action, strong peer pressure and consistent implementation of the rules of the treaty and of the stability and growth pact. countries should maintain budgetary positions close to balance or in surplus over the cycle, and, where this is not yet the case, take the required structural consolidation measures. this also creates the necessary room for the operation of automatic stabilisers. at the same time, governments are advised to place the emphasis on growth - oriented consolidation policies that strengthen the productive forces of the economy. by strengthening confidence, a credible medium - term fiscal consolidation strategy will also support economic growth in the short term. finally, structural reforms are essential to increase the euro area β s growth potential and enhance its ability to better withstand external shocks. indeed, such reforms, which should aim to reduce rigidities in labour and goods markets, could significantly strengthen the degree of resilience of economic activity to such shocks, both in the euro area as a whole and in its regions. renewed momentum in the process | 0 |
deliver a broad based assessment of economic developments in the arab economies but rather as an economist i will stick to the principle of comparative advantage and as a central banker i will concentrate on the issue of monetary integration. it is an issue that plays an important role in the current policy agenda in many countries on the arab peninsula. and it is an issue where i can draw on our own european experiences to exemplify the terms on which a european - arab dialogue can be established. the regional monetary integration initiative is, in my view, a quite astonishing development that does not get the attention it deserves. in fact, in economic terms, it is the second most important monetary integration initiative in the world economy. with its plan to introduce a monetary union in 2010 the economies of the gulf cooperation council ( gcc ) endeavour on a project that is surpassed only by the european monetary integration. this development is of interest to germany and europe for a number of reasons. firstly, the six gcc member countries bahrain, kuwait, oman, qatar, saudi arabia and the united arab emirates are by far the most important trading partners for germany in the arab world, accounting for nearly 55 % of german exports to the arab region in 2004. secondly, the debate about the benefits of monetary integration and the attempt to build regional currency blocks has become much more attractive since the successful launch of the single monetary policy in europe. so europe β s experiences after over six years of the common currency might be of interest to those economies currently endeavouring into closer monetary and financial integration. this, of course, is not to say that the example of the euro area can and should be uncritically carried over to other regions with different economic structure, cultural background and political systems. nevertheless, there are distinct pre - conditions necessary for the functioning of a currency union that are common to each and every project of closer monetary cooperation β even though the recognition of the empirical truth that a β one size fits all β approach is not doing justice to the many projects of regional economic and monetary cooperation throughout the globe. 1 thirdly, in that context the proper functioning of emu has been questioned in some camps over recent weeks. in cases where this might have created some irritations in other parts of the world which are less familiar with what is going on in emu some brief comments are necessary to put things in a proper perspective. please let me start with the latter point. without any doubt, one of the major institutional changes in the international financial system in | good. nevertheless, central banks can play a productive role in safeguarding financial stability. it certainly makes sense to harness central banks β high level of expertise with regard to financial stability risks. however, the " weapon of choice " for combatting these risks is not monetary policy β it is macroprudential policy. in his first speech as a governor at the federal reserve board, ben bernanke demanded : " use the right tool for the job. " 8 to stretch the analogy with the african fauna further, this is something we could compare to the feeding habits of zebra and wildebeest. they graze alongside each other, of course, but they actually feed from different grass heights, with zebra preferring taller grass and wildebeest focusing on short grass. researchers have attributed this selection to anatomic differences in mouth dimensions. 9 in a similar vein, macroprudential instruments can be used in a far more targeted way than monetary policy. they cut the grass at a different level, so to speak. this is of particular use with respect to the euro area. macroprudential tools can be employed at the level of member countries to combat problematic developments in national financial systems β developments that cannot be counteracted by the single monetary policy. one of the instruments to address exuberance in the financial system are countercyclical capital buffers. moreover, as real estate markets have underscored their destabilising potential during the last crisis, many tools are geared explicitly towards this market. caps on the loan - to - value or debt - to - income ratios are two examples of instruments that allow for a tempering of the demand for mortgages. however, if we are to deploy these new policy instruments, we need to gain a better understanding of how they affect macroeconomic performance and interact with monetary policy. a forthcoming bundesbank discussion paper points out the danger of " financial dominance ". within a dsge model, vivien lewis and markus roth demonstrate that, if macroprudential policy is too lax, monetary policy may be forced to do the job by driving inflation above its price stability target and reducing the real burden of private debt. 10 thus a stringent macroprudential reaction to financial stability risks is also a means to protect monetary policy. to ascertain when we should adjust macroprudential tools, and by how much, we need to know how effective these tools are, and whether the transmission channel is subject to lags | 0.5 |
speeches assessing current financial imbalances in light of this experience, the federal reserve is carefully monitoring financial indicators for signs of potential imbalances and is assessing the extent to which leverage is currently employed by investors, particularly where some of the potentially amplifying factors i just discussed may be present. asset valuations misaligned asset prices are notoriously difficult to detect in a timely fashion, and no single metric or set of metrics can consistently and reliably identify stretched valuations. nonetheless, it is clearly worthwhile to track a wide range of metrics and to view them in the context of their historical norms. current conditions can be evaluated against a baseline of past experience, and then assessed in light of the various institutional and market factors that could conceivably account for deviations from historical ranges. the federal reserve tracks a large number of indicators, and i will highlight a few examples. overall, these indicators do not obviously point to significant excesses or imbalances in the united states. for example, as shown in figure 1, forward price - to - earnings ratios in the stock market fall within the ranges prevailing in recent decades, and are well below the early2000 peak, although corresponding measures for small - cap equities ( not shown ) appear somewhat elevated. in the residential real estate market, price - to - rent ratios are now somewhat below their long - run averages, in sharp contrast with the situation immediately before the financial crisis. notwithstanding this general view, some areas warrant our ongoing attention. as shown in figure 2, credit spreads on nonfinancial corporate bonds have dropped sharply since the financial crisis. this decline partly reflects improvements in earnings and corporate balance sheets, but also lower risk premiums. one measure of risk premiums, the forward spreads far in the future, are extremely low compared with historical norms for high - yield bonds, suggesting that investors have become more willing to assume credit risk. in the syndicated leveraged loan market, strong inflows appear to have contributed to an increase in prices. i will return to developments in this market and discuss their potential ramifications shortly. rapid debt growth may also signal emerging imbalances. in recent quarters, issuance of high - yield bonds by nonfinancial corporations has been robust. as shown in figure 3, credit flows have also been solid in the syndicated leveraged loan market, with a substantial amount of this credit being ultimately provided by nonbank institutional investors such as loan mutual funds, | a fair rate of exchange between goods and services that are produced in the domestic economy with those that are produced abroad. trade and investment is facilitated by an exchange rate that is stable and reflective of economic fundamentals, not by one that is volatile and unstable and subject to speculative capital flows. the exchange rate should also not be manipulated to cater to narrow sectoral interests. for every change in the exchange rate that benefits one sector, there would be another sector that is disadvantaged. therefore, the exchange rate policy has to rise above sectoral interests and consider the overall economic implications in deciding on the appropriate exchange rate. it is also not prudent to respond to short - term trends or to focus solely on developments in bilateral exchange rates. malaysia has trading and investment relations with many nations. we therefore, cannot look at movements of any particular currency pair as a basis for determining the appropriate valuation of the ringgit. a longer - term perspective to exchange rate policy is taken, looking at the relationship between the exchange rate and economic fundamentals. of greater importance is to focus on enhancing our overall productivity and competitiveness against all our major trading partners. the pegged exchange rate has served malaysia well. it continues to serve malaysia well. this is manifested in terms of the significant growth in the volume of trade and the steady inflow of foreign direct investment. in trade - weighted terms, the exchange rate is not misaligned. since the ringgit peg to the us dollar, the ringgit real effective exchange rate ( reer ), which is the trade weighted value of the ringgit against our major trading partners β currencies after taking into account changes in our inflation relative to those of our trading partners, has fluctuated within a range of plus or minus 7 %. this is well within an acceptable range. more importantly, the ringgit reer has not experienced a sustained trend towards increasing appreciation or depreciation. the ringgit has essentially gravitated around its fair value and has not experienced misalignment. finally, the malaysian economy has both external balance in the form of a sustainable current account and internal balance in the form of price stability. this again supports the ringgit being fairly valued. in addition, foreign direct investors have placed more importance on factors other than just the exchange rate alone. in managing exchange rate policy, no amount of exchange rate manipulation would satisfy the interests of all parties at all times. indeed, it is a stable and fundamentally sound exchange rate system that will best serve | 0 |
##o - asset - related activities. 3 the recent volatility in crypto markets has demonstrated the extent of centralization and interconnectedness among crypto - asset companies, which contributes to amplified stress. while banks were not directly exposed to losses from these events, these episodes have highlighted potential risks for banking organizations. when a bank's deposits are concentrated in deposits from the crypto - asset industry or from cryptoasset companies that are highly interconnected or share similar risk profiles, banks may experience deposit fluctuations that are correlated and closely linked to broader developments in crypto - asset markets. in addition, misrepresentations regarding deposit insurance by crypto - asset companies can cause customer confusion and lead to increased withdrawals at banks providing deposit services to crypto - asset firms and their customers during times of stress. the fed is working with the occ and the fdic on these issues and highlighting them to supervised institutions. for example, it is important for banks to understand some of the heightened liquidity risks they may face from certain types of deposits from cryptoasset companies. this effort is not intended to discourage banks from providing access to banking products and services to businesses associated with crypto - assets. our work in this area is focused on ensuring risks are appropriately managed. looking ahead, there are additional types of crypto - asset - related activities where the fed may need to provide guidance to the banking sector in the coming months and years. regulating stablecoins 2 / 5 bis - central bankers'speeches because crypto - assets have proved to be so volatile, they are unlikely to grow into money substitutes and become a viable means to pay for transactions. however, stablecoins, which purport to maintain a stable value, have greater capacity to function as privately issued money. for this reason, they pose specific, and well - understood risks, similar to other types of money - like assets. history has shown that money - like assets are subject to runs that can threaten financial stability. stablecoins linked to the dollar are of particular interest to the federal reserve. as chair powell said the other day, a central bank is and will always be the main source of trust behind money. stablecoins borrow that trust, so we have an abiding interest in a strong federal prudential framework for their use. over time, stablecoins could pose a risk to financial stability, and it is important to get the regulatory framework right before they do. here too | , one of the principles guiding our cra modernization work is that any redesign of cra regulations should continue to encourage banks to seek opportunities in underserved areas, including rural communities. i understand that the hac has done considerable research and stakeholder engagement to shed light on the barriers to the effective use of cra in rural communities ; all of that work will benefit our reform efforts. the fed β s ongoing series of for example, see ann carpenter, douglas white, and mary hirt ( 2018 ), β rental housing affordability in the southeast : data from the sixth district, β community and economic development discussion paper 2 - 18 ( atlanta : federal reserve bank of atlanta, july ), https : / / www. frbatlanta. org / communitydevelopment / publications / discussion - papers / 2018 / 02 - rental - housing - affordability - in - the - southeast - 201807 - 19. aspx ; and andrew dumont ( 2018 ), β rural affordable rental housing : quantifying need, reviewing recent federal support, and assessing the use of low income housing tax credits in rural areas, β finance and economics discussion series 2018 - 077. ( washington : board of governors of the federal reserve system, november ), https : / / www. federalreserve. gov / econres / feds / files / 2018077pap. pdf. - 5roundtable discussions in communities across the country will also allow us to hear suggestions for improving cra from local stakeholders, including many people from rural communities. these perspectives will inform our deliberations on this critical regulation, and we will make a summary of our discussions available to the public. in closing, while the economy is strong overall, we recognize that some communities have yet to feel the full benefits of the ongoing expansion. we are conducting research, collaborating with communities, and assessing financial regulations so that our nation β s current prosperity will benefit small towns and cities alike. the work being done by tonight β s award recipients and by each of you in this room is critical to making progress toward that goal. thank you for being our partners in this work, and enjoy the conference. | 0.5 |
our bus drivers are making close to the median wage in singapore. 15 / 17 bis central bankers'speeches in sum, demographics is not destiny and economic dynamism is not about numbers. dynamism is about quality β the quality of our workforce, the quality of our enterprises, and the quality of our institutions. it is about high levels of efficiency and productivity. it is about growing the singaporean talent base as well as being a magnet for the world β s talents. it is about a vibrant entrepreneurial and innovation base, characterised by a lot of start - ups, a lot of experimentation, and a lot of r & d. a key aspect of dynamism is also high rates of churn in the labour and capital resources in our firms : there needs to be continuous flux and reallocation of resources in response to changing economic and market conditions. both capital and labour need to be nimble and highly adaptive. the structure of the singapore economy is well suited for sustaining our dynamism. singapore β s strong advanced manufacturing and related trade and logistics activities are internationally competitive. in modern services, comprising financial, professional services, and info - communications technology, we enjoy an international hub status. together, these sectors make up some 40 % of our economy. if our domestic services can be further professionalised β job by job, each worker possessing deep skills and delivering a high quality of service, we will be a dynamic economy. finally, dynamism must be about our people. we must remain an open society. 16 / 17 bis central bankers'speeches not just in being open to foreign trade, investment, and talent, but being deeply connected to the rest of the world. not just attracting foreign talent to singapore but singaporeans venturing abroad as our companies and industries internationalise. most of all, being open in spirit and mindset, staying open to diversity, being comfortable working in multi - cultural settings, thriving in a globalised world. we must also remain a resilient society. able to ride the ups and downs of business cycles and structural changes. able to adapt, learn new skills, continually improve. we must become a more innovative society to be dynamic. willing to experiment and accepting failure as a halfway house to success. investing in r & d, leveraging on technology. most of all, having an enterprising spirit β always seeking new and better ways to do things. in the end, we must be an inclusive society. it is probably not | male and females in their 40s and 50s. this gap in singapore is higher than that in leading oecd countries. in many advanced economies, women tend to return to the work force after their prime child - bearing years. in singapore, this is much less prevalent. if we can make it easier for our women to return to the workforce after they have had their children, we can narrow the gender gap vis - a - vis the advanced economies. this slide demonstrates another thought experiment : assume we narrow our gender gap from the current 15 % points to 11 % points by 2035 β approximately the level seen in germany and netherlands. this will only translate into a cumulative labour force increase of about 2 % in 2035. 7 / 17 bis central bankers'speeches the demographic trilemma presents the constraints and choices facing us. we can soften it by raising the tfr and lfpr. of course, having babies or returning to work are deeply personal choices. no one makes these choices in order to boost labour force growth or gdp growth, and we should not suggest doing so. the government tries to facilitate fertility and labour force participation because that is what many people desire for their own fulfilment. many women would like to return to work, but they face a number of constraints. we must make it easier for them to do so. the government has made significant efforts in recent years to invest in childcare and facilitate more flexible working arrangements. we must continue to push on this front and collectively as a society enable more who want to work enter the workforce. likewise, many married couples want to have children β not for gdp but because children are a source of joy and fulfilment of love. government policies on marriage and parenthood are guided by this higher purpose. and of course, a growing labour force is a happy, economic by - product. we must make balanced choices in addressing the trilemma. we must accept a slower rate of labour force growth. the underlying demographic slowdown is so severe that it is neither feasible nor desirable to try to completely offset it through immigration or foreign workers. but we must also allow a certain rate of net immigration to augment our resident population. this is not just about numbers but about rejuvenation and expanding our talent base. 8 / 17 bis central bankers'speeches and while we cannot keep increasing our share of foreign workforce indefinitely, we must be flexible in allowing fluctuations in the ratio according to economic cycles, changing | 1 |
, and must lie with, the banks. self - regulation is still the rule. however, more complex systems and the potential of new participants increase the need for the public sector to take on partial responsibility. this is the background to the proposal for a new act on payment systems, which is under deliberation in the storting. according to the bill, norges bank is to be granted responsibility for licensing and supervision of interbank systems in norway. we wish to exercise this responsibility together with the industry and its participants. in the following, i will take a closer look at this interaction, how it may be developed and what our respective roles and responsibilities should be. i will also briefly touch on cls : continuous linked settlement. based on combined average daily turnover of about nok 175bn in nbo and total collateral of nok 37bn. vps : the norwegian central securities depository. our preparations for the new role as licensing authority, and provide a few opinions on which requirements must be placed on the interbank systems. 4. 1. the importance of self - regulation norges bank β s new licensing and supervisory responsibility will be a supplement to present - day self - regulation. up to the present, participants have cooperated on standards, rules and routines for security and transaction exchange within the payment system. agreements on obligations and responsibilities between the participants have assured coordination between banks. self - regulation has primarily taken place through and between the two banking associations. there is consensus that this model has given rise to substantial results, not least an infrastructure which safeguards important social considerations, while also providing for active competition between participants. the challenge for norges bank will be to fulfil its licensing and supervisory responsibility in such a way that self - regulation may be maintained, but which also allows us to move in the right direction in terms of both risk ( reduction ) and efficiency in the interbank systems. 4. 2. norges bank β s responsibility that norges bank has responsibility in connection with the payment system is not new to this bill. under the norges bank act, norges bank shall promote an efficient payment system domestically as well as vis - a - vis other countries. this formulation requires us to balance risk against efficiency. norges bank also serves as settlement bank for the banks. norges bank has, as a result of this function, set requirements on the banks and their clearing systems, with particular emphasis on risk - reducing measures. as a future licensing authority for | up to now for the payee bank to make funds available to its customer - pending the final transfer of funds from the payer bank in the settlement. this practice can lead to large and unforeseen exposure before settlement is finalised. if the payee bank postpones crediting instead, credit risk will be eliminated from the net settlement, but at the expense of efficiency - because the customers receive funds one ( or perhaps two ) days later. the advantages of delayed crediting must therefore be weighed against the disadvantages. my point here is that the banks themselves must be responsible for this assessment, while we at norges bank must evaluate whether the relevant measures are sufficient for promoting the objective of the law. let me add that licensing does not mean that norges bank has issued a stamp of approval for the technical solutions of the interbank systems. this is also emphasised in the preparations to the law, where it states that... the processing of licence applications does not mean that the authorities are responsible for the properties of the system β s operation, etc. it terms of the licensing process itself, norges bank has initiated preparations and we will be ready to receive licence applications when the law enters into force. at the same time, we are aware that the formulation of these applications will take some time, not to mention that any changes in agreements or routines ( which become necessary based on legal requirements ) may take even more time. however, we will endeavour to facilitate this process. we have already had informal contact with the banking associations concerning this matter and we are prepared to provide counsel and guidance in the further progress of this process. 4. 3. the responsibility of the banks the primary responsibility for the development of the payment system must, as mentioned, lie with the banks. this is in line with the approach of self - regulation. further development of the common infrastructure, agreements and new payment services must come from the industry itself. in this process, it is important that banks provide more information on risk in the systems, so that an explicit division of responsibilities can be established - both for the individual systems operator and for the participants in the payment systems. however, the banks β ability to develop efficient and stable payment services is influenced by the regulatory framework established by the authorities. norges bank can be of assistance in helping the industry to make the β proper β choices by providing a regulatory framework which maintains competition, while also encouraging that participants are faced with relative prices reflecting the real costs of | 1 |
will need stronger democratic control over euro area affairs. to this end, we will need to consider a euro area format of the european parliament. relationships between euro area mps and national parliaments will also need to be enhanced. as i said, not only do we need to better coordinate public policies, but we also have to foster private risk - sharing throughout the eurozone. to recall wolfgang schauble, european leaders need to show β that balanced budgets, growth and investment are not mutually exclusive, but rather go hand - in - hand β 5. wolfgang schauble, β managing europe β what is germany β s responsibility? β, speech at the lse, march 3 2016. bis central bankers β speeches iii. building an efficient financing and investment union for tomorrow we need to improve investment financing in the eu. our efforts should be directed towards financing growth and innovation, and towards finding the right mix between debt and equity financing, while still preserving financial stability and consumer protection. in the eu, the european commission has launched the investment plan β so called juncker plan β and the capital markets union ( cmu ). until now, these initiatives have shown results, but they are not enough. a more ambitious approach would bring together the cmu, the banking union and the juncker plan. this is why i suggest to think of a financing and investment union. it is essential to clarify two objectives : ( i ) the diversification of financing for firms, and ( ii ) the strengthening of the euro area. as we argued in our joint article with jens weidmann in february, this financing and investment union β including more equity financing β seems to be the best way to match the abundance of savings and the lack of appropriate investment financing. first, let β s focus on the diversification of financing. the starting point should be firms β needs. new financing of business investment, which is one of the keys to innovation, must be enabled. there should be above all, more equity financing. β’ it is an essential fact that the equity share of corporate financing in europe is half as large as in the united states : 52 % of gdp in the ea, vs. 121 % in the us. β’ this is unfortunate because equity financing is the best way to share risks and opportunities, as well as to support innovation. β catch - up β growth, as in many emerging markets, can be financed by debt. but an economy standing at the technological frontier, as in the u | and in real terms. in order to have sustainably higher interest rates tomorrow, we must have them low today. that being said, not all unconventional instruments are legitimate. there are limits on how negative interest rates can go, as mario draghi stressed it. so this type of unconventional measure, although useful, should be used with care. and i think that socalled β helicopter money β would bring more harm than good : we do not need it and it is not on the table. the real issue is that monetary policy cannot do everything. we have done our bit but cannot create the lasting economic growth which underpins prosperity, including for savers. for this we need other policy makers to act. at a time when the euro area is experiencing both a negative output gap and a large external surplus β i. e. an excess of savings over investment, we must reflect on how abundant european savings could be put to the most productive use for investment in europe. abundant savings in the euro area current account balance ( % of gdp ) 10, 0 10, 0 7, 5 7, 5 5, 0 5, 0 2, 5 2, 5 0, 0 0, 0 - 2, 5 - 2, 5 - 5, 0 - 5, 0 - 7, 5 - 7, 5 - 10, 0 - 10, 0 spain source : eurostat, banque de france france italy germany euro area this is why we need to foster more extensive private risk - sharing in the eurozone, which requires a more integrated financing and investment framework. as the so - called fratzscher report on increasing investment in germany puts it : β the key to a sustainable recovery in europe lies in faster growth that must be bolstered first and foremost through a joint investment and modernization campaign β. i will come to this issue. but we also need to achieve better coordination of public policies. to that effect, we need to think through the concrete role of a euro area finance minister could play. bis central bankers β speeches ii. why we need a β full coordination β institution in the euro area, embodied by a finance minister clearly, monetary policy cannot be a substitute for economic policy coordination or for the lack of reforms. if only for that reason central bankers need to take part in this debate, although taking action will obviously remain a decision for political leaders. this is why our focus should be on the eurozone economic governance and coordination. we know there is deep political resistance to sharing fiscal | 1 |
mr latter takes a central banker β s look at new challenges in a rapidly changing environment speech given by mr tony latter, deputy chief executive of the hong kong monetary authority, at the asian treasury forum 2000, held in hong kong on 22 - 23 february 2000. * * * there was a time, many years - or more likely decades - ago, when it seemed that the main role of the company treasurer, if indeed there was any such identifiable position in the company, was to make sure that enough money had been transferred from time deposits to current account before each month β s pay day ; and it seemed that the main, possibly the only, function of a company β s finance director was to make sure that the accounts were compiled, audited and filed on time. how times have changed. not only has there been a ceaseless escalation in the range and complexity of financial instruments available to us all, and in the sophistication of accounting, but there has also been an inexorable rise in the expectations which others, such as shareholders or executive boards, have as to what can be delivered from the financial side of a business. as a central banker i feel some empathy with those who find themselves sandwiched between pressure on one side from their masters to achieve ever lower funding costs or ever better returns from financial investments, and persistent enticements on the other side from bankers claiming that you could be freed of all that pressure if you simply subcontracted everything into their capable hands. treasury has come to be regarded in many instances as a separate profit centre. the treasurers of some major corporates are nowadays acknowledged as being at least as significant players in the financial markets as are the banks themselves. there are some well - known examples where the profitability of an enterprise in the manufacturing or services sector has been sustained by deft treasury and financial management for considerable periods when the mainstream business has itself been floundering. and there are also examples, alas, where reputable companies have been brought to their knees by flawed financial management. you probably don β t have an easy life, but you won β t need me to tell you that. i find myself wondering whether or for how long the financial scene will continue to be one of such rapid change as we have been witnessing in recent years ; and what the implications are, for any or all of us here, of recent and prospective developments in financial products and infrastructure. it is difficult to put a starting date on | such as the economic variables on which policy should focus, or in other words, the choice of intermediate objective. in some countries, germany among them, policy is targeted at a monetary aggregate, while in others a strategy of direct inflation targeting is pursued. alternatively, monetary authorities may focus on a range of economic indicators, as is done in the united states. i will not go into the pros and cons of these methods here today. in the european context, the emi has concluded that in practice the differences between the various policy strategies that could be pursued by the escb are not as large as in theory. a decision is to be taken by the ecb on this point next year. 3. looking at the structure of the fed, we see three components, specifically the board of governors, the regional reserve banks and the federal open market committee ( fomc ). the fomc issues a periodic guideline for monetary policy, while the board serves as the executive body. it is empowered to adjust policy, within the mandate provided by the fomc, when necessary in the period between fomc meetings. thanks to a rotation system, the reserve banks are involved in fomc decision - making on an alternating basis. the american legislature obviously meant the fed to have a decentralized structure, in which the regional reserve banks can each have their say. the aim was to prevent fed policy - makers from catering unduly to the wishes of either the financial centre, i. e. new york, or the political hub, i. e. washington. in spite of the decentralized nature of the federal reserve system, however, a certain specialization tendency has increasingly developed over the years, due in part to technological innovations and market developments. take, for instance, the operations ensuing from the fed β s monetary tasks, such as money and foreign exchange market interventions. these are effected in their entirety in new york. in other areas, too, such as the payments system, the reserve banks have developed their own specializations. 4. in determining monetary policy, the fed relies on regional input. the reserve banks contribute to policy through their role in the discussions and the number of votes they can cast ( five out of a total of twelve ) at fomc meetings. at these meetings no fixed policy proposals are presented in advance, the aim being an open discussion where the various parties reach agreement through mutual persuasion. any decision should, after all, be endorsed by as | 0 |
wish all success for today's deliberations. thank you. 1 it incorporates various new age features like a data lake and integrated analytics with much higher processing speeds and scalability. data lake is envisioned as a part of cims, which is more flexible than usual database systems, in terms of data fetching from multiple systems ( inside and outside rbi ), data storage ( both structured and unstructured information ) and data processing ( standard and dynamic query based reports ). 2 the innovations implemented in the cims include : ( a ) to improve exchange of data and metadata, a statistical data and metadata exchange ( sdmx ) based repository has been implemented, which consists of the sdmx elements and related artefacts, undertakes data standardisation by aligning the elements with business concepts, and facilitates visualisation at desired level of granularity by drilling down elements ; ( b ) a novel sdmx data conversion tool has been developed and implemented to generate sdmx time series from periodic data submitted by regulated entities ; ( c ) all regtech and suptech data collection features have been implemented through creation of 2 / 3 bis - central bankers'speeches sdmx artefacts / metadata in server - to - server data transmission and data governance ; ( d ) an advanced analytical platform to perform statistical analysis connecting cross domain data has been implemented with integrated programming interface ; ( e ) an sdmx data query functionality provides interactive metadata driven search and data visualisation analytical platform for the general public ; ( f ) power user capability known as common data platform has been implemented ; and ( g ) functionality of regular information submission has been enriched with dashboards for regulated entities, system driven alerts and data submission monitoring utilities. 3 the new standards for national accounts and balance of payments statistics, coordinated by the united nation's intersecretariat working group on national accounts ( iswgna ) and the international monetary fund ( imf ) committee on balance of payments statistics ( bopcom ), respectively aim to meet boarder policy analysis and monitoring needs by integrating elements of social wellbeing and environmental sustainability ; incorporating globalisation and innovation in real and financial sector operations ; incorporating digital transformation ; tracking climate change ; steadiness between stock and flows ; more detailed breakdowns ; consistency with other standards ; and developing new data sources and methods. 4 moore's law 5 kryder's law 6 rao, b. l. s. prakasa ( 2020 ).'c. r. rao : | the second half of 2013 is the significant strengthening in household balance sheets. one aspect of that improvement is that from mid - 2008 through mid - 2013, total household liabilities declined significantly after a period of quite rapid debt growth over the preceding decade. the reduction in household debt is an extremely rare event for the u. s. economy. in fact, this has been the only period of sustained declines in nominal household indebtedness over the period since the early 1950s. the household sector in the remainder of my remarks, i β d like to focus on the finding, made public in our most recent quarterly report on household debt and credit, that for the first time since 2008, households increased their borrowing on a year - over - year basis, at least in nominal terms. i β ll argue that this is an encouraging development, although we should be cautious both in predicting future borrowing and in recognizing that the aggregate increase in borrowing may mask the fact that many individual households remain constrained by prior borrowing and / or a reduction of income. these households are still engaged in attempting to reduce their debt burden by pay - downs in debt. furthermore, i β ll explain how the type of borrowing by households has changed over time. here too there is a reason for some caution, because borrowing for education has become more common for u. s. households. it appears that heavy student debt can restrain the consumption activity of those individuals who are burdened with it. if this is the β new normal β for the economy, it might result in delayed purchases of homes and autos for those graduates who finance their education by taking on large amounts of debt. this is a potential development that bears close monitoring. why do i suggest that an increase in household borrowing is an encouraging development? while in recent years we have certainly seen that household debt can carry serious negative consequences, overall an increasing level of borrowing indicates that the economy is returning to normal patterns. after all, with rising gdp and an expanding population, we should not be surprised to see debt increasing, if only modestly. of course, the kinds of debts that people are taking on and the riskiness of those loans β to both the borrower and the lender β are important issues, and i will return to them later in the talk. now households borrow for a variety of reasons, but we can generalize to say that households borrow to smooth their consumption. for households whose incomes are temporarily low, perhaps because they are just starting their careers, borrowing makes it | 0 |
monetary union is therefore essential. this does not require a choice between extreme options. some observers have argued that long - term stability requires a return to the original maastricht framework. others have suggested that we need a full federation, a united states of europe. in my view, neither approach is necessary. we can ensure future stability by elevating to the european level only those policies that are essential for our union to function effectively. i have been asked to work on identifying these policies under the lead of the president of the european council and together with the presidents of the commission and the eurogroup. in our view, a stable and prosperous union must be built on four pillars. the first pillar is a financial union that can maintain a stable and integrated financial market. this implies a single supervisor to control risk - taking by banks and reduce regulatory capture β and a single resolution system to ensure that banks can fail without dragging down their sovereigns. as regards the commission proposal for a single supervisor that i mentioned earlier, i am confident that governments will find agreement on the appropriate perimeter of supervisory responsibilities, as well as issues related to democratic accountability. for our part, we will guarantee the firm separation of monetary policy from supervisory tasks. we will also ensure close cooperation with national supervisors who have the competence and resources to implement supervision. the second pillar is a fiscal union that can effectively prevent and correct unsustainable budgets. the consequences of misguided fiscal policies in a monetary union are too severe to remain self - policed. so a stable emu would ultimately require the establishment of true budgetary oversight at the european level. bis central bankers β speeches the third pillar is an economic union that can guarantee the highest standards for competitiveness. countries must be able to generate growth and high employment without excessive imbalances. this implies that there must be minimum standards for key economic policies and incentives for continued structural reform. the fourth pillar is a political union that can engage euro area citizens more deeply and make the other pillars legitimate. this is essential to ensure that where sovereignty in selected policy fields is pooled, democratic participation is deepened in parallel. a firm commitment from governments to complete economic and monetary union is the best complement to the ecb β s actions. it ensures that, by supporting immediate confidence, we will build the bridge to a more stable and prosperous euro area. and it sends a clear signal to investors that the euro area has a vision for a sustainable future. conclusion let me draw to a close | the experience of central and eastern european economies with the latest crisis would indicate a broad range of outcomes. while this might look normal at first view, it is worth remembering that cee countries share quite a few commonalities in their economic and financial structures. furthermore, they were hit by the same type of external shock, at exactly the same time. one has thus a fair approximation of a controlled experiment on the role of macroeconomic policies before and during the crisis. at the risk of generalizing too much, i would say that cee economies shared broadly the same development model and problems. we benefited from large capital inflows mainly in the form of fdi, remittances and cross - border loans. western european banks penetrated our financial system, increasing financial intermediation and facilitating capital inflows. this process resulted in fast credit and economic growth based on a consumption lead model. while inflation has been generally under control financial imbalances and vulnerabilities were increasing, in the form of rapid growth in real estate prices and balance sheet exposures in liquidity and foreign currencies. our economies were hit by the crisis since the first week of october 2008. the fear of contagion was enhanced further by a sharp decrease in the market value of the eu banking groups that operate in the region. it affected negatively the public trust in the system, resulting in widespread deposits withdrawals. later, as the financial crisis progressed and transformed into a global economic recession, the effects extended to real economy and exchange rate depreciation. most of the countries in the region faced a rapid liquidity shortage caused by the deposits run, lower remittances and fdi outflows. the balance sheets across the region suffered from both liquidity problems and exchange rate depreciation. this was negatively reflected in consumption and investment, which further deteriorated the financial stability outlook with the possibility of a balance sheet deflation and economic contraction mutually supporting each other in a vicious spiral. the ability of our economies to absorb these shocks was however different. the natural instinct of macroeconomic policies facing such a contraction scenario is to engage in countercyclical measures in the form of expansionary monetary and fiscal policies. however, the very presence of financial stability concerns in the equation significantly changed the equation. we can safely argue that countries which experienced the least macroeconomic and financial imbalances were the ones better placed to pursue countercyclical policies and in fact the ones which emerged the fastest from the | 0 |
large proportion of highly skilled and educated people would make it difficult to exit the middle income trap. labor force with high education is crucial to shift the existing majority of labor - intensive / low - technology and resource - based industry up to the middle or high technology industry. 24. the development of human capital would lift up the productivity level of the labor force, which would in turn enhance indonesia β s competitive advantage, which is an important prerequisite to excel within the current asean economic community era. 25. infrastructure problem also poses as indonesia β s major constraint for accelerated growth. connectivity issues among regions, including the need for high quality and high capacity harbors, airports, roads and railways in indonesia have spurred logistical costs. manufacturing activities related to exports and imports are especially in need of appropriate harbors, even for java region which contribute the largest part to the national economy. 26. in addition, energy particularly electricity, also becomes a crucial issue and serves as important prerequisite for domestic industry β s development. a reliable and adequate supply of electricity would attract investors β interest to build manufacturing facilities in indonesia. the increased foreign direct investment will enhance indonesia β s role within the global value chain. 27. policy simulation in our growth diagnostic research indicates the importance of resolving these human capital and infrastructure issues for growth acceleration process. bank indonesia found that modest increase in electricity capacity and human development will each enhance growth of around 0. 25 % per year, while enhancement in the quality human capital will contribute to an increase in employment of around 0. 50 %. ladies and gentlemen, policy priorities 28. to address the existing challenges, i believe we have come to a common understanding that reforms to improve the economic structure should be underlined and properly implemented. cyclical policies from monetary and fiscal domains remain indispensable indeed, but not sufficient as it only responds to short term recurrent symptoms. bis central bankers β speeches 29. thus far, bank indonesia β s monetary and macroprudential policies have been among the key factors in safeguarding macroeconomic stability, which support the structural reforms pursued by both central and regional government. 30. bank indonesia has lowered bi rate and primary reserve requirement as available room to ease monetary policy became apparent on the back of solid macroeconomic stability, including lower inflationary pressures going forward. however, stability remains the priority. 31. in this regards, bank indonesia will also continue to strengthen coordination with the government. in addition, by cooperating in harmony with other authorities such as indonesia | roughly matched in frequency and duration by periods below β as we are having now. if we set our aspirations higher than that β if we try for above - average performance all the time β we will just get inflation. that is the economics of full employment. now you may feel that a growth rate for real gdp of something like 3 per cent on average is not that high. is that the best we can do? can β t we lift it? the only way the potential growth rate can be lifted is by adding more factors of production β more labour and capital β or raising the growth rate of productivity. over the long term, the key is productivity. on that front, productivity growth does seem over the past several years to have settled at a lower average rate than we had seen since the early 1990s. this may have several causes, and the experts debate them. but over the years ahead, as a community we must be sure not to let up on our efforts to keep productivity growing. i have no specific policy prescriptions here β only general ones β trying to sustain competition, to keep markets open, to maintain flexibility and so on. but those general values are worth recounting from time to time. household balance sheets a feature of the economic landscape of the past decade and a half has been the long gearing up of households. in the early 1990s, household gross debt in australia was equal to about 50 per cent of average annual household disposable income. this year, it reached about 160 per cent. households β assets rose generally in parallel, though not quite as fast, with total assets rising from about 460 per cent of income in 1990 to over 800 per cent at the end of 2007. ( assets have fallen somewhat since then, with the decline in the share market and some softening in housing prices. ) the ratio of debt to assets rose from under 10 per cent in 1990 to about 18 per cent in 2008. the ratio of housing debt to housing assets reached about 27 per cent. very similar trends have been seen in a number of comparable countries around the world, so in thinking about the causes, we should not look exclusively for domestic causes. but in summary, the main factors behind this big increase in the size of the household sector β s balance sheet were : β’ the general tendency for financial activity and wealth to grow faster than income, which has been a feature of most economies since at least as far back as the 1950s ; β’ an increased pace of financial innovation β | 0 |
is very accustomed to a world of inflation near 2 see lawrence m. ball ( 2013 ), β the case for four percent inflation, β central bank review, vol. 13 ( may ), pp. 17 β 31 ; and philippe andrade, jordi gali, herve le bihan, and julien matheron ( 2019 ), β the optimal inflation target and the natural rate of interest, β brookings papers on economic activity, fall, pp. 173 β 255. see richard h. clarida ( 2019 ), β the federal reserve β s review of its monetary policy strategy, tools, and communication practices. β speech delivered at the 2019 u. s. monetary policy forum, sponsored by the initiative on global markets at the university of chicago booth school of business, new york, february 22, https : / / www. federalreserve. gov / newsevents / speech / clarida20190222a. htm. - 12 percent, which has allowed households and businesses to operate with considerable certainty. research shows that such certainty is valuable for households and businesses to make sound financial decisions and to avoid economic distortions that could hinder economic growth. 8 my strong support for our consensus framework is predicated not only upon its new features designed to address inflation that falls too low, but also its commitment to prevent longer - term inflation expectations from rising materially above a level consistent with our 2 percent goal. in this sense, the current elevated rates of inflation are not challenging our new framework any more than they would have challenged our previous framework or, for that matter, most reasonable frameworks for conducting monetary policy. as i said earlier, when our price - stability and employment goals are not complementary, the framework calls for policy to depend on the remaining shortfall from our maximum - employment goal, on the extent to which inflation continues to exceed 2 percent, and on the amount of time we expect it will take for employment and inflation to meet our goals. i remain quite optimistic about the capacity and willingness of consumers and businesses to power a robust expansion as we put the covid event behind us, even with the headwinds coming from the supply side. but that forecast for growth and uncertainty about the resolution of supply constraints mean that there are upside risks to inflation next year. so my focus is beginning to turn more fully from the rapidly improving labor market to whether inflation begins its descent toward levels that are more consistent with our price - stability mandate, as | coming months, but also how far it will fall and if it will fall soon enough to avoid spurring a concerning rise in longer - term inflation expectations. i agree with my fomc colleagues and most private forecasters that inflation likely will decline considerably next year from its currently very elevated rate. for instance, most of the september summary of economic projections forecasts for pce inflation in 2022 were between 1. 9 and - 82. 3 percent, with a minimum of 1. 7 percent and a maximum of 3. 0 percent. 3 but i see significant upside risks to my current inflation outlook. supply constraints in production and distribution already have become more widespread and have lasted longer than most forecasters anticipated. as noted earlier, labor supply constraints are making it difficult for businesses to keep up with demand. this dynamic will continue to support robust wage growth, putting further upward pressure on prices. moreover, there is evidence in the past couple of months that a broader range of prices are beginning to increase at moderate rates, and i am closely watching those developments. the fundamental dilemma that we face at the fed right now is this : demand, augmented by unprecedented fiscal stimulus, has been outstripping a temporarily disrupted supply, leading to high inflation. but the fundamental productive capacity of our economy as it existed just before covid β and, thus, the ability to satisfy that demand without inflation β remains largely as it was, and the factors that are disrupting it appear to be transitory. looked at purely in that light, constraining demand now, to bring it into line with a transiently interrupted supply, would be premature. given the lags with which monetary policy acts, we could easily find that demand is damping just as supply is increasing, leading us to undershoot our inflation target β and, in the worst case, we could depress the incentives for supply to return, leading to an extended period of sluggish activity and unnecessarily low employment. but β transitory β does not necessarily mean β short lived. β indeed, we are discovering that it β s going to take more time than we had thought for supply to return to normal, and with demand already high during that time, i am monitoring the extent to the september 2021 summary of economic projections is available on the board β s website at https : / / www. federalreserve. gov / monetarypolicy / fomccalendars. htm. - 9whic | 1 |
particular attention, notwithstanding the current regime applied. the presentations on this issue by ms. m. peeters yesterday and by the experiences of various countries during today β s panel of the conference were very useful. fiscal domination remains a constant risk to price stability, as it came out of the experience presented here by mr. baschi ( turkey ). we hope that the commitment of the government for developing a better coordination of monetary and fiscal policies will continue in the future, as the minister of finance, mr. malaj stated in his speech. this idea was further elaborated on in the presentation authored by mr. hida and mr. haderi. dollarisation or fx may constitute another obstacle that places financial stability and monetary policy independence at risk, as argued by mr. driessen. therefore, it is a problem that needs attention. what inflation rate should be targeted remains a subject of debate. this concern was presented by mr. olters. the bank of albania is closely addressing this issue in a very prudential manner, so that it does not become an obstacle for economic growth. in light of the above difficulties for passing to a new regime, as stressed by mr. mayes, it is important to implement a robust strategy so as to avoid large mistakes. price stability, as stressed some times during the conference, helps economic growth. on the other hand, the second pillar of the bank of albania, the financial stability, is likely to play a more important role for economic extension. but, as mr. blejer stressed in his speech, stability should not be turned into an end in itself. a good regulated but undeveloped financial sector may be as ineffective as a deregulated sector. in order to make the basic policies in economy more harmonized and effective, i would emphasize that the banking system and the other financial institutions of the country should be more effective, open and supervised. in the final analysis, it is very important to create a real financial market, where all actors know the rules of game and obey them fairly, as it came out in the presentations of mr. niedermayer, mr. danielson, mr. pencapligil and mr. bunda. in conclusion, i would underline that the challenges ahead of us, on our way to development and integration, become easier when a spirit of cooperation exists not only within the country but also in the regional framework and broader. thanking you for your participation in this conference, i declare it closed. | emergency intervention function, the promotion of the development of the payment system, the increase of the banknote quality, the administration of the foreign exchange reserve, the improvement of statistics, the support of european integration, and the work to educate the public and improving communication with it. * * * dear ladies and gentlemen, the moment i am making this presentation is unusual. the covid - 19 pandemic and the measures needed to control it have dealt a severe blow to albanian families and businesses over the past three months. the albanian economy is expected to decline during 2020, a decline which will be accompanied by rising unemployment, declining household incomes, as well as deteriorating financial situation of businesses and increased non - performing loans in the banking sector. this blow required a quick and comprehensive response of the public authorities, both in terms of health and economic and social. in addition to fiscal easing measures, the bank of albania undertook a comprehensive package of measures to provide the necessary liquidity to the banking system, to boost lending and to control debt service costs. this package includes : 2 / 3 bis central bankers'speeches reduction to 0. 5 % of the key interest rate and unlimited supply of liquidity to the banking system ; temporary easing of banking regulations, to enable the temporary postponement of the payment of loan installments to customers in difficulty and the consensual restructuring of loans to customers with solid business prospects, helping business finances and increasing their chances of survival ; elimination of operating costs of the electronic payment system, in response to the increasing demand for this type of activity ; increase operational capacity to guarantee the supply of the economy with physical money. in response to these measures, financial markets continue to function normally, despite increased public sector demand for financing and increased uncertainty in the economy. they also enable and complement the fiscal package of the albanian government. in economic terms, coordinated fiscal, monetary and macroprudential measures have partially mitigated the negative effects of the pandemic. however, the challenges ahead remain serious. in our judgment, the albanian economy has the premises to successfully withstand this blow. however, this requires that all public actors and private sector operators make the right decisions, in a timely manner and in the most coordinated manner possible. coping with the shock is within our means, if each of us will do our best and if we continue to guarantee with priority the monetary and financial stability of the country. thank you! 3 / 3 bis central bankers'speeches | 0.5 |
muhammad bin ibrahim : challenges in compiling and communicating statistics in malaysia opening remarks by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the national statistics conference ( mystats 2012 ), kuala lumpur, 9 november 2012. * * * saya berbesar hati untuk mengalu - alukan kepada semua yang hadir pada persidangan yang julung - julung kali diadakan ini, mystats 2012, yang memperlihatkan sekali lagi kejayaan dalam usaha kerjasama di antara jabatan perangkaan malaysia dengan bank negara malaysia. saya juga amat gembira dan berbangga dengan sokongan yang ditunjukkan oleh para peserta yang mengambil bahagian hari ini, yang terdiri daripada sektor swasta dan sektor awam, pengguna dan perangkawan statistik, di samping rakan - rakan saya daripada irving fisher committee on central bank statistics ( ifc ). dengan kehadiran kumpulan yang mempunyai pelbagai kepentingan ini, saya yakin forum ini akan menjadi platform yang amat sesuai untuk kita berkongsi pandangan, bertukar - tukar pengetahuan dan pengalaman tentang statistik, dan akhirnya memperoleh manfaat besar daripada persidangan ini. i am pleased to welcome all of you to this inaugural conference, mystats 2012, a collaborative effort between department of statistics malaysia and bank negara malaysia. i am also very encouraged by the strong support from all of you present here today, representing both the private and public sectors, users and compilers of statistics, and executives members from the irving fisher committee on central bank statistics ( ifc ). with such a diversified interest group, i believe this forum will be an important platform for us to share views, exchange statistical knowledge and experiences. the objective of mystats is to provide a platform for our statisticians, analysts, economists, policy makers, academicians and media to share, discuss and highlight insights and issues in statistical analysis and policy formulation as well | investors, financial institutions and the general public at large. in the first three sessions today, our distinguished speakers and discussants will share insights and experiences in many areas ; the adoption of statistical best practices in data management, ways to promote data sharing and communication of statistics, identification of statistical gaps and limitations faced by analysts or authorities in the usage of data. the session would also explore and provide possible resolution to challenges confronted by compilers and users of statistics. in the concluding panel discussion, the panellists will deliberate on new data requirements, the need for more forward looking and pre - emptive data collection and compilation, identify best practices to enhance data integrity and communication of statistics, and the role the private sector can play in contributing better data collation. bis central bankers β speeches your views today is important as it would provide insights and assistance to statistical compilers, policymakers and regulatory authorities to facilitate planning and enhancement of existing data measurement or implementation of new statistical initiatives. the end game is to facilitate effective analysis, monitoring and surveillance of the economic and financial activities and provide accurate assessment of risks and the effectiveness of policy initiatives and the state of the economy. this forum will also provide analyst an opportunity to share their views on the type of data that would be useful to them. while debating on the statistical needs of the public and private sectors, there are many areas that could be considered, amongst them : 1. does the private sector benefit given the significant resources that have been invested by the national statistics office, regulatory authorities and government agencies to compile more comprehensive, timely and granular data? 2. what type of data that the private analysts require that would improve their analytical capability to provide analysis for informed decision making to their client? 3. based on past experiences, data compilation always lags behind financial innovations and economic developments. based on this premise, what should be the strategy, from the perspective of statisticians and users, to ensure the availability of new and appropriate data on a timely basis to meet future needs of users? 4. how can data compilers and users play a greater role inidentifying new data needs of a high income and high value added economy? 5. how can statisticians play a more proactive role in advising or communicating with users on the availability of appropriate data for analysis and surveillance to avoid the redundancy of data collection? these questions are by no means exhaustive but i hope our distinguished speakers and discussants today will address some of them. the speakers and | 1 |
clarification in 1999 made it clear that the practical formulation of monetary policy takes account of developments in the real economy. according to the clarification there may be reason for the riksbank to deviate from the target if inflation is being affected by a temporary shock that will not fully dissipate during the coming two - year period but that is nonetheless not deemed to have any lasting influence on inflation developments. another reason is when a bigger shock makes a return to the target one to two years ahead associated with excessive undesirable effects on the real economy. there are many examples in recent years of when we have taken such factors into account. at the turn of the year 2002 - 2003, for example, rising energy prices were pushing up inflation quickly. but since the high energy prices were expected to gradually fall back entirely we saw them as temporary and decided to leave the repo rate unchanged. when the current regime of inflation targeting was established in the early 1990s it had been preceded by a long period of high, fluctuating inflation in both sweden and other countries. many countries around the world experienced a similar shift in regime around this time. partly as a result of this, international inflation fell sharply during the 1990s, from about 30 per cent to below 4 per cent a year on average. 4 the inflation targeting regime and its practical application has been underpinned by the conviction that high, variable inflation is bad for the economy. now we are living in a world with very weak price increases, particularly for manufactured goods. is there anything in the current circumstances that could motivate a change in the riksbank β s thinking? the integration of china's and india's large, fastgrowing economies into the world economy will most likely affect world growth and inflation for a long inflation targeting β theory and practice ", sveriges riksbank quarterly review 4, 13 - 42, for a similar discussion that is linked to the monetary policy framework in sweden. read more about this in, for example, palmqvist s. & stromberg l. ( 2004 ), " households β inflation opinions β a tale of two surveys " in sveriges riksbank economic review 4, 24 - 43. see rogoff, k. ( 2003 ), " disinflation : an unsung benefit of globalization? " time. globalisation has been given a powerful push forward. even though setbacks are possible, it is reasonable to believe that the | kristina persson : monetary policy in a low - inflation economy speech by ms kristina persson, deputy governor of sveriges riksbank, at the stockholm strand rotary club, stockholm, 18 february 2005. the references for the speech can be found on the sveriges riksbank β s website. * * * introduction thank you for the invitation to take part in this morning seminar. i intend to begin by giving my views on the current prospects for the economy and inflation, including the risks associated with, among other things, the unwinding of the present global imbalances. i will do so against the background of the minutes from this year β s first monetary policy meeting, which were published last week and which gave an account of the executive board β s discussion on 27 january. then i will discuss the riksbank β s remit, different ways to conduct monetary policy and the possible implications of the low inflation rate for future monetary policy. the current monetary policy situation since christmas the news flow has been dominated by the huge tidal wave disaster that hit the countries in the indian ocean. despite the scale and extent of the disaster the consequences for the world economy will probably be very small. that at least has been the conclusion from the different international meetings that have taken place after christmas. international economic activity is thus expected to continue to strengthen and resource utilisation in the world economy to become increasingly higher in the coming years. inflation has risen slightly in most countries, owing mainly to the increasing oil price. but excluding oil, inflation has not risen at the same rate. there are plenty of spare resources in several of the biggest economies, and in recent years competition has toughened in many industries. as a result, international inflation is forecast on the whole to be relatively moderate in the coming years. the economic situation in the us and the euro area in the us the economic situation is continuing to improve. in the fourth quarter last year gdp in the us rose by 0. 8 per cent compared with the previous quarter, partly due to a sharp increase in investment. this reflects a benign investment climate in the us with historically high profits and optimism among firms. indicators of growth prospects for the fourth quarter provide a positive picture of the activity level in the us economy. as resource utilisation has picked up the federal reserve has raised its key policy rate from 1 per cent to 2. 5 per cent. many factors suggest that we can expect the tightening to continue in the spring. inflation is estimated | 1 |
concentrated ownership? i have an open mind on this issue, too. both alternatives have their advantages and disadvantages. a broad ownership may better protect the interests of the minority shareholders, but if financial problems occur the majority owners have stronger incentives to provide capital injections. the governance of a bank is sometimes promoted by having strong owners, but there are also examples of strong owners misusing the bank for their personal purposes. all in all, you should be open to different forms of ownership but monitor them closely. should you allow different forms of banks, such as commercial banks, savings banks, credit unions, development banks and micro - finance institutions? in my view : yes, of course. competition is best served by having a range of bank ownership structures such as shareholding, mutual ownership, nonprofit organisations, etcetera. but having said this i want to warn against certain practices i have experienced in some countries which i would call β compartmentalization β. this happens when the legislation prescribes unnecessary and ineffective borderlines between the allowed activities of defined banking categories. usually, the intention is to ensure limited competition and high profits for the various categories. such restrictions are in effect a subsidy to the banks and they are harmful to the consumers and to the overall economy. the rule - of - thumb should be that any bank should be allowed to conduct any of the generally regulated bank activities if it can prove that it possesses adequate competencies, systems and resources. should there be one set of prudential rules for all institutions conducting bank - like activities or should you differentiate? could there be β light - touch supervision β for small and non - complex institutions for instance in micro - finance or local credit unions or exchange houses? there is no obvious answer to these issues. on the one hand you want to create a fair level - playing field for all bank activities which call for equal treatment. but on the other hand there is no necessity to burden small institutions with the elaborate regulations intended for large and complex banks. as i noted before, there must be a reasonable relation between the amount of regulation and its cost to the institutions. consequently, i would accept the case for lighter supervision of small and non - complex institutions, but there must always be adequate supervision to ensure discipline also for those. even when a small institution fails it causes disruptions and a loss of confidence in banks in general. we have recently had bad experiences in sweden, so if you intend to introduce risk - based supervision i advise you to do | your banking system. where there are shortcomings you must deal with these in the appropriate ways, such as through legislation. while waiting for the preconditions to improve, the authorities and the banks must compensate for the shortcomings. let me stress this again : your banks, as well as other financial institutions, cannot operate efficiently and soundly in an environment where the necessary preconditions are inadequate. regulation banks perform special and unique services to society, such as accepting deposits and transforming them to credits, and for providing payment services. the combination of receiving short - term deposits and extending long - term loans makes banks inherently unstable. for this they may receive some protection by the public, such as the possibility of liquidity support and depositor guarantees. but the price for receiving protection is that banks must be subject to some regulation and supervision. having acknowledged this, i am not a fan of extended bank regulation but rather regulation of a limited and transparent type, intended to protect society against major incidents and costs but allowing banks to conduct and develop their business as flexibly as possible. clearly, bank regulation must aim at promoting efficiency and stability. only efficient banks will remain stable in the long run. the old - fashioned type of regulation forcing banks to do business on other than market - oriented terms must be abolished. if the government wants to subsidize certain activities, such as banking for people in remote geographical locations, mortgage lending on favourable terms, or lending to important borrowers or projects, the costs for this should be transparent and show up as a part of the fiscal budget. such activities should not be conducted by directives from the government to the banks. another type of regulation which is becoming increasingly obsolete and inefficient is when the authorities try to micro - manage the behaviour of the banks by setting upper or lower limits on fees, deposit rates, lending rates, and credit expansion. the situation in the economy changes so rapidly that the authorities will never be able to catch up and their actions could then be more harmful than helpful. the type of regulation i would like to promote is flexible. the regulation will not obstruct developments in banking while at the same time it prevents banks from behaving in a way that might harm customers or themselves, other institutions or markets, or society as a whole. without going into detail i could mention the new basel ii framework for capital requirements on banks as an example of such flexible regulation. under basel ii, banks may assume | 1 |
ravi menon : asia β short - term bumps along long - term growth path remarks by mr ravi menon, managing director of the monetary authority of singapore, at the opening of korea β s national pension service office, singapore, 17 september 2015. * * * dr choi kwang, chairman and chief executive officer, national pension service ladies and gentlemen, good afternoon i am delighted to join you to celebrate the opening of the singapore office of korea β s national pension service ( nps ). this is an exciting development for singapore β s asset management industry. β’ nps manages one of the largest pension funds in the world, with krw 500 trillion of assets under management. the decision by nps to set up an office here is significant. β’ this will be nps β s first overseas office in asia and its third in the world after new york and london. in setting up an overseas office in asia, nps is affirming the long - term growth prospects for the region. nps is clearly taking a strategic view of asia against the backdrop of recent market volatility and moderation in growth. asia β s recent tantrum : what does it mean? financial markets, including those in asia, have experienced a surge in volatility over the past several weeks. β’ equity markets have taken a beating. the stock indices in emerging asia are down by an average of 18 % since their highs in q2 this year, with the chinese stock market correcting the most, by about 40 %. 1 β’ currency markets saw sharp movements. the depreciation of the rmb, alongside a pullback of foreign funds from the region, triggered downward pressures on the region β s currencies. since the rmb move on 11 august, emerging asia currencies have depreciated by an average of 3. 2 % against the us dollar, with some falling by as much as 7 %. 2 while markets seem to have calmed somewhat, a sense of uncertainty prevails and the risk of renewed volatility remains. what is happening? financial markets are essentially coming to terms with four significant β re - pricings β. β’ first, the stock markets in china are adjusting downwards from unsustainably high levels. β’ second, the rmb has become de - coupled from the us dollar and is moving towards a more market - determined exchange rate. β’ third, oil and commodity prices have eased considerably this year, marking the end of what some have called | a β super - cycle β. emerging asia economies refer to china, india, korea, hong kong, taiwan, singapore, thailand, malaysia, indonesia and the philippines. excluding the hong kong dollar. bis central bankers β speeches β’ fourth, the effects of an impending interest rate hike in the us β the first after seven years of extremely easy monetary policy β are being priced in across asian markets. these are not necessarily unwelcome developments. the correction in china β s stock market is not surprising given the stretched valuations that had developed over the preceding year. and it serves to deflate some of the excesses that have built up in the system, such as the rapid rise in margin financing. the 2. 5 % depreciation of the rmb against the us dollar since august is consistent with the divergence in growth momentum between china and the us. it must also be seen in the context of the 15 % appreciation of the rmb in real effective terms during the year to july. the move towards a more market - determined exchange rate is in line with the broader liberalisation and internationalisation of the currency. the gradual tightening of financial conditions in emerging asia as interest rates normalise in the us will serve to rein in the excessive credit expansion seen in some of the regional economies in recent years. it is not a bad thing to break the psychology of monetary overdependence on the part of markets and even some policymakers. talk of currency wars is over - blown and comparisons with the asian financial crisis are over - done. to be sure, some of the gyrations in financial markets have reflected concerns among investors about the moderation of growth in asia. β’ the sluggish recovery in the g3 economies has taken the wind from many tradeoriented asian economies. β’ at the same time, the transition to domestic - led growth has been bumpy. structural reforms to raise human capital, spur new investments and reduce impediments to growth have not proceeded quickly enough in many countries. so, downside risks remain, and there may be further bumps along asia β s growth trajectory. but asia is still expected to grow faster than other emerging economies. β’ in china, debt overhang and excess capacity will be a drag. but sustained monetary and fiscal stimulus measures should help to pre - empt a sharp slippage in economic activity. β’ in the asean countries, a slowdown in export growth will have a negative impact. but public infrastructure spending and private | 1 |
mr. greenspan comments on the current direction of the us economy and the fiscal situation in the united states testimony by the chairman of the board of the us federal reserve system, mr. alan greenspan, before the committee on the budget of the us senate on 29 / 1 / 98. mr. chairman and members of the committee, in just a few weeks, the federal reserve board will submit its semiannual report on monetary policy to the congress. that report, and my accompanying testimony, will give a detailed assessment of the outlook for the us. economy and the implications for monetary policy. this morning, i would like to direct most of my comments to the fiscal situation. but let me begin by offering a few observations about the current direction of the economy. first, it is clear that the u. s. economy has been exceptionally healthy, with robust gains in output, employment, and income. at the same time, inflation has remained low - indeed, declining by most measures - - over the past year. second, to date, we have as yet experienced only the peripheral winds of the asian crisis. but before spring is over, the abrupt current - account adjustments that financial difficulties are forcing upon several of our asian trading partners will be showing through here in reductions in demand for our exports and intensified competition from imports. all of this suggests that the growth of economic activity in this country will moderate from the recent brisk pace. third, as i β ve noted previously, such a moderation would appear helpful at this juncture. the growth of output has caused employment to rise much faster than the working - age population and there are limits to how far this can go. pressures in the labor market likely contributed to the acceleration of wages in recent months. since price inflation has been minimal and domestic profit margins firm, productivity appears to have accelerated sufficiently last year to damp increases in unit labor costs. how long that pattern can continue is still an unresolved issue. the likelihood that we shall be seeing some lower prices on imported goods as a result of the difficulties in asia may afford some breathing room from inflation pressures. but they will not permanently suppress the risks inherent in tightened labor markets. conversely, a continuation of the asian crisis should give us pause in assuming that our economy will remain robust indefinitely. as a consequence, we must be vigilant to the re - emergence of destabilizing influences - - both higher inflation, and shortfalls in demand and decreases in some prices that would press the | . moreover, the cbo projection assumes that discretionary spending will be held to the statutory caps, which allow almost no growth in nominal outlays through fiscal 2002. given the declining support for further reductions in defense spending, keeping overall discretionary spending within the caps is likely to require sizable, but as yet unspecified, real declines in nondefense programs from current levels. not surprisingly, many observers are skeptical that the caps will hold, and battles over appropriations in coming years may well expose deep divisions that could make the realization of the budget projections less likely. in addition, although last year β s legislation cut medicare spending substantially, experience has highlighted the difficulty of controlling this program, raising the possibility that the savings will not be so great as anticipated - - especially if resistance develops among beneficiaries or providers. uncertainties such as these argue for caution as you begin work on the 1999 budget. we have no guarantee that the projected surpluses will actually materialize. an even more important consideration, though, is the need to address the erosion of the budget after the next decade, a task that will become increasingly difficult the longer it is postponed. the favorable budget picture over the next decade, unless steps are taken, will almost inevitably turn to large and sustained deficits as the baby boom generation moves into retirement, putting massive strains on the social security and medicare programs. indeed, especially in light of these inexorable demographic trends, i have always emphasized that we should be aiming for budgetary surpluses and using the proceeds to retire outstanding federal debt. this would put further downward pressure on long - term interest rates, which would enhance private capital investment, labor productivity, and economic growth. the outpouring of proposals for using the anticipated surplus does not bode well for the prospect of maintaining fiscal discipline. in recent years the president and the congress have been quite successful, contrary to expectations, in placing, and especially holding, caps on discretionary spending. more recently, they have started to confront the budget implications of the surge in retirements that is only a decade away. we must not allow the recent good news on the budget to lull us into letting down our guard. although many of the individual budget proposals may have merit, they must be considered in the context of a responsible budget strategy for the longer run. over the decades our budgetary processes have been biased toward deficit spending. indeed, those processes are strewn with initiatives that had only a small projected budgetary cost, but | 1 |
institute of supply management manufacturing composite index rose from october to december 2011. improvements were particularly notable in new orders and production activity. stronger growth of consumer spending on durable goods is likely boosting the manufacturing sector. in addition, growth of u. s. exports has been well maintained, while import growth has been subdued. alongside the somewhat stronger near - term growth we have also seen some improvement in the labor market. workers are filing fewer initial claims for unemployment insurance. new claims have fallen to levels not seen since mid - 2008. private - sector employees are working more hours. aggregate hours worked rose at a 3 percent annual rate in the fourth quarter of 2011, up from essentially no growth in the third quarter. combined with average hourly earnings rising at a 1. 8 percent rate, the increase in hours worked suggests an annual rate of bis central bankers β speeches increase in private wage and salary income of close to 5 percent. this is a respectable rate that might support more spending β if sustained. a firmer labor market has been accompanied by partial recovery in consumer confidence over the past few months. confidence is rising up from levels that were often β in the third quarter of 2011 β lower than at the depths of the great recession. it should be noted that while workers β hours grew at a healthy pace in the fourth quarter, employers added an average of just 140, 000 payroll jobs per month, somewhat less than in the third quarter. despite this rather tepid increase in jobs, the unemployment rate fell a cumulative 0. 5 percentage points from september to december. this apparent discrepancy is due to two factors β faster job growth as measured by the household survey and an outright decline of the labor force. workers aged 25 to 54 have been particularly prone to dropping out, which suggests that the decline in the unemployment rate may overstate the improvement in labor market conditions. despite some improvements, the economy continues to operate with significant excess slack. less than 59 percent of the u. s. working - age population has a job. this is unacceptably low β just about the same share as in late 2009 and well below the levels in 2006 and 2007. once again, this large amount of slack is putting downward pressure on trend inflation. after a brief run - up during the second quarter of 2011 β reflecting the pass - through from higher commodity prices and supply - chain disruptions β inflation has retreated and may be headed down further. as i noted earlier, it is unlikely that the faster growth experienced in | prasarn trairatvorakul : thailand β s financial challenges in global capital markets speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the thailand focus 2012 β positioning thailand for the next growth phase β, bangkok, 29 august 2012. * * * it β s an honor to speak before you today at the thailand focus conference. this morning you heard finance minister kittiratt na ranong speak on thailand β s competitiveness and fiscal policy. later on in the conference, other distinguished speakers will discuss thailand β s investment opportunities in greater detail. to complement the picture, i will speak on monetary policy to complete your views on the investment opportunities and prospects of the thai economy. as international investors, i believe you need to have a firm understanding of the country β s policy direction β something that is sorely needed in the current uncertain global economic environment. so today i will share with you my thinking on the monetary policy options going forward in light of my assessment of the global economy and the risks to the thai economy. the organizer of this conference, president charamporn, has kindly asked me to talk about β financial challenges in global capital markets β. this is an especially relevant topic because, this year, the key challenge for thailand is the challenge of weathering the financial and economic turmoil from the euro crisis. more than one year ago, i had the honor of giving a talk here. some of you who were in attendance may recall that i labeled 2011 β the year of rebalancing β for monetary policy. why β rebalancing? β because we were steadily raising interest rates toward normal territory amid global and domestic economic recovery. well, that was one year ago. one year can be a long time, especially for financial markets. and, indeed, things have changed a great deal since then. we had the flood ; and the euro crisis. interest rate hiking was put on hold and rebalancing postponed amid post - flood recovery and reconstruction and especially amid global uncertainty due to the euro. now we project global economic recovery to be weaker than believed since the financial crisis in 2008. so if last year was the β year of rebalancing β what is this year? for monetary policy, this year is a year of risk and reassessment. by risk i refer to the possibility that the euro crisis may spread to asia and thailand. and by reassessment, i refer to how | 0 |
we have won four global innovation awards in three consecutive years. while we can be proud of these achievements, i believe that much remains to be done. there is a famous quote by the american sociobiologist edward o. wilson that continues to occupy my thoughts of late : " the real problem of humanity is the following : we have palaeolithic emotions, medieval institutions and godlike technology. " you know that i spend a great deal of my waking hours thinking about the implications of the changing financial services environment we find ourselves in today. it's an increasingly complex landscape, where we are facing geopolitical, climate and operational resiliency risks emanating from third party dependencies and cyber - attacks. we are facing changes to business models incorporating partnerships and responding to competition from and new entrants bigtech and fintech. and the exponential growth of the global markets since the great financial crisis in the interconnectedness of entities categorized as non - bank financial institutions with banks, especially private credit and equity funds operating outside the regulatory perimeter, is concerning, even worrying as we think about the effects on supervision and financial stability. successfully connecting our technology and people to empower them in this changing landscape is essential. i would say that if we want to truly equip pete for the future, it's clear that our work has only just begun. thank you very much for your attention. i hope you enjoy the rest of the conference. 6 / 6 bis - central bankers'speeches | proper context. a new wisdom from financial globalization, however, is emerging. as professor rodrik will probably agree, reaping the benefits from globalization is by no means automatic. globalization, financial or trade liberalization, all need supporting institutions for their gains to materialize. furthermore, past experiences according to professor michael bordo of rutgers university, also indicate that although the globalization winners appear to outnumber losers in an increasingly integrated world, it is still possible that the losers ( even temporary ones ) can create a backlash that will once again cause a retreat in the globalization process. ladies and gentlemen, it is obvious that a global financial crisis will need a global solution. this symposium on financial globalization is thus very timely and come at a time when policy makers and market participants are in dire need of a better solution. and this year, we are honored to have with us many distinguished speakers from well - regarded institutions to discuss this important topic. we have professor dani rodrik of harvard university as our keynote speaker on the topic of β the disappointments of financial globalization β, followed by five leading international researchers, namely dr. claes berg, sveriges riksbank ; professor raghuram rajan, university of chicago ; professor jose antonio ocampo, columbia university ; dr. arvind subramanian, the peterson institute for international economics ; and dr. robert mccauley, bank for international settlements who will be presenting their in - depth studies over the next two days on broad range of issues, a part of which i have barely begun to touch upon. this symposium will also be rounded up by a panel discussion on β financial globalization in emerging market economies β which should provide an interesting discussion on the implication of financial globalization and the current financial crisis from an emerging market perspective. ladies and gentlemen, i would like to conclude by saying that the recent developments in financial markets around the world will stimulate considerable review and analysis in the months and years to come. across the globe, legislatures, regulators, financial supervisors are already hard at work trying to distill the lessons to be drawn from this experience and their implications for future policies. for the private sector, banks, credit - rating agencies, and the investment community are also trying their best in coping and adapting to these developments. for central banks, the implementation of monetary policy will certainly become a more challenging task as a result of the current financial turmoil. a lasting stabilization of the financial system obviously requires a holistic policy approach which successfully | 0 |
, however, the recovery in the growth of the economy in the medium term will be that of a balanced, diversified growth as both the mining and non - mining sectors are expanding. economic prospects for the next five years are particularly positive as gdp is projected to grow on average at a rate slightly below 5 % per year between 2001 and 2005. for the ensuing five years beyond 2005, growth is expected to fall to an average of around 4 %. the balance of trade deficit is forecast to deteriorate during the first half of the decade as the terms of trade will continue to deteriorate. this is further compounded by the envisaged reduction in sacu revenue. consequently, the current account of the balance of payments will become negative for the first time since data were recorded. the current account deficit, together with persistent capital outflows, yield a balance of payment shortfall for the large part of the forecasting period, implying that the internal reserves of the country will be falling. at the end of 1999, the level of reserves was equal to an import coverage of 8. 3 weeks. it should be the authorities β objective over the next ten years to increase this coverage. chart balance of payments projections 2000 - 10 f or e cas t s ( 2000 - 2010 ) β’ b alance of payme nt s - 1 - 2 - 3 - 4 - 5 cu rre n t a c c % g dp - 6 o v e r a ll b o p b a la n c e % g d p public finance public finance projections are based on the assumption that the budget deficit for the next ten years remains at a level of not more than 4 % in relation to gdp. revenue from mining is expected to rise in the first half of the decade, but this positive trend is likely to be offset by the declining sacu receipts. although the magnitude of the fall is still being investigated, preliminary evidence suggests that revenue from this source could shrink by as much as 15 % over the next ten years. government expenditure is forecast to remain stable at the level witnessed during the past two years. chart budget deficit forecast growth 2000 - 10 f or e cas t s ( 2000 - 2010 ) β’ b udge t de f icit deficit as % of gdp - 1 - 2 - 3 - 4 - 5 - 6 - 7 actual 1990 / 91 actual 1992 / 93 actual 1994 / 95 actual 1996 / 97 actual 1998 / 99 forecast forecast forecast forecast forecast forecast the consequence is | the question is what namibia can do to bring the economy on a path of sustainable and healthy growth. as i have already emphasised the point, investments in physical and human capital must continue. however, it is far from obvious that high initial investments and savings are sufficient preconditions for growth. the relatively high saving ratio in namibia has not been transformed into high investment and growth. as mentioned, one important explanation has been low and declining factor productivity in the economy. public investment will remain important, but investment opportunities must also be made available to the private sector. although our present knowledge strongly indicates that investment is probably the factor closest correlated with growth, it is crucial to identify other relevant factors that will trigger investment and growth in namibia. advances in production efficiencies and technology are such important factors, but so is the complicated interplay between economic and political factors. let me start with sound macroeconomic policies. sound macroeconomic policies basically mean a sustainable fiscal balance and a supportive monetary policy. the pressure on the public finances has been growing in recent years and the budget deficit has been edging up and public debt has increased as a result. among the new challenges that will affect the budget, is the reduced sacu receipts over the next few years. as our fiscal policymakers are aware, bold measures are needed to make sure public finances are put on a sustainable path over the medium term. these will include reduced expenditure on recurrent expenditures, especially on personnel costs, and a broadening of the tax base. this should not increase the general tax burden, but rather contribute towards its reduction. the announced review of the tax system and the introduction of a medium term budgetary framework will undoubtedly contribute to a more efficient tax system and strengthened expenditure control. turning briefly to monetary policy, we believe that the peg of the namibia dollar to the rand and our membership in the common monetary area ( cma ) have contributed to securing broad financial stability. our objective is to expand the role of the cma in the direction of a true regional monetary union. recent initiatives have strengthened the role of the smaller members in information exchange and in providing input into the monetary policy making process in the cma. also within the domain of the central bank is our payment system reform project, which is aimed at establishing an automated payments system that is able to link up with regional and global systems. this would facilitate foreign trade and make monetary policy and supervision more effective. the bank is also committed to the steady liberalisation of exchange controls | 1 |
avenue. combined with a carefully designed framework of targeted and temporary financial support, they should contribute to fostering structural reforms and thereby strengthening competitiveness. ideally, the reform contracts should focus on countries with the largest competitiveness challenges. they should identify the structural bottlenecks to improving competitiveness and target the reforms in a way that will remove those bottlenecks. this would establish a clear link between reforms and restoring competitiveness, which is essential for growth and job creation. smooth functioning of product and labour markets is a prerequisite for growth and job creation in emu. i therefore welcome the announcement that next year the european commission will undertake a systematic review of product and labour markets. for euro area countries the review should allow to assess whether these markets are fully compatible with participation in emu. here, product and labour markets must provide for enhanced adjustment capacity to adapt to a changing global economic environment and ensure sustained high levels of employment. the second priority for 2013 from the ecb β s perspective is the completion of financial union with the establishment of a single resolution mechanism. the aim of resolution is to deal with non - viable banks through measures that include their orderly winding down and closure while preserving financial stability. such a mechanism will make it possible for banks to fail in an orderly manner. improving economic union by restoring competitiveness and the functioning of product and labour markets on the one hand, and setting up a single resolution framework on the other hand are key priorities for 2013. this committee has always pushed for ambitious european solutions in the field of financial and economic governance. i am confident that you will again play an instrumental role in moving the agenda forward and adopting the relevant legislative proposals. thank you for your attention. i am now at your disposal for questions. bis central bankers β speeches | this implies that central banks revisit the central bank money services they provide with the objective of adapting them to the digital age. this is necessary for the services provided in the wholesale sphere, for the settlement of transactions between financial intermediaries, which are the most important from a systemic risk perspective. today, central bank money is the very dominant settlement asset in that space because it is the safest and most liquid settlement asset on supply. it is essential that tomorrow it remains so, in particular if tokenized finance takes off. these attributes of central bank money cannot be matched by stablecoins or commercial bank money. 2 / 3 bis - central bankers'speeches hence our strong and early involvement at the banque de france in a large - scale experimentation program on wholesale cbdc with a number of market participants ; and the announcement by the ecb a few days ago that the eurosystem will explore potential solutions for central bank money settlement of wholesale financial transactions recorded on dlt platforms. adapting our central bank money services might also be necessary in the retail space. hence the in depth investigations led by the ecb with the ncbs of the eurosystem. a digital euro would contribute to the anchoring role of central bank money by offering to the general public cbm in a form that would be complementary to banknotes and adapted to the growing demand of the public for digital payments. in addition, a digital euro would contribute to strengthening our strategic autonomy. to conclude, let me just stress that it is not clear to me what is going to be the destiny of digital finance and the shape that the financial landscape will eventually take as a result, in the medium run. market forces will decide. but what is clear to me is the role we, as a central bank, should play, which is to make sure that the shape evolves in a confidence prone regulatory and operational framework, which implies that we play an active role to help build that framework on both aspects, in line with our mandate. 3 / 3 bis - central bankers'speeches | 0 |
sheryl kennedy : real estate, mortgage markets, and monetary policy remarks by ms sheryl kennedy, deputy governor of the bank of canada, to the investment industry association of canada, banff, alberta, 23 june 2008. * * * good afternoon. it's great to be in banff β today especially. on this day in 1887, parliament enacted the rocky mountains park act, which established banff as canada's first national park. happy birthday, banff national park! i am delighted to be at this iiac conference. just as parks and conservation are vital for our, and our children's environmental and spiritual well - being, sound investment is vital for our long - term economic and financial well - being. for many canadians, one of the most important investments they'll make is the purchase of a house. and for you as financial market professionals, the links between the housing market and financial markets have important consequences. today, i'd like to speak about housing and how it interacts with the economy, financial markets, and monetary policy. over the past 10 years, the canadian housing market has exhibited a good deal of strength. demand, supply, and prices have increased [ chart : housing activity in canada : 1998 - 2008 ]. but while the canadian real estate market does not currently exhibit the generalized signs of excess we see in some other countries, 1 we cannot afford to be complacent. after a fairly substantial run - up, real house prices have declined in the united states, the united kingdom, and spain, and canadians would be wise to remember that house prices can fall as well as rise [ chart : changes in real house prices in the u. s., the u. k. and spain ]. it wasn't that long ago β in the late 1980s and early 1990s, to be exact β that canada experienced its own real estate boom and bust. it took a decade after that before we saw activity pick up and real prices increase [ chart : changes in real house prices in canada ]. more recently, of course, we have seen in this part of the country a strong housing market cycle. the current state and likely future evolution of the housing market in canada have implications for the economy, financial markets, and policy - makers. i will describe these implications later, but first i'd like to set the stage by discussing the role of housing in the canadian economy and some of the factors that drive housing activity and prices. housing | amando m tetangco, jr : sustaining growth while riding the uncertainty speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the bloomberg β s foreign exchange forum, makati, 13 august 2014. * * * introduction β caution in a time of uncertainty good afternoon. seeing all of you here once again validates my theory that indeed there is a strong correlation between volatility and attendance in a forum like this one β to listen to the central bank talk about uncertainty. from a smaller function room downstairs where we used to hold this forum, we have been kicked upstairs to this ballroom. holding this discussion now also shows bloomberg β s knack for getting the timing right. your interest confirms that the most common reaction to uncertainty is caution. think about it, if you are about to undergo your annual physical, don β t you modify your eating habits and hold off on that last piece of β lechon β? however, how long you feel you need to deprive yourself depends on your β initial conditions β. if you are in fairly good health, maybe you would only skip one craving for that savory bite and you would still be confident to walk into the doctor β s office. the same reality applies to the financial market. 1 ) when market participants sense uncertainty, they proceed with caution and 2 ) the impact of uncertainty on your behavior will depend on initial conditions. if uncertainty finds you at a time of high market volatility, you are likely to be more nimble, than when uncertainty finds you at a time of low volatility. right now we are in a low volatility environment. some analysts say volatility is β eerily β low. there is even an assessment that markets have become β too β complacent. is that the case among market participants in the philippines? i hope not. see, the thing with β uncertainty β is that the degree of uncertainty is itself uncertain. therefore, we really cannot, and should not be complacent. because however quiet markets seem to be now, risks remain. risks remain what are these risks that we face today? let me name four that are top of mind : 1 ) monetary policy normalization in advanced economies. the consensus, as i understand it, is that the fed would continue with its current pace of tapering. the operative question now therefore is when will | 0 |
andres sutt : macroeconomic co - ordination and fiscal policy in the expanding eurozone statement by mr andres sutt, deputy governor of eesti pank ( bank of estonia ), at the conference β thinking euconomy - wirtschaftspolitik europaisch denken β, berlin, 3 may 2006. * * * the enlargement of the european union with the clear message that all countries without an opt - out clause will, in the future, be also members of the emu, is a most welcome and forward - looking approach in view of an ongoing globalisation and integration processes in the world. eventually, the adoption of the single currency by all member states provides clear benefits for the union as a whole. from the macroeconomic point of view it would support further economic integration and higher growth rates by fostering trade and investments. therefore, euro area enlargement will provide tangible benefits for all european citizens over time. the main policy challenge for both the current and prospective euro area members is to ensure that the best use is made of the monetary stability provided by the framework of the european system of central banks ( escb ). from the perspective of the new member states, the issue at stake is how to maintain the economic structure supportive for sustained growth and rapid real convergence. strong fiscal stance is instrumental in this regard. convergence programs of the new member states should include ambitious medium term objectives to ensure that not only the maastricht criteria are met, but most importantly, the emergence of excessive deficit situations is avoided and the risks of taking recourse to exchange rate adjustments after joining the erm2 ( and, eventually, the euro area ) are minimized. the well functioning single market for all goods and services, including infrastructure networks, as well as pursuing the national reform programmes in the context of the reinforced lisbon agenda is the other pillar for the success of the euro area and for the new member states in particular. estonia has been a de facto member of the euro area since the inception of its independent currency in 1992. fixing the local currency to d - mark, and later to the euro meant that the monetary policy decisions were not made in estonia. estonia's currency board regime implies prudent fiscal stance that has been largely adhered to since 1992, resulting in our general government having accumulated a relatively large net asset position of around 10 percent of gdp. a solid budgetary position and early deregulation of product and capital markets implies that estonia has been | well placed to absorb both positive and negative shocks during the last 15 years. deregulation and reform in preparation of the eu membership has allowed us to fully integrate our economic and financial systems with the single market. however, that kind of approach requires, in today's conjuncture, forward - looking structural reforms in almost all eu member states, e. g. in the product, services and labour markets, healthcare and social insurance systems etc. for estonia the adoption of the euro is the only logical step and the overarching policy priority. in this context, we would like to emphasize that it is in the interest of the whole european union that the euro area enlargement takes place in accordance with the clear set of well known rules while the criteria are applied, in line with the treaty provisions, on an equal and economically meaningful manner. the countries joining should have a proven track record to fare well under the common monetary policy. this being the case, the euro area membership would fasten the catch - up process in these countries and strengthen the countries'ownership in the eu - wide macroeconomic co - operation at large. macroeconomic stability and economic flexibility are prerequisites for the new member states to ensure that investment in physical and human capital is sustained and outlays for research and development further increased. higher growth and stronger policy coordination on the eu level will also strengthen the social dimension of enlargement. | 1 |
toshihiko fukui : a review of the bank of japan β s conduct of monetary policy statement by mr toshihiko fukui, governor of the bank of japan, concerning the bank β s semiannual report on currency and monetary control, before the committee on financial affairs, house of councillors, tokyo, 31 march 2005. * * * introduction the bank of japan submitted its semiannual report on currency and monetary control for the first half of fiscal 2004 to the diet in december 2004. i am pleased to have this opportunity to present an overall review of the bank β s conduct of monetary policy. i. developments in japan β s economy japan β s economy is still at a pause due to such factors as the ongoing adjustment in the production and inventory of it - related goods. the underlying mechanism for economic recovery, however, continues to operate steadily and production, which was somewhat weak some time ago, has been more or less flat recently. the economy is therefore expected to emerge from this pause before long and to continue recovering and move to a sustainable growth path. in more detail, overseas economies, particularly those of the united states and china, are expected to continue to be on an expanding trend. adjustment in it - related goods is likely to be completed before long, partly because manufacturers started adjustments at an early stage while demand was increasing. in light of this, exports and production are expected to increase. corporate profits and business fixed investment are expected to remain on an increasing trend, as structural adjustment pressure stemming from firms β excess capacity and debt has been easing. in addition, household income has clearly stopped declining while the employment situation continues to be on an improving trend. private consumption, therefore, is expected to show signs of a gradual increase. attention should, however, continue to be paid to developments in it - related demand and crude oil prices, which have been at high levels recently, and their impact on the domestic as well as overseas economies. on the price front, domestic corporate goods prices had been rising since the beginning of 2004, but they have been somewhat weak recently. as for the outlook, they are likely to become relatively strong again, due to the rise in the prices of crude oil and other commodities at home and abroad. consumer prices ( excluding fresh food, on a nationwide basis ) continue to fall slightly on a year - on - year basis in a situation where they have been less responsive to the economic recovery, reflecting the increase in productivity and the restraint on labor costs by | not face the need to adjust production capacity and employment. as for prices, the bank is focusing on the upside risks to inflation. as i mentioned earlier, energy and materials prices have been rising for a long time and this rise should not be regarded as " temporary. " moreover, given that japan's economy has not faced such a high level of inflation in recent years, the bank should pay attention to the risk that possible changes in the inflation expectations of households and firms'price - setting behavior may generate second - round effects. as i have explained, the current situation requires the bank to carefully monitor both downside risks to economic growth and upside risks to inflation. furthermore, it should be mindful of the risk that if the downside risks to the economy turn out to decrease, prolonging the period of accommodative financial conditions may lead to swings in economic activity and prices, as the recent experience of the world economy suggests. the bank continues to carefully assess the future outlook for economic activity and prices, closely considering the likelihood of its projections as well as factors posing upside or downside risks, and will implement its policies in a flexible manner. moreover, since global financial markets are expected to remain unstable and there are various uncertainties in the outlook for economic activity and prices, it is essential for the bank to ensure the stability of the japanese financial markets. closing remarks thus far, i have spoken about the issues facing japan's economy and the bank's thinking regarding the conduct of monetary policy. it takes about one and a half to two years for the effects of monetary policy to permeate throughout the economy. it is therefore extremely important to make macroeconomic projections for the period covering this lag. you may be able to imagine the difficulty in making an accurate projection. however, speaking from my own experience as a policymaker, it is not easy even to grasp the current state of the economy. to succeed in doing so, a close analysis of both macroeconomic indicators and microeconomic information is essential. the indicators and information have both advantages and disadvantages. macroeconomic indicators are important, but do not show the most recent developments due to the lag between the relevant period and the time of release. on the other hand, microeconomic information that is gathered through interviews with firms has an advantage of a minimal lag. the latter also includes information that cannot be expressed numerically, such as business sentiment. however, it also has drawbacks : there often is a | 0.5 |
ready to act as a mediator to voice the concerns to the appropriate international channels. as a result, where possible, banks in thailand are now pursuing a coordinated effort for a better implementation of basel ii. such effort can be as close as forming an alliance to pool the necessary data for model development, or as loose as sharing the costs of training and seminar similar to the one we are having here today. i should now end my talk. it has been a pleasure to share with you a regulator β s perspective on the implementation of basel ii and ifrs. i hope my remarks and observations have been useful. we are traveling on an important and challenging path towards achieving a robust and resilient financial system, and steady progress is being made. you, as a key stakeholder, are also an important part of this journey. i wish the rest of the seminar great success and accomplish its objective, and be interesting and educating to all. thank you very much. | amando m tetangco, jr : strengthening the foundation for effective governance speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the induction of officers and annual general membership meeting of the bankers institute of the philippines ( baiphil ), makati city, 24 july 2007. * * * the newly elected officers and directors of baiphil led by its president and bsp assistant governor ms. ma. dolores b. yuvienco, my colleagues at the mb ( mbm valdepenas, boncan, villafuerte, antonio ) prime minister virata, gov. laya, gov. cuisia, sec chairman barin, members of the institute, bank chairman, vice - chairman, presidents, other distinguished guests, fellow bspers, ladies and gentlemen. first of all, let me thank you for inviting me to be your inducting officer and guest speaker in this year β s general membership meeting. it is an honor to be here. i am very pleased to be here today for your annual general membership meeting for several reasons. first, we at the bangko sentral ng pilipinas look at the bankers institute of the philippines more popularly known as baiphil s our partner in strengthening our banking system through research, information exchange and education. in fact, baiphil is one of only seven institutions accredited by the bangko sentral to conduct mandatory corporate governance seminars for bank directors. second, the theme chosen by baiphil β s new set of officers and directors for the fiscal year 2007 to 2008 echoes our own focus at the bangko sentral, which is : β enhancing internal governance a continuing journey. β indeed, good corporate governance is a must for banking institutions, whether they are private or government. you can say that we at the bangko sentral walk the governance talk. while i will be the first to say that we are not perfect, it is not for lack of trying. in fact, it is a continuing topic in our planning sessions. like baiphil, we at the bangko sentral believe that for as long as the environment where we operate remains dynamic, there will always be room to enhance governance ; it is a continuing journey with no finish line. we at the bangko sentral ng pilipinas are also pleased that assistant governor dolly yuvienco has been elected president of baiphi | 0 |
that while vulnerabilities associated with household indebtedness and housing markets are edging higher, the overall risk to financial stability in canada is roughly the same as it was at the time of our june fsr. with that, carolyn and i are happy to take your questions. bis central bankers β speeches | a case to case basis. this goalpost has already been set and we need to reach it in the most cost - effective manner, preferably keeping pace with other jurisdictions. i know that professor avinash persaud and mr. percy mistry have delved into the issues concerning basel 2 at a deeper level, having had knowledge of how things are moving in the commonwealth and other countries. i trust that they can enlighten us more fully about the direction we can practically take in our specific context of a small and emerging economy. it is therefore my pleasure to leave the floor to them to throw light on how best the regional economies can deal with the new challenge that the implementation of basel 2 represents and i invite you to participate actively in the exchange of views due to take place over the next couple of days. i know that discussing about banking risks in the beautiful setting of this tourist resort is not the ideal thing to do but the trade - off may be well worth the while for the short duration of the workshop. thank you for your attention. | 0 |
exchange rates, because of the interest rate differentials. the success and sustainability of the monetary union will depend at least partly on its credibility. crucial to its credibility will be fiscal discipline and this requires fiscal rules to prevent free riding by any individual partner state. in a monetary union, the costs of fiscal indiscipline by one member of the union are partly externalised to the other members. the possibility that the profligate sovereign borrower might be bailed out, directly or indirectly through higher inflation, by its partners, will drive up public borrowing costs for all members of the monetary union. the future of the monetary union itself could be thrown into doubt if the financial markets and public believe that a member with serious fiscal problems cannot solve these problems within the monetary union, essentially because the solution would be too deflationary, and hence opts to leave the monetary union. this is the concern which many commentators have expressed in relation to the current economic and fiscal problems of greece. to avoid these problems we must put in place binding, transparent fiscal rules covering fiscal deficits and public debt, which will operate both during the transition to monetary union and after the monetary union has been established. i trust that the principle of fiscal rules is generally understood and accepted within the east african community. however there are some who argue that these rules should be made less stringent β i. e. the fiscal deficit targets should be loosened β to allow for much higher public spending, on the grounds that there are large unmet demands for public investment within the east african community. unfortunately this misses the point. if the monetary union is to be successful, the targets for fiscal deficits and public borrowing must be tight enough to ensure that the partner states of the monetary union run fiscal policies which are sustainable, and are perceived to be sustainable by the markets, even in the face of adverse fiscal shocks, such as a cyclical downturn in the tax base or a cutback in donor aid. conclusion the 21st century global economy will present enormous opportunities for east africans to lift their economies to middle income status, raise living standards and eradicate mass poverty. we will be much better placed to take advantage of these opportunities and to face up to the challenges if we can achieve deep and meaningful integration of the east african economies. monetary union is an essential component of regional economic integration. establishing a monetary union in east africa will be difficult and will pose risks. it will require an enormous amount of work to reform institutions, change legislation | the ministry of finance planning and economic development, the ministry of justice and constitutional affairs, the uganda communications commission, the capital markets authority, the uganda bankers association and the technical staff from bank of uganda. in a special way we would like to thank the eac and the african development bank for the support provided under the eac - payment and settlements system integration project. the next steps after the stakeholders workshop will be as follows : to incorporate comments from the workshop. the draft bill will be submitted to parliament through the minister of finance planning and economic development for the enactment of the payment systems law followed by the president β s assent. bank of uganda will then operationalize the law. with these remarks, i wish the stakeholders interactive and fruitful deliberations. | 0.5 |
. some of the weakness in economic activity in the first half of the year was due to temporary factors such as the hit to household income from higher food and energy prices, and supply chain disruptions following the tragic earthquake in japan. these restraining forces have abated and thus, we should see stronger growth in the second half. but it is clear that not all of the weakness was due to these one - time factors β and in light of this, i have revised down my expectations for the pace of recovery going forward. on the inflation front, the committee noted that inflation has moderated recently as energy and commodity prices have declined from their peaks β having picked up earlier in the year, mainly reflecting higher prices for commodities and imported goods, as well as the supply disruptions from japan. longer term inflation expectations remain stable, and the committee now expects inflation to settle over the coming quarters at levels at or below those consistent with our mandate to promote full employment and price stability. in light of the current outlook, the fomc in its statement noted that we now anticipate that we are likely to keep short - term interest rates exceptionally low at least through mid - 2013. we also discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. further details on the discussion at the meeting will be available when the minutes are published later this month. i will not comment on monetary policy any further today. following the release of the fomc β s statement, market interest rates generally moved lower, which should help provide some additional support for economic activity and jobs. i would note, however, that conditions remain unsettled and the equity market in particular has been quite volatile recently. regional economic conditions so how is our region doing? let me start by saying that new jersey is well - positioned for growth. the state has a population of 8. 8 million, the 11th largest state, and despite the fact that this is a fairly mature region, the state β s population expanded by 4. 5 percent over the past decade. more than 40 percent of the population 25 years of age and older in the state have a college degree, a full 5 percentage points higher than the national average. our population is quite ethnically diverse : roughly 20 percent of the state β s residents were born abroad, and that share is even higher in essex and bergen counties. significant numbers of the foreign born residents in the state come from india, mexico, the philippines, the dominican republic | 2 / 4 bis - central bankers'speeches 1. it is easy to understand the risk profile of some blended instruments such as guaranteed loans. but other blended instruments have more complex structures. it is difficult to create a universal framework for all blended instruments. 2. as i mentioned earlier, the risk does not disappear. it is shifted from one balance sheet to another. this other balance sheet sometimes sits in the domestic financial system and sometimes sits in another jurisdiction. for financial sector supervisors, this creates a significant level of complexity around how we think about the risk profile of blended finance. we need to understand the balance sheets of the institutions that we supervise but also of those institutions that provide risk insurance. many of our tools such as risk ratings and internal capacity adequacy are based on historical data. climate - related risks and those associated with new financial instruments require forward - looking analysis, which is often characterised by high levels of uncertainty. this often leads to a higher pricing of risk. global standard - setting bodies recognise this challenge and have prioritised climaterelated risks in their work plans. now to the last question. how do we mitigate against risks related to blended finance instruments? many efforts to improve climate - related information flows in financial markets and enhance reporting by financial institutions can help with scaling up blended finance by helping central banks to better understand the risks associated with these instruments and mitigate them more effectively. this, however, is impossible without greater international cooperation as risks shift from one jurisdiction to another. blended instruments will increase financial linkages and require a greater exchange of information across different jurisdictions. financial sector regulators need to develop new skills and research capabilities to understand the various implications of the climate transition on the financial system. more importantly, we need to understand how the combination of different structural changes is likely to impact financial stability. for example, the rapid deployment of artificial intelligence ( ai ), in addition to the climate transition, is likely to have profound effects on the financial system and generate significant financial innovation. scenario analysis and transition planning can help financial regulators in understanding future pathways and the associated risks. there have been advances and improvements but data quality and consistency need to be enhanced, particularly in emerging market and developing economies. in conclusion, we need a massive increase in financing for the climate transition but also to adjust to other structural challenges. central banks and financial regulators have an important role in ensuring that the financial system is resilient to shocks and scales up fundings. however, our efforts to increase blended | 0 |
element in the ongoing deliberations of both economists and jurists. of particular current relevance to our economy overall is the application of property right protection to information technology. a noticeable component of the surge in the trend growth of the economy in recent years arguably reflects the benefits that we have derived from the synergy of laser and fiber optic technologies in the 1960s and 1970s. this synergy has produced very little that is tangible in information technology. yet the information flow that it facilitates has fostered the creation of vast amounts of wealth. the dramatic gains in information technology have markedly improved the ability of businesses to identify and address incipient economic imbalances before they inflict significant damage. these gains reflect new advances in both the physical and the conceptual realms. it is imperative to find the appropriate intellectual property regime for each. * * * if our objective is to maximize economic growth, are we striking the right balance in our protection of intellectual property rights? are the protections sufficiently broad to encourage innovation but not so broad as to shut down follow - on innovation? are such protections so vague that they produce uncertainties that raise risk premiums and the cost of capital? how appropriate is our current system - developed for a world in which physical assets predominated - for an economy in which value increasingly is embodied in ideas rather than tangible capital? the importance of such questions is perhaps most readily appreciated here in silicon valley. rationalizing the differences between intellectual property rights as defined and enforced in the united states and those of our trading partners has emerged as a seminal issue in our trade negotiations. if the form of protection afforded to intellectual property rights affects economic growth, it must do so by increasing the underlying pace of output per labor hour, our measure of productivity growth. ideas are at the center of productivity growth. multifactor productivity by definition attempts to capture product innovations and insights in the way that capital and labor are organized to produce output. ideas are also embodied directly in the capital that we employ. in essence, the growth of productivity attributable to factors other than indigenous natural resources and labor skill, is largely a measure of the contribution of ideas to economic growth and to our standards of living. understanding the interplay of ideas and economic growth should be an area of active economic analysis, which for so many generations has focused mainly on physical things. this work will not be easy. even as straightforward an issue as isolating the effect of the length of patents on overall economic growth, a prominent issue recently before our | , β why is involuntary part - time work elevated? β feds notes ( washington : board of governors of the federal reserve system, april 14 ). bis central bankers β speeches tightness in the labor market. here too, however, the signal is not entirely clear, as other factors such as longer - run trends in productivity growth also generally influence the growth of compensation. key measures of hourly labor compensation rose at an annual rate of only around 2 percent through most of the recovery. more recently, however, some tentative hints of a pickup in the pace of wage gains may indicate that the objective of full employment is coming closer into view. recent inflation developments while the labor market has moved closer to the fomc β s mandated goal of maximum employment, less progress has been made in moving inflation close to the fomc β s longerrun objective of 2 percent, which the committee considers to be consistent with our mandated goal of price stability. overall consumer price inflation has been close to zero over the past year, in large part because the big drop in crude oil prices since last summer has pushed down prices for gasoline and other consumer energy products. price inflation excluding the volatile categories of energy and food prices, or so - called core inflation, is often a better indicator of future overall inflation. but it too is running below our 2 percent objective and has been over most of the recovery. the recent low level of core inflation - 1. 2 percent over the past 12 months - partly reflects the appreciation of the foreign exchange value of the u. s. dollar during the second half of last year, as global financial markets seemed to judge that our economy was relatively stronger than those of many of our trading partners. the stronger dollar has pushed down the prices of imported goods, and that, in turn, has put downward pressure on core inflation. in addition, the plunge in oil prices may have had some indirect effects in holding down the prices of non - energy items in core inflation, as producers passed on to their customers some of the cost savings from lower energy prices. in all, however, these downward pressures seem to be abating, and the effects of these transitory factors are expected to fall out of measures of inflation by early next year. very low inflation may not sound like a real problem to many people. however, persistently low price inflation, which can tend to slow the pace of wage increases over time, can weaken the economy by, for example, making it more difficult for households and firms | 0.5 |
frank elderson : prudential pathways to paris contribution by mr frank elderson, member of the executive board of the european central bank and vice - chair of the supervisory board of the ecb, on the panel β sustainable finance : what is expected from transition scenarios? β at the eurofi high level seminar 2022, frankfurt am main, 23 february 2022. * * * many thanks to the organisers for letting me participate remotely in this panel alongside such distinguished speakers. and thank you to the chair of the panel for allowing me to open the discussion with some remarks on the importance of transition planning. i fully appreciate the irony of what i β m about to say, what with you in paris and me here on - screen, but we are all on the path to paris. citizens, firms, banks and prudential supervisors alike are working towards the climate goals agreed in 2015 as the eu and national governments roll out policies implementing the paris agreement. in previous speeches, i have stressed the need for banks to put in place transition plans compatible with eu policies implementing the paris agreement β plans with concrete intermediate milestones to enhance banks β long - term strategies and decision - making. more and more banks are already doing this themselves, while the european commission also called for enhanced transition planning in its sustainable finance strategy published in july 2021. for ecb banking supervision, the main concern that needs to be addressed by these transition plans is the level of banks β risk exposures and the effectiveness of their controls. have the exposures been sufficiently mitigated and are they prudent? as climate - related and environmental risks become increasingly widespread and more material, banks will, inevitably, be exposed to them, through both physical and transition risks. banks therefore need adequate risk mitigation measures in place. this is what we need to assess as the prudential supervisor. introducing a legal requirement for banks to have a clear, detailed and prudent transition plan in place would increase the consistency of the regulatory and supervisory framework and contribute to maintaining a level playing field. needless to say, we are very happy to see that this is exactly what the european commission has proposed in its review of the capital requirements directive, which is now with the co - legislators. but it doesn β t stop there. for banks to be able to manage their transition risks adequately, they need to have information on how their customers are performing relative to a paris - aligned transition path. this is where the european commission β s | proposal for a corporate sustainability reporting directive comes in. the ecb welcomed this proposed directive in a legal opinion and it is now awaiting approval by the co - legislators. the current standards on sustainability disclosure are insufficient to ensure that sustainabilityrelated financial risks are properly understood and priced by market participants. the proposed corporate sustainability reporting directive is a necessary step to address the gaps that currently hinder the development of appropriate sustainability policy, risk assessment and risk monitoring frameworks for the financial sector. this is because it will not only explicitly ask large banks to disclose their transition plans, it will also ask banks β corporate clients to do the same. this last point is crucial, as it will enable banks to assess the climate - related and environmental risks in their asset portfolios. these disclosures are therefore an important element in ensuring that banks manage all material risks, in line with what we as the prudential supervisor expect them to do. the climate - and - environmental puzzle is still highly complicated, but we can now see the pieces slotting into place. against this backdrop, it is crucial that the elements included in the commission β s proposals are implemented in actual binding legislation entering into force without 1 / 2 bis central bankers'speeches undue delay. this will smooth the path to paris for all. 2 / 2 bis central bankers'speeches | 1 |
, might significantly overestimate inflation. 6. let me also add that we should pay attention to the interactions among these ( and other ) conditions. a very relevant aspect is that too low inflation for too long makes it more difficult to deal with public and private debt. related to this, as shown by recent research, the interaction of falling inflation and nominal interest rates at the zlb with nominal debt and downward nominal rigidities can lead even favourable transitory supply shocks ( such as a reduction of the price of oil ) to have negative effects on economic activity. 2 β the outcome of the ecb β s evaluation of its monetary policy strategy β, ecb monthly bulletin, june 2003. neri, s. and a notarpietro, β the macroeconomic effects of low and falling inflation at the zero lower bound β, banca d β italia, temi di discussione ( working papers ), no. 1040, 2015. bis central bankers β speeches why does inflation remain low? do global forces dominate, and is monetary policy still effective? 7. low inflation certainly has a global dimension. it reflects developments in oil prices ; deflationary pressures coming from the chinese economy ; possibly technological change. but it also reflects domestic developments that should not be underestimated. domestic factors operate both via expectations and via economic activity, and in both respects conditions in the euro area differ from those in other main advanced economies. 8. although declining inflation expectations has been a global phenomenon, since the end of 2014 the risk of a de - anchoring has increased particularly in the euro area, where expectations have reached lower levels than in other advanced economies. 3 a measure of this risk can be inferred from the probability that large changes in short - term expectations will be passed on to long - term expectations. 4 this indicator climbed from october 2014 until mid - january 2015 in the euro area, while no increases were recorded in the u. s. or the u. k. over the same period ( figure 1 ). after the extension of the app to include public sector securities the indicator decreased sharply, but remained volatile and above the historical average. 9. let me also point out, in this respect, that the importance of expectations of low inflation in determining wage outcomes, and thus giving rise to second - round effects, may be increasing. in italy, in some recently signed collective contracts it was agreed that parts of future pay rises will be revised downwards in the event that the inflation rate | reise was an essential bridge between the culture of germany and that of the land wo die zitronen bluhen. the programme for these days revisits our cultural heritage, our artistic and historical legacy, but it also reflects the culture and cultural activities of present - day italy. classical music is the centrepiece of the opening and closing concerts as well as the charity event, but there will also be presentations of contemporary italian music. the italian film days are entirely given over to contemporary directors and will offer the opportunity to reflect on the ways in which the traditional italian family model has changed. in literature, the themes range from the deeper meaning of cultural identity to the role of women in the risorgimento. this evening the orchestra mozart will perform the opening concert under the baton of claudio abbado. the maestro β s career, his essential embodiment of the universal language of music, certainly needs no presentation. i cannot even begin to sum up the course of his art. let me merely recall that he has conducted some of the world β s greatest orchestras : the berliner philarmoniker, the wiener philarmoniker, la scala. constantly engaged with social problems and active in promoting the artistic growth and careers of young musicians, claudio abbado has founded a series of orchestras for young instrumentalists of artistic excellence, including notably the chamber orchestra of europe and the orchestra mozart, which came bis central bankers β speeches into being in bologna. both draw their players from a vast range of different countries, talented young musicians playing alongside established soloists. the orchestra mozart owes its name to the role that the city of bologna played in mozart β s development. it was with the philharmonic academy of bologna β one of the centres of european cultural life β that mozart, at the age of fourteen, took his diploma as β maestro compositore β on the 9th of october 1770. music as solidarity, music as social life, music as at once expression of and factor in personal and cultural growth. these are the values that claudio abbado and all these young musicians have brought with them to the orchestra mozart, from the very start. now, it is my pleasure to leave you to the sublime art of gioacchino rossini. claudio abbado conducts the orchestra mozart in the overture to the barber of seville. bis central bankers β speeches | 0.5 |
that makes the eu fit for the future. second, the union has to integrate an unprecedented number of new member states. in my speech, i will concentrate on these two tasks and discuss to what extent - from the perspective of a central banker - the eu is on the right track. i will, however, start by identifying what i regard as the three key qualities of the european union. three key qualities of the european union the european union is a remarkable endeavour which is absolutely unique in human history. three reasons are, most of the time, proposed for explaining this collective will of the europeans to unite. first, the lessons drawn from the wars, particularly the last two world wars, which were, from a european standpoint, abominable civil wars. second, after world war ii the emergence of the soviet union empire creating a major economic, social and strategic threat for europe. and third, the challenge of global economic competition which called upon the setting up of a large single market to benefit from economies of scale of the same order of magnitude as those existing in the us single market. ensure peace amongst the europeans, protect europe against external threats, permit europe to cope efficiently with global competition had undoubtedly played a role in the bold european adventure of the last half century. but i am not sure that they are really telling the full story. in a way all these reasons are defensive, aiming at protecting europe against domestic and external dangers. i trust that at the heart of the european ideal of today there are also ideas that are profoundly enshrined in the european psyche : the idea of universality which is topical in the β enlightenment β, in der β aufklarung β, dans les β lumieres β. in this perspective, european union β in motion β would be also driven by this profound and rich european dedication to universality which is at the root of our civilisation and the ultimate goal of the europeans. i am referring to fertile ideas of ancient times. but as jean monnet said in his β memoires β : β there is no such thing as premature ideas, there are only ripe times that one should wait for. β whatever the complex set of reasons, almost fifty years ago european nation states took a bold step : they decided to work together. they initiated a european project which over time transformed this continent. i have always seen the european union as an impressive sailing ship with strong masts and many sails. this sailing ship and its crew have three very important qualities | not been fully learned, means there are still obstacles to cross - border banking. in europe, we have gone one step further in ensuring that banks in the euro area are supervised according to one approach β an essential part of the response to the crisis was to create a single supervisor for the euro area. the single rulebook forms the basis for this supervision. but this rulebook is not as single as supervisors would like. there are still some important areas in urgent need of harmonisation, not only to ensure a level playing field, but also to promote cross - border banking. 1 / 2 bis central bankers'speeches i will mention just a few : fit and proper rules are not harmonised at all. many crisis - related supervisory competences are not harmonised. there are still some options and national discretions open to member states, which means banks can be treated differently for reasons other than the underlying risks. we see that cross - border banking has recovered elsewhere but not in europe. european banks still lag behind in this respect. in part, this is also due to ring fencing, which limits banks β ability to freely move liquidity and capital within groups in europe. i understand that taking the first step in eliminating ring - fencing is daunting. host country supervisors fear being left to foot the bill of costly crises. for small economies, or large economies with a large number of foreign banks, this is a challenge. but it is a challenge we need to find a common solution to. and we need to find this solution before the next crisis hits. 2 / 2 bis central bankers'speeches | 0.5 |
. needless to say, the course of commodity prices has implications on many other key macro variables. for example, as a net energy - commodity importer, turkey β s dependence on energy imports makes the current account balance more sensitive to volatility in commodity prices. recent uncertainty surrounding the energy market is not comparable to any other period in the near history. moreover, there is a significant risk that commodity prices stay volatile due to uncertainties regarding global economy and the exceptionally loose monetary policies across the globe. therefore, medium - term outlook for commodity prices is unusually hard to predict. in the long term, supply conditions and structural policies should adjust to stabilize the energy and other commodity prices. the recent concrete steps as part of the medium term programs in turkey, aiming at curtailing the dependence on energy imports by switching towards domestically produced and renewable energy sources, have important implications also for decreasing the sensitivity of current account balances to international price movements. the key question here is how to smooth out the impact of the volatility in energy and other commodity prices on the domestic economy in the short to medium term, while there is a heightened degree of uncertainty regarding financial and real factors. introducing a fixed element into the sales tax on gasoline or other energy prices might be an effective method in dealing with this issue. in the case of turkey, for example, there are two types of taxes on the retail gasoline prices. the first one is the vat that is proportional to the price ; the second one is the special consumption tax ( sct ) that is a fixed tax. the sct forms a significant portion of the retail gasoline prices and attenuate the volatility of final prices that consumers face, since it is not a proportional tax. this tax structure not only smooths out the fluctuations in retail gasoline prices but also avoids the need for subsidies, discretionary choices and associated fiscal costs. this conference serves as a perfect platform to discuss alternative methodologies on these issues. once again i would like to welcome you all to istanbul and hope that we will address some of the challenges regarding commodity prices and the global economy in this meeting. thank you. bis central bankers β speeches | durmus yΔ±lmaz : central bank achievements and opportunities in turkey speech by mr durmus yΔ±lmaz, governor of the central bank of the republic of turkey, to members of the press at the central bank of the republic of turkey, ankara, 18 april 2006. * * * dear press members, i have been appointed governor of the central bank, which was vacated by former governor mr. sureyya serdengecti due to his retirement after having completed his five - year term on 14 march 2006 at the end of the business hours, and which has been filled temporarily by dr. erdem bascΔ± as acting governor since then. i have worked in various positions of the central bank of the republic of turkey since 1980. as you have been closely following, many achievements have been made since then, especially in the last couple of years, that will always be remembered as the turning points in our economic history. distinguished members of the press, as a result of the legal amendments made in 2001, the greatest achievement in the area of monetary policy has been the attainment of the β central bank independence β. accordingly ; β the bank shall, with the objective to achieve and maintain price stability, be authorized to utilize monetary policy instruments described in this law and shall also be authorized to directly determine and implement other monetary policy instruments that it deems appropriate. β as expressed in the law on the central bank. such an authorization is called β instrument independence β in the modern economic literature. on the way to price stability, the inflation target is determined jointly with the government. as you know, these targets have been determined and announced as follows : 5 percent for 2006, 4 percent for 2007, 4 percent for 2008 our primary objective is to attain these targets. the central bank will support the growth and employment policies of the government, unless it conflicts with this objective. likewise, with the law no : 1211, the central bank has been entrusted with the power of establishing the β exchange rate regime β jointly with the government. the floating exchange rate regime, which was introduced within this framework, will continue to be implemented, preserving its basic implementation framework. turkey has grasped a golden opportunity to get rid of the damage created by inflation with which it has had to live more than 30 years. the period of β declining inflation β is about to end. our next objective will be to achieve and preserve the price stability. this will be the most significant contribution of the central bank in mob | 0.5 |
market review underwriting requirements. more worryingly, surveys suggest some slowing could reflect would - be sellers holding back properties from the market in anticipation of higher future prices β an early sign of extrapolative price expectations. the underlying dynamic of the housing market reflects a chronic shortage of housing supply, which the bank of england can β t tackle directly. 5 since we are not able to build a single house, i welcome the chancellor β s announcement tonight of measures to increase housing supply. ten years ago, former mpc member kate barker estimated that construction of around 260, 000 homes a year would be necessary to contain real house price growth at 1 per cent per annum ( barker, 2004 ). far fewer have in fact been built in the years since β just 110, 000 in 2013. because housing demand tends to rise more than onebis central bankers β speeches to be clear, the bank does not target asset price inflation in general or house prices in particular. it is indebtedness that concerns us. this is partly because over - extended borrowers could threaten the resilience of the core of the financial system since credit to households represents the lion β s share of uk banks β domestic lending. it is also because rapid growth in or high levels of mortgage debt can affect the stability of the economy as a whole. an economic expansion is more precarious if there are a large proportion of heavily indebted households. history shows that the british people do everything they can to pay their mortgages. that means cutting back deeply on other expenditures when the unexpected happens, potentially slowing the economy sharply. that β s why recessions that follow rapid credit growth tend to be deeper and longer lasting. it is for these reasons that the bank of england β s financial policy committee ( fpc ) is mandated to address systemic risks arising from unsustainable levels of debt, leverage or credit growth. in this regard, the uk starts from a vulnerable position with household debt at 140 % of disposable income. 6 there are some signs that underwriting standards are becoming more lax, with the proportion of new mortgages at high loan - to - income ratios now at an all - time high. 7 the increase in house prices in the past year means we can expect the proportion of high loan - toincome mortgages to grow further in the coming year even if the housing market begins to slow. this is concerning because a durable expansion requires mortgages to be serviceable over their lifetime not | ##colour sketch by her sister cassandra. to the side are two further images celebrating austen β s work : an illustration of miss elizabeth bennet undertaking β the examination of all the letters which jane had written to her β ; and an image of godmersham park, home of austen β s brother, edward austen knight, and believed to be the inspiration for a number of her novels. the central design in the background of the note is inspired by the twelve - sided writing table and writing quills used by austen at chawton cottage, where she lived and wrote most of her novels. also included is a quote from pride and prejudice β β i declare after all there is no enjoyment like reading! β as austen β s final resting place, this building β winchester cathedral β is also commemorated in the note, featuring in the foil. the bank of england is committed to ensuring our banknotes recognise the diversity of their users not only through the characters represented but also through their ease of use. that is why we are introducing a new tactile feature on the Β£10 to help the visually impaired : a series of dots in the upper left - hand corner. these dots join existing features, such as differing colour palettes and raised print, that enable those who are blind and visually impaired to recognise different notes, ensuring the nation β s money is as inclusive as possible. this short video illustrates these and other features of the note. conclusion our banknotes serve as repositories of the country β s collective memory, promoting awareness of the united kingdom β glorious history and highlighting the contributions of its greatest citizens. that tradition continues with the new Β£10. as austen herself advised us β you must learn some of my philosophy. think only of the past as its remembrance gives you pleasure. β today, we look forward to the launch of the new Β£10 note, graced by jane austen, as we look back to her life and celebrate the joy she has brought, and is yet to bring, to all those who read her work. the advantage of using the engraving, rather than the original portrait, is that it has sufficient detail that it can be used without requiring any alterations to the image. this image is from a drawing by isabel bishop ( 1902 - 1988 ), who illustrated e. p. dutton & company β s 1976 edition of pride and prejudice. miss bingley, chapter xi. other features of bank of england banknotes that aid the visually impaired include the tiered sizing of different denominations and | 0.5 |
. 1 see the gfxc β s index of public registers at. 2 gfxc ( 2021 ) β outcomes of the 3 - year review of the fx global code β, july. available at. 3 bank of international settlements ( 2020 ) β fx execution algorithms and market functioning β, markets committee study group report, october. available at. 4 / 4 bis central bankers'speeches | contributed significantly to the council β s recent studies β one on the volcker rule β s restrictions on banking entities β proprietary trading and private fund activities and a second one on the act β s financial - sector concentration limit. and we are now developing for public comment the necessary rules to implement these important restrictions and limits. last week, the board adopted a final rule to ensure that activities prohibited by the volcker rule are divested or terminated in the time period required by the act. we also have been moving forward rapidly in other areas. last fall, we issued a study on the potential effect of the act β s credit risk retention requirements on securitization markets, as well as an advance notice of proposed rulemaking on the use of credit ratings in the regulations of the federal banking agencies. in addition, in december, the board and the other federal banking agencies requested comment on a proposed rule that would implement the capital floors required by the collins amendment. in december, we also requested comment on proposed rules that would establish standards for debit card interchange fees and implement the act β s prohibition on network exclusivity arrangements and routing restrictions. in january, the board, together with the office of the comptroller of the currency, federal deposit insurance corporation, and office of thrift supervision ( ots ), bis central bankers β speeches provided the congress a comprehensive report on the agencies β progress and plans relating to the transfer of the supervisory authority of the ots for thrifts and thrift holding companies. in addition, as provided by the act, we and the federal reserve banks each established offices to consolidate and build on our existing equal opportunity programs to promote diversity in management, employment, and business activities. we continue to work closely and cooperatively with other agencies to develop joint rules to implement the credit risk retention requirements for securitizations, resolution plans ( or " living wills " ) for large bank holding companies and council - designated nonbank firms, and capital and margin requirements for swap dealers and major swap participants. we are consulting with the securities and exchange commission ( sec ) and the commodity futures trading commission ( cftc ) on a variety of rules to enhance the safety and efficiency of the derivatives markets, including rules that would require most standardized derivatives to be centrally traded and cleared, require the registration and prudential regulation of swap dealers and major swap participants, and improve the transparency and reporting of derivatives transactions. we also are coordinating with the sec and the cftc on the | 0 |
gent sejko : launch of the ebrd transition report 2023 - 24 opening remarks by mr gent sejko, governor of the bank of albania, at the launching of the ebrd transition report 2023 - 24, tirana, 29 january 2024. * * * dear participants, the bank of albania, for years now, has turned it into tradition hosting the european bank for reconstruction and development in one of the most important events in its schedule of activities : the launching of the transition report. this report, which opens the door to professional economic analysis for the year, is of great importance. the analyses, conclusions and recommendations provided in it have always feed the economic debate, on the challenges that the time poses and on the appropriate development policies in order to achieve the fastest and most sustainable growth, the improvement of social well - being, as well as the economic and financial integration with our european partners, in turn strengthening resilience against shocks. for these reasons, i am pleased that this year we are continuing this journey, with the presentation of the transition report for the period 2023 - 2024. this satisfaction is even greater when i find that this year's report invites us to a moment of reflection. while our activity focuses on the issues of the day, the topic of this report, - " transitions big and small ', urges us to look further afield. the quality of life and the affecting - related factors, the new geopolitical realities and their consequences on the development strategies of countries in transition, climate change, global warming and the reduction of biodiversity, are undeniable realities with significant consequences, on economies also on our society and communities. in this context, this year's transition report rightly has added value for its focus on the implications of transition on the structure of economies, on global supply and value chains, on climate change, on the need for sustainable access to raw materials, as well as on the living, working and well - being of the individual. to this end, i would like to place some of the report's aspects in the context of the albanian economy, in view of the messages found in this report. to begin with, let me emphasize that the albanian economy has shown a good performance in the face of successive shocks of the last four years. the sound foundations of the albanian economy, the flexibility of our private sector, coupled with the prudential macroeconomic policies we have implemented, have enabled a sustainable | as much as possible in our future work. 3 / 3 bis - central bankers'speeches | 1 |
% in february, after β 0. 9 % in january, continuing its gradual recovery from a trough of β 3. 2 % in february 2014. in this respect, the april 2015 bank lending survey confirms that improvements in lending conditions support a further recovery in loan growth, in particular for firms. despite these improvements, the dynamics of loans to non - financial corporations remain subdued and continue to reflect the lagged relationship with the business cycle, credit risk, credit supply factors and the ongoing adjustment of financial and non - financial sector balance sheets. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) increased further to 1. 0 % in february 2015, after 0. 9 % in january. the monetary policy measures we have put in place should support further improvements both in borrowing costs for firms and households and in credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirms the need to implement firmly the governing council β s recent decisions. the full implementation of all our monetary policy measures will provide the necessary support to the euro area recovery and bring inflation rates towards levels below, but close to, 2 % in the medium term. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. however, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively. given continued high structural unemployment and low potential output growth in the euro area, the ongoing cyclical recovery should be supported by effective supply - side measures. in particular, in order to increase investment, boost job creation and raise productivity, both the implementation of product and labour market reforms and actions to improve the business environment for firms need to gain momentum in several countries. a swift and effective implementation of these reforms will not only lead to higher sustainable growth in the euro area but will also raise expectations of permanently higher incomes and encourage both households to expand consumption and firms to increase investment today, thus reinforcing the current economic recovery. fiscal policies should support the economic recovery while remaining in compliance with the stability and growth pact. full and consistent implementation of the pact is key for confidence in our fiscal framework. in view of the necessity to step up structural reform efforts in a number of countries, it is also important that the macroeconomic imbalance procedure is implemented effectively in order to address the excessive imbalances as identified | regulatory framework. for example, the g - sib framework currently penalises cross - border transactions within the banking union by attaching a higher systemic risk score to banks with more of such transactions. this goes against the very rationale of the banking union, as it reduces the incentives for cross - border transactions and risk diversification. the international regulatory framework should recognise the progress that has been made in the banking union and exclude intra banking union positions from the cross - jurisdictional indicators in the g - sib methodology. fourth, there are also some resolution related aspects that warrant further consideration. in particular, the allocation of internal mrel has turned out to be an area of tension between national jurisdictions. jurisdictions with a foreign bank subsidiary prefer to have a high pre - positioning of internal mrel to ensure an orderly resolution of its local subsidiary. however, this implies a certain degree of ring - fencing to the detriment of the foreign parent bank. the compromise reached by member states in the council only allows that internal mrel is 1 / 2 bis central bankers'speeches waived if the resolution entity and the subsidiary are located in the same member state, neglecting the fact that we have achieved so much in terms of joint supervision and resolution among euro area countries. to account for this progress, internal mrel waivers on a crossborder basis in the banking union should be allowed as this would contribute to continuous cross - border banking, e. g. by generating efficiency gains and promoting further integration. therefore, it should also be possible to use guarantees to replace internal mrel and allow for more flexibility in the allocation of resources within the banking union. of course, to install confidence it will be important to have adequate safeguards in place, including that there is no legal or practical impediments to the provision of support by the parent to the subsidiary, in particular when the resolution action is taken. 2 / 2 bis central bankers'speeches | 0.5 |
and upgrades in the financial sector to remove obstacles to the development of regional trade and investments. we are confident that japan, thailand and the region can mutually benefit from broader and deeper linkages, both economically and financially. with stronger economic and financial ties, i am excited to see how we, together, will move the region forward and continue to work closely in the global arena. again, it is my great honor to be here tonight with our close and longtime friends who have supported thailand β s economic and financial development. thank you very much for your friendship, your commitment, and your contribution to the thai economy. i look forward to further cooperation between our countries for many years to come. thank you very much. bis central bankers β speeches | economic growth. the thai economy this year will continue to be driven largely by domestic demand and tourism. exports will likely remain flat or decline further, not only due to subdued global demand but also price effects as export prices have tumbled following the low commodity prices. but, so far the impact on the labor market, even those in export - oriented sectors, has appeared well - contained. notwithstanding the threatening uncertainty around us, tourism continued to be a main growth driver for the thai economy, with expected tourist arrivals of around 31 millions in 2016. the clmv market is another bright spot. the thai exports to clmv market are expanding in accordance with their growing middle class and vibrant economic activities. the clmv market is now accounting for 10. 4 percent of thai total exports, which is already larger than our exports to japan, the third largest export destination. in terms of the domestic economy, we have learned from the latest gdp release that the construction sector has picked up with a strong growth of more than 20 percent in the fourth quarter of last year, thanks to government infrastructure projects. the spillovers from these projects are also benefiting the real estate market. demand for properties continues to expand as we see mortgage loans growing at around 10 percent year on year in recent months. financing conditions have also been favorable. monetary policy stance remains accommodative and in full support of economic recovery. and, despite the slow economic growth, the overall credit and corporate bond issuance to the private sector continues to grow at around 7 percent. the bank of thailand would ensure that the cost of funds is conducive to the ongoing recovery, while also keeping a cautious eye on risks to financial stability. on the fiscal front, the government has become more effective in disbursing and implementing investment projects. government relief and stimulus measures are also essential at difficult times, especially for those severely affected by adverse economic situations, such as from the current drought. but while taking care of the short - term issues, we must not forget to reckon longer term challenges facing the thai economy. thailand is in need of serious initiatives to upgrade and unlock our economic potential in the long term. in this context, we welcome many new initiatives by the government to push ahead with structural reforms. this brings me to the last part of my talk tonight on the way forward for the thai economy, and how we and our partners like japanese businesses may ride together toward sustainable prosperity. let me first touch upon some of the ongoing reforms | 1 |
, have developed and adopted sustainable banking guidelines in 2019. we have seen concrete steps taken by thai banks to incorporate sustainability into their business strategy. we have seen them setting up clear governance structure on sustainability issues such as dedicated sustainability committees, developing risk assessment tools, and disclosing esg - related information. some notable standards that banks adhere to include the un principles for responsible banking and recommendations from the task force on climate - related financial disclosures. the bank of thailand stands ready to lead and support the financial institutions β role in this transition. it is our aim to create an ecosystem for sustainable finance that would better internalize a lot of these environmental concerns and issues. this would include incorporating and improving disclosure standards, developing better risk assessment tools, as well as, developing a green taxonomy that is consistent across the financial sector. let me end my remarks by saying that these are very early steps, and much much more needs to be done. inaction will only increase the risk of a disorderly transition. 1 / 2 bis central bankers'speeches thank you very much. 2 / 2 bis central bankers'speeches | so that minority shareholders are better represented on the board. audit committees are now a requirement and many banks now have nomination and compensation committees to reduce the power of the major shareholders. most also have risk management committee or, at least, asset and liability management committee. to further increase transparency, commercial banks now have to announce at the end of each month their npl level, penalties and fines imposed by the authorities, as well as the amount of their related lending. by year - end, we will launch the director's handbook for the financial community and further encouraging increased transparency of appointment and compensations. of course, we cannot change others without changing ourselves at the bank of thailand. our reorganization strategy focuses on four aspects, namely organizational structure and work process, human resource management, decision - making process, and database and information technology. our hierarchical structure has now been reduced from a total of seven layers to four. authorities and responsibilities are being further delegated toward a lower level to the operating officers in charge. this helps reduce the previously lengthy approval process and increase our flexibility. new departments have been established to better cope with the rapidly changing economy and the rising information need of the organization. these include the data management group, the information and public relation group, the planning group who conducts a bank - wide risk assessment as well as a new department of risk management and information technology examination, who monitor risk profile and risk management at the financial institutions. in addition, our business processes are now more client - oriented with a new website, new voice - mail, and new central point of contacts being offered as services to our stakeholders. both the netherlands and thailand are small open economies in the world market. to survive the tide of globalization, we both need a well thought out strategies. we have to choose our battleground and cooperate with friends around the world. to do this, local strength has to be further strengthened while lessons and technologies must be learnt from others. here, international co - operations through jointed ventures, through foreign direct investment, or through international trade will play major roles in our successes. on this front, thailand has done remarkably well, registering a substantial increase in net inflow of foreign direct investment in the four years following the crisis despite the overall net capital outflow due to debt repayment within the banking sector. foreign direct investment ( to the non - bank sector ) increased from an average around 1. 4 billion us dollars during 1992 - 1996 to 3. 4 billion us dollars during 1997 - 2000 | 0.5 |
less than in late 2008. graph 4 see β the australian foreign exchange market in the recovery β, address to westpac forum, 10 december 2009. while turnover has recovered, the pricing of foreign exchange swaps has been affected by the events of the financial crisis in a more long - lasting way. historically, the implicit cost of borrowing us dollars through the swap market was the same as borrowing directly in the us dollar money market, that is, us dollar libor. covered interest parity held and there was no implicit basis in the foreign exchange swap market. however, during the crisis the basis in the swap market widened considerably implying a large premium for borrowing us dollars under swap ( graph 5 ) : the pricing indicated it was considerably cheaper to borrow us dollars directly in the interbank market than under swap. this basis has narrowed significantly from its peak in late 2008, but remains positive at around 50 basis points. graph 5 the origin of this positive basis is the dislocation in money markets that emerged through 2007 and 2008. 2 prior to the crisis, banks outside the united states β mostly in europe β built up large us dollar asset positions which were funded in part by rolling short - term us dollar borrowing. there was a large maturity mismatch between their short - term funding and their long - term asset positions. in the second half of 2007, the supply of us dollars in the money markets tightened considerably and these banks found it increasingly difficult to borrow the us dollars they needed directly. nor could they sell the assets because of their illiquidity. following the collapse of lehman brothers the situation worsened as general counterparty concerns saw the supply of us dollars in the unsecured money market largely disappear. in response, non - us banks increasingly sought to obtain us dollars via the foreign exchange swap market, but supply of us dollars here was also tight. this saw the basis spike sharply higher in october 2008. under normal conditions, market forces would ensure any price discrepancy would be arbitraged away. however, there were a number of constraints on the ability to arbitrage over this period. increased risk aversion, counterparty concerns and balance sheet losses restricted potential arbitrage activity. further, us institutions with access to us dollar borrowing tended to hold additional precautionary balances to ensure their own liquidity rather than lending in the market. for more analysis of this, see cgfs ( committee on the global financial system ) ( 2010 ), β | . this has obviously changed over recent years, as bank funding costs β and hence mortgage rates β have risen relative to the cash rate. as we have noted many times, the board of the rba has taken account of this in its monthly policy decisions. as a result, the cash rate today is around 1Β½ percentage points lower than it otherwise would have been. the fact that the bank has offset the effect of higher funding costs on lending rates means that the normal level of the cash rate is lower than it otherwise would have been. a 3 per cent cash rate today is not the same as a 3 per cent cash rate in the past. a more difficult issue to assess is the normal level of lending rates, as opposed to the normal level of the cash rate. it is difficult to be definitive here, but there are a couple of reasons why the normal level of lending rates may be lower, at least for a time, than was the case over the past two decades. the first reason is the international environment. as i talked about in another speech recently, many of the countries that avoided the financial crisis are experiencing uncomfortably high exchange rates and low interest rates. 5 australia is one of these. with the major economies of the world quite weak, most other countries would see themselves as benefiting from a lower exchange rate to boost their exports. but, of course, given that exchange rates are relative prices, not every country can simultaneously have a lower exchange rate. it should not really come as a surprise that countries that are in relatively good shape and have not seen large - scale expansion of the central bank balance sheet are experiencing stronger currencies than those that are in relatively poor shape. this is one of the mechanisms through which the weak conditions in most of the advanced economies are transmitted to the rest of the world. and in response to this, interest rates are lower than they otherwise would be to offset some of the effects of an uncomfortably high exchange rate. the second factor that might have an influence on the normal level of lending rates is related to the issues that i spoke about at the outset. for most of the past 20 years we were benefiting from either the credit boom or the terms of trade boom. under the influence of these two factors, one might expect, all else constant, higher average lending rates than otherwise, as both factors boost aggregate demand relative to supply at least for a period. another way of thinking about this is that in the earlier period there was an increase in the rate | 0.5 |
themselves into the prices charged to consumers. while cash is not costless for merchants to accept, it does provide some competitive pressure on the cost of payments more broadly. so as cash use declines, it is even more important than ever that we ensure competitive pressure remains on the costs of electronic payments to merchants. there are a couple of ways in which this competitive pressure can manifest. the first is the use of surcharging. merchants may not feel that they can refuse to accept a particular payment method. but they may be prepared to signal to customers that it is costly to them by imposing a surcharge for its use. they may not even need to surcharge β in some cases simply the threat of surcharging may be enough to negotiate a lower fee with the payment provider. second, and particularly relevant for card payments, is least - cost routing. least - cost routing puts some power into the hands of merchants by providing them the ability to route a dual - network debit card transaction through the network that costs them the least to accept. in australia, for many merchants, this is the eftpos network ( graph 4 ). the evidence is that the growing availability of least - cost routing has increased competition among card schemes through reductions in interchange fees, and this has resulted in a lower cost of acceptance for card payments for some merchants. graph 4 but while least - cost routing has been available for a couple of years, it has not been widely promoted by the major banks which account for most of the acquiring market in australia. so with many customers switching to contactless in response to covid - 19, some merchants are finding their payment costs rise as debit card payments are automatically routed through the international schemes. it is therefore important that merchants be given the option of least - cost routing. so far, the bank has not mandated that acquirers explicitly offer least - cost routing to all their merchants. but it remains an option that will be considered in the review. in the meantime, we are talking with merchants to understand their experience with payment costs through this period. we will also be considering how transparency of the cost of the payment plans offered to merchants could be improved. ultimately though, if market forces are not generating competition to lower the cost of debit card payments, we may need to consider lowering the benchmarks that serve as a cap on average interchange fees. we need to be on guard against technological lock - out least - cost routing works because the physical cards | being presented at the point - of - sale terminal are provisioned with two networks β so - called dual - network debit cards. but what if there is no physical card, as is the case with mobile payments? how do we encourage provisioning of dual networks in these circumstances and encourage the mobile and terminal technology to enable merchant choice of routing. there are already some disputes in this area. some banks have been choosing to provision only one debit system, so the option to route is being limited. and there are further disputes in the wings on schemedependent tokenisation of β card on file β transactions and the problems this might create for least - cost routing. as highlighted in our consultation document, this is a challenging area. but ultimately, if banks or other stakeholders are acting in ways that prevent downward pressure on merchant fees, we may need to consider regulatory options for keeping the cost of electronic payments low. with people carrying less cash, resilience is paramount so far during the covid - 19 period, the electronic payment system has had very few severe outages ( despite the need for providers to quickly adopt different working arrangements ). this is a welcome outcome. given the reduced use of cash during this period, it could have been even more difficult for merchants were there to be disruptions to the electronic payment system. and in the circumstances a loss of access to funds could have caused harm to customers and dented confidence within the community. but this episode does highlight something we have been concerned about for some time β the importance of the resilience of the retail payments system. there are effectively two parts to this β the resilience of the shared infrastructure such as the payment card message and switching infrastructure, and the resilience of financial institutions'own systems. while there have occasionally been system infrastructure outages, most of the outages over the past few years have been in banks'systems. sometimes it has been their account systems affecting the ability of customers to make payments. sometimes it has been their merchant - facing systems so that merchants were unable to take payments. in these cases, often the only fall - back at the point of sale is cash. prior to covid - 19, there was already a sizeable proportion of people who tended to have little or no cash in their wallets. so when disruptions did happen there were stories of people leaving goods at the counter and merchants effectively having to close until the systems were restored. post - covid - 19, | 1 |
causes, overemphasising financial standards could detract attention from other policy priorities. the relative importance of financial standards in crisis prevention must also be adjudged from the standpoint of the relative openness of the economy β s capital account and in this sense the β one size fits all β approach may have to be eschewed. 1. 8 since the primary motive for having standards is to catalyze orderly capital flows, while ensuring financial stability, greater consultation with the private sector in evolving and prioritizing of core standards is of utmost necessity. all standards and codes are not equally relevant to all segments of private sector and further they do tend to evolve over a period reflecting concerns of both public policy and market participants. 1. 9 it is gratifying to note that currently there is a better appreciation of india β s stand in the international fora as compared with the past. ii. india β s association with the global efforts in fostering international standards and codes 2. 1 india has been closely associated with various standard setting bodies and has been taking active part in the work of several key international fora devoted to the task of developing and promoting implementation of financial standards and codes. although india is not a member of the @ financial stability forum ( fsf ), it was one of the countries specially requested to help the forum in task force on the implementation of standards and to participate in the joint committee group meeting. the task force was set up to explore key issues relating to standards / codes / core principles and consider the strategy for fostering the implementation of international standards relevant for a sound financial system. 2. 2 the reserve bank is also represented at the follow up group on incentives for implementation of standards instituted by the fsf following submission of the task force report. the group has been ascertaining how various elements of market and official incentives could best reinforce one another within the framework of the overall strategy to foster implementation of standards and, for this purpose, engages in a dialogue with a cross section of relevant market participants. 2. 3 reserve bank of india officials worked closely with the basel committee on banking supervision ( bcbs ). in 1997, in consultation with the supervisory authorities of a few non - g - 10 countries including india, the bcbs drew up the 25 β core principles for effective banking supervision β aimed at guiding supervisory authorities seeking to strengthen their current supervisory regime. 2. 4 from its inception, india was also represented on the group on joint task force | ample liquidity, it points to upside risks to price stability over the medium to longer term. monetary developments therefore continue to require very careful monitoring, particularly against the background of a solid expansion in economic activity and continued strong property market developments in many parts of the euro area. to sum up, in assessing price trends it is important to look through any short - term volatility in inflation rates. the relevant horizon for monetary policy is the medium term. risks to the medium - term outlook for price stability remain on the upside, relating in particular to stronger than currently expected wage developments in a context of robust ongoing growth in employment and economic activity. given the vigorous monetary and credit growth in an environment of already ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability prevail over the medium to longer term. the governing council will continue to monitor very closely all developments so that risks to price stability over the medium term do not materialise. this will support the solid anchoring of medium to longer - term inflation expectations in the euro area at levels consistent with price stability. therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term remains warranted. as regards fiscal policy, there is growing confirmation that the favourable cyclical developments led to better than expected budgetary outcomes in 2006 in a number of countries and in the euro area as a whole. however, updated stability programmes foresee only moderate progress with fiscal consolidation in the coming years. in this respect, some countries β consolidation targets appear not fully in line with the requirements of the revised stability and growth pact. risks stem in particular from a lack of well - specified and credible measures, notably on the expenditure side of budgets. given the favourable economic environment, the governing council considers it essential that procyclical policies are avoided in all euro area countries and that sufficiently ambitious fiscal consolidation efforts are made in the countries with remaining budgetary imbalances and / or high public debt outstanding. the opportunity should be seized to attain sound public finances within the programme horizons and by 2010 at the latest in all euro area countries. fiscal consolidation that is part of a medium - term - oriented, credible and expenditure - based reform strategy would support longerterm output and employment growth and help prepare for the fiscal impact of population ageing. as regards structural reforms, the european council will discuss the current state of, and future progress in, | 0 |
- 19 stimulus payments, β working paper series 2020 - 15 ( chicago : federal reserve bank of chicago, may ; revised february 2021 ), https : / / www. chicagofed. org / publications / working - papers / 2020 / 2020 - 15. - 3spending and gdp this year, the absence of similar transfers will lower the growth rate of spending next year relative to this year. the boost to spending from pent up demand this year as the economy reopens is also unlikely to be repeated next year. the latest jobs report reminds us that while there are good reasons to expect the number of jobs and the number of people wanting to work will make a full recovery, it is unlikely they will recover at the same pace. over the past few months, the demand for workers has strengthened as covid - affected sectors have reopened. labor supply has also improved, with many people coming back into the labor force and others extending their hours of work, but there are indications that many other workers still face virusrelated impediments. although the fraction of the population ages 25 to 54 that is employed has improved in each month of this year, the current prime - age employmentto - population ( epop ) ratio of 76. 9 percent is still far from the 80 percent level reached during both of the past two expansions. 5 on the demand side, we saw a welcome increase of 331, 000 jobs in the hard - hit leisure and hospitality sector in april following a 206, 000 increase in march. but bottlenecks on inputs such as semiconductors appear to be limiting production and hiring in industries such as motor vehicles, contributing to a decline of 18, 000 jobs in the manufacturing sector. the increase in average hours worked and the reduction in people who are working part time but would prefer full - time work suggest some employers are responding to the increase in demand by lengthening workweeks. for additional discussion, see lael brainard ( 2021 ), β how should we think about full employment in the federal reserve β s dual mandate? β speech delivered at the ec10, principles of economics, lecture, faculty of arts and sciences, harvard university, cambridge, mass. ( via webcast ), february 24, https : / / www. federalreserve. gov / newsevents / speech / brainard20210224a. htm. - 4on the supply side, the number of people entering the labor force strengthened for the second month | , and to have done so alongside such excellent and stimulating colleagues. since mid - 2007 decisions have become more difficult and the task more stressful, but the overriding objective of achieving the cpi inflation target and maintaining confidence in this target has remained the right guide for policy. a significant part of an mpc member β s work is explaining policy to various audiences, or accompanying the banks β regional agents on visits and discussions with business and other contacts. i am sure that the work of the bank β s twelve agents based around the uk, and the willingness of mpc members to be seen out and about, both contribute to the credibility of the mpc. they also serve the valuable purpose of giving us high - quality and up - to - date feedback on business trends. while these visits enable business audiences to question and debate policy, perhaps another aspect of accountability has been a little less satisfactory. once a quarter, several members of the mpc accompany the governor to an appearance before the treasury committee. the purpose of the sessions is to hold us to account for our individual votes. however, despite some recent improvement, it remains the case that the vast majority of questions from the mps tend to be directed at the governor. my view is that it would be better in future to ensure that each mpc member attending, including the external members, has the opportunity to explain their recent votes and to comment on the key policy issues. as i leave the mpc, the challenges remain considerable. in retrospect, my first two terms on the mpc were periods which now look like the small change of monetary policy β small changes in bank rate aimed at adjusting for relatively small anticipated deviations of inflation from target. as i suggested at the start, it may however also have been the period in which a large error was made in allowing the belief to become established that policymakers had solved the issue of economic instability. as jean - claude trichet recently commented : β... remedial action has often been triggered as soon as the financial firestorm has threatened the stability of the economic system. but such action risks raising expectations that macroeconomic policy will always insure against tail risks, no matter how large. β 13 even when policymakers have added robust macroprudential instruments to their armoury, it will be important to be clear that there will still be sources of macroeconomic instability. this may not be easy during any prolonged period without such a shock, unless policymakers are prepared to be a | 0 |
as a leading international financial centre. 43. singapore is also prepared to break old moulds and be flexible and practical in a changing world. for instance, we overturned our longstanding policy of disallowing casino gambling. to remake itself into a city with buzz, singapore is developing integrated resorts, with casinos, convention facilities and world - class entertainment. japan - singapore partnership for the future 44. i see great potential in closer collaboration between singapore and japan. the landmark japansingapore economic agreement for a new age partnership ( jsepa ) provides an excellent framework. japanese companies can use singapore as a hub with radiating spokes to tap global opportunities. from singapore, companies can service a combined population of 3 billion. that is why 7, 000 mncs choose to hub in singapore. of these, 4, 000 manage global and regional responsibilities. recognising this strategic value - add, many japanese companies have further expanded their operations in singapore. 45. japanese companies can also take advantage of singapore as a hub for knowledge and market intelligence. over the years, we have developed a network of institutions that have a deep reservoir of knowledge on china, india and southeast asia. our businessmen are also familiar with these countries. we are now building up links with the middle east. 46. japanese companies based in singapore can enjoy not only benefits from the jsepa, but also 10 other ftas that singapore has concluded with major economies like the us, south korea and australia. i would like to highlight the comprehensive economic cooperation agreement ( ceca ) between singapore and india as it is the first comprehensive fta that india has signed with any country. conclusion 47. the rise of china and india will shift the global economic centre of gravity from west to east. remaking our economies cannot be an occasional exercise. governments must respond boldly and continuously to the imperatives of our changing times. likewise for companies. this is the only way to ride the rising asian tide. 48. thank you. i will be happy to take your questions. | mario draghi : competitiveness of the euro area and within the euro area speech by mr mario draghi, president of the european central bank, at the colloquium β les defis de la competitivite β, organised by le monde and l β association francaise des entreprises privees ( afep ), paris, 13 march 2012. * * * ladies and gentlemen, i am delighted to have the opportunity to participate in this debate. competitiveness is a key issue of economic policy in each and every country of the euro area. it is a key issue for the euro area as a whole. and it is of fundamental importance to the lives and long - term prosperity of all of our citizens. we at the european central bank ( ecb ) have a steadfast commitment to price stability. this in turn provides support for economic growth and job creation across europe. but for any individual member of the euro area to prosper in a globalised world, our contribution needs to be complemented by the work of national policy - makers. future prosperity requires us all to establish and maintain a competitive position, both inside and outside the euro area. these external and internal dimensions of competitiveness will be the main focus of my remarks. but first let me say a few words about how we see the current economic situation. the state of the euro area economy overall, we see continued signs of stabilisation in the euro area economy, albeit still at a low level. the situation in financial markets has clearly improved in response to the ecb β s measures. the improvement is also due to the progress made by euro area governments towards accepting more binding common fiscal rules and by the progress on fiscal consolidation and economic reform in many countries. countries should use this phase of financial stabilisation to make further progress on their programmes of economic reform β to strengthen their potential growth, to boost employment and to enhance competitiveness. banks too should use this currently more benign environment to strengthen their resilience further, including by retaining earnings, cutting dividends and bonuses. the soundness of banks β balance sheets will be a key factor in facilitating an appropriate provision of credit to the economy, which is their main task. the financial system should serve the real economy, not the other way around. as far as monetary policy is concerned, growth will be supported by the very low short - term interest rates and by all the measures adopted by the ecb to foster the proper functioning of the euro | 0 |
compounded by the impact of the global recession and natural disasters that we suffered. i had mentioned the devaluation above. the others included : β’ exchange controls that were tightened, similar to december 2006. β’ interest rates were capped to december 2008 levels and interest rate spread ( between the lending rate and deposit rate ) was fixed at 4 percent. β’ lending policies β priority sector lending will continue and special approval above the ceiling will still be considered by the rbf. β’ taking proactive β hands on β approach in the development of the key areas of the economy ( which are normally beyond the scope of a traditional central bank β s role ) through the establishment of the new financial system development and compliance group to look at issues like microfinance & sme development, sustaining remittances flows, financial literacy, rural banking, local value adding and policies to discourage the importation of high value luxury goods. let me correct some mis - reporting especially in the overseas media with respect to exchange controls and foreign reserves. yes, the rbf did tighten exchange controls in april this year. these measures are absolutely essential to prevent capital flight when there are huge speculations and expectations of currency adjustments. however, let me state here that there are no restrictions on any trade transactions whatsoever. all payments in and out of fiji are as normal as can be expected. however, we do control fiji residents β investments abroad. policies in this regard are either tightened or relaxed depending on how our foreign reserves perform. on foreign reserves, i did mention earlier that our reserve levels had started to fall rapidly since last year with the onset of the global crisis. most countries went through similar situation. we all had to take various actions to reverse the trend. this does not mean that we are not capable of meeting our overseas commitments. fiji has never failed to meet any of its foreign obligations. our reserve levels are now reaching comfortable levels and i am sure this should give more comfort to our trading partners. rbf policies towards a sustainable tourism growth one of the key policies that the rbf has announced this year is the local valued added content requirement for the tourism industry. the local value adding policy announcement by the reserve bank requires that any domestic borrowing by the hotel industry from banks for extension or development purposes should have a local value content included. this is to encourage the use of local goods and services. it would help reduce dependence on imports. why did we have to introduce this policy? i am sure there is lot of interest in this | the world. what lessons can we learn from them? i am positive that we can address this particular structural issue and improve our world ranking. investments will create domestic economic activities and help the country grow sustainably. the sustained performance of the economy is important for employment generation, poverty alleviation, improving confidence and ensuring stability. like in any other country, unemployment and poverty could become major issues if we do not grow the economy sustainably. the 2003 β working out of poverty β report by the international labour organisation stated that β poverty elimination is impossible unless the economy generates opportunities for investment, entrepreneurship, job creation and sustainable livelihoods. the principal route out of poverty is work. β we have to manage the things that are within our control whilst adjusting to those that are beyond us. reforms in this respect are therefore vitally critical. this is actually the new economic paradigm that we are pursuing in fiji. we need to commit to the reform agenda that the government has developed. our growth performance has been less than impressive over the years. we need to change the way we do things. we need to address the structural reforms necessary to unleash our economic growth potential. we have identified these structural challenges in various forums over the years. addressing them will be part and parcel of building a better fiji for all. we have to continue the reform momentum. other countries are doing it in their endeavour to better their performance. to do otherwise could mean isolation for us whilst our neighbours and others progress. we must not lose sight of this reality. we need to share this common vision that change is inevitable for us to maximise and put to good use the limited resources we have, improve productivity and efficiency, address poverty and hold our ground in this increasingly integrated global economy. we have to remain competitive. to do nothing or progress at a snail β s pace would be to our disadvantage. i cannot emphasise enough the importance of undertaking reforms now and maintaining momentum. the improved livelihood of our future generation will depend on the sacrifices we make now through economic adjustments or reforms. when we begin to reap the rewards of the reforms in future, though difficult some of them may be, we can stand back and say at that juncture that it has been worth it all. ladies and gentlemen, we meet at a time when the global economy continues to go through turbulent times. the numerous downward revisions of world growth by the imf are an indication of the uncertainties that we face. the recently revised global growth projection for this | 1 |
. by extending work on patterns of cooperation and competition among firms in other industries to the financial sector, io might help shape regulatory structures that can reduce the potential for contagion during periods of financial stress. 2 there is work at the federal reserve board on some relevant topics. see, for example, li and schuroff β s ( 2012 ) working paper, which shows that about 30 large and highly interconnected β central dealers β provide valuable forms of liquidity to hundreds of smaller periphery dealers while simultaneously offering more immediate, but more expensive, execution to investors relative to those offered to periphery firms. dan li and norman schuroff ( 2012 ), β dealer networks, β social science research network working papers series, march 15. this topic is addressed at somewhat greater length in daniel k. tarullo ( 2011 ), β industrial organization and systemic risk : an agenda for further research, β speech delivered at the federal reserve board conference on the regulation of systemic risk, washington, september 15. bis central bankers β speeches as important as io research can be in developing financial regulation, the financial sector is in key respects sufficiently different from other industries as to limit the relevance of at least some existing research. in addition to the just - noted contractual interconnectedness of competing firms, the combination of correlated asset holdings, maturity transformation, and mark - to - market accounting means that distress at one firm leading to asset fire sales can create problems at competing firms. finally, the presence of systemic risk in financial - sector intermediation adds an important consideration not normally present in io analysis of other industries. thus, as noted earlier, too - big - to - fail problems can affect the analysis. also, prudential regulation can create opportunities for arbitrage both among products and practices in the regulated sector and between the regulated and unregulated sectors. although the characteristics of the financial sector may limit the relevance of conclusions from io research in other sectors, they do not limit the relevance of the questions about industry structure and relationships asked by io economists. they argue, instead, for combining the io approach with the specialized learning of finance, a part of economics that has grown so important precisely because of the manifold ways in which the financial sector differs from other industries. scale and scope economies in the financial sector there are few topics within io more familiar than that of scale and scope economies. 3 and there are few reform proposals that have been put forward more regularly since the start of the financial crisis than those to | , with the transition to an upward - sloping band, the slope of the band was defined as reflecting differences between inflation in israel and that in other countries ; these too have disappeared ; Β· next, in the wake of the development of high - tech industry, capital import for investment began on a large scale. this capital inflow is not connected with differences in interest rates or in inflation between israel and other countries, so that it is illogical to limit exchange - rate fluctuations because of it ; Β· while these changes were taking place, and as we agreed in 1994 to allow the market to determine the rate of exchange, a domestic foreign - exchange market developed. it involved domestic banks and foreign financial institutions. daily turnover is growing, and the market has low volatility. the fact that the bank of israel avoids market intervention, and the experience of external financial shocks have led to a better awareness among the public of exchange - rate risk. this had a dual effect : a. speculative activity is a rarity in the market. b. when assets and liabilities portfolios are being put together, interest - rate differentials between israel and abroad, which have existed for a long time and still exist are outweighed by exchange - rate risk. consequently, it is difficult to discern a change in the composition of assets and liabilities portfolios in response to changes in interestrate differentials around their current level, so that this component of capital flows has hardly affected the rate of exchange. in other words, interest - rate differentials do not explain why the actual rate of exchange is close to the bottom limit of the band. the main reasons for the closeness lie in the inflow of long - term capital coupled with the upward slope of the limit of the band. for the sake of accuracy we should add the recent weakness of the euro against the dollar. on the other hand, protecting the lower limit of the band will cause financial complications : Β· the purchase of foreign currency to lead towards a new equilibrium must be undertaken while prices are falling. the current positive slope, even if it falls to zero, does not allow this to happen, so that it is a non - stabilizing factor. Β· the obligation to purchase foreign currency means that the initiative in implementing monetary policy is transferred to the importers of capital, although they have no intention of participating in such management. they import capital according to their own needs, and not to inject into the economy in an ordered manner the liquidity it | 0 |
t t mboweni : a review of economic and financial developments in south africa during 2002 address by mr t t mboweni, governor of the south african reserve bank, at the dinner for heads of foreign missions, pretoria, 10 december 2002. * * * mr el - herfi, acting dean of the diplomatic corps, ambassadors, high commissioners, heads of international organisations, senior management of the department of foreign affairs, senior management of the reserve bank and honoured guests, all protocol observed 1. introduction integrating dinner with discussions of finance is not unfamiliar to central bankers. the key ingredients are good food and brevity and relevance of the discussion. i will do my best to adhere to the latter two ingredients. the former is out of my hands. 2. the global economy in 2002 the developed countries were already experiencing a slowdown in economic activity in 2001 when the events of 11 september shocked the world. transport and tourism in particular were hit very hard, with some fallout continuing to this day. world growth in 2002 has been subdued and for the full year is expected to amount to around 2, 8 per cent, slightly better than the 2, 2 per cent recorded in 2001 but still way below the 4, 7 per cent recorded in 2000. alongside the uninspiring growth performance, however, inflation has been very low. in japan prices are in fact falling, while in the euro area the latest average inflation rate is 2, 2 per cent. in the united states, inflation is running at 2, 0 per cent. beyond the lacklustre world growth and low inflation, there were a number of key events in 2002. argentina's one - to - one peg of the peso to the american dollar, that had led to a significantly overvalued peso, collapsed. against the one - to - one rate at the end of last year, the current exchange rate is 3, 54 peso per dollar. the argentinian economy has been contracting, while their inflation rate has accelerated to more than 40 per cent. brazil experienced some problems, partly related to the country's high government debt and its linkages with troubled argentina. imf funding is helping to soften the adjustment process. in the northern reaches of the american continent, the demise of enron led to disillusionment with corporate governance and accounting practices. this has led to a greater awareness of the need for sound structures and practices, revised codes of conduct and a sharpening of regulation. and | yet policymakers cannot stand idle and wait for these imbalances to resolve themselves. the experience of the 1930s is there to teach us that failure to act, or an anchoring of policy to standards that are no longer adapted to the economic realities of the day, can easily turn low growth into a recession, and a recession into a depression. if structural adjustments in an economy result in an elevated degree of bis central bankers β speeches slack for an unusually long period, then the macro policy mix should equally be characterized by an unusually long phase of accommodation. this way, the risk of permanent damage to the economic tissue will, if not removed, at least be mitigated. yet should it be the fiscal or the monetary policymaker at the forefront of this response? over an extended period, both policies are not perfect substitutes. running large budget deficits for several years ( say, for as long as the output gap remains sizeable ), will quickly raise public debt as a share of gdp. in turn, this will result in a greater share of state resources being absorbed by the service of that debt ; a higher risk premium embedded into domestic interest rates as bondholders worry about fiscal sustainability ; and potential capital outflows as a consequence thereof. at worst, deteriorating public finances could more than offset the impact of monetary stimulus. it should be remembered that spain, currently mired in recession and facing an elevated credit risk premium on its sovereign debt, had the second largest budget surplus in the euro zone ( 2. 2 per cent of gdp ) in 2007, and a debt ratio of 36 per cent of gdp. in a word, prior to the crisis, spain did not have a fiscal problem. prudent fiscal management for almost two decades means that south africa does not face at present a meaningful fiscal constraint. at a projected 36 per cent of gdp in the present fiscal year, public debt is way below the levels seen in most developed economies, and relatively in line with the emerging world β s average. nonetheless, the situation leaves no room for complacency, and indeed the scope for responding to the current lack of strong economic momentum with additional fiscal stimulus appears very limited. the south african government has on many occasions reaffirmed its commitment to gradually reduce the budget deficit, so as to ensure that the net debt to gdp ratio stabilizes no higher than 40 per cent. it is in part for that reason that the national budget presented in february 2012 targets a reduction in the deficit from 4. | 0.5 |
more stable? a bayesian approach based on a markov - switching model of the business cycle β, review of economics and statistics, vol. 81 ( november ), pp. 608 - 16. kim, chang - jin, james morley, and jeremy piger ( 2005 ). β nonlinearity and the permanent effects of recessions β, journal of applied econometrics, vol. 20 ( no. 2 ), pp. 291 - 309. king, robert g., and alexander l. wolman ( 1999 ). β what should the monetary authority do when prices are sticky? β in john taylor, ed., monetary policy rules. chicago : university of chicago press, pp. 349 - 98. levin, andrew t., fabio m. natalucci, and egon zakrajsek ( 2004 ). β the magnitude and cyclical behavior of financial market frictions β, finance and economics discussion series 2004 - 70. washington : board of governors of the federal reserve system, december. levin, andrew, alexei onatski, john c. williams, and noah williams ( 2005 ). β monetary policy under uncertainty in micro - founded macroeconometric models β, in mark gertler and kenneth rogoff, eds., nber macroeconomics annual 2005. cambridge, mass. : mit press, pp. 229 - 88. mishkin, frederic s. ( 2007a ). β inflation dynamics β, speech delivered at the annual macro conference, federal reserve bank of san francisco, san francisco, march 23. mishkin, frederic s. ( 2007b ). β monetary policy and the dual mandate β, speech delivered at bridgewater college, bridgewater, va., april 10. mishkin, frederic s. ( 2007c ). β will monetary policy become more of a science? β finance and economics discussion series 2007 - 44. washington : board of governors of the federal reserve system, september. mishkin, frederic s. ( 2007d ). β financial instability and monetary policy β, speech delivered at the risk usa 2007 conference, new york, november 5. mishkin, frederic s. ( 2007e ). β the federal reserve β s enhanced communication strategy and the science of monetary policy β, speech delivered to the undergraduate economics association, massachusetts institute of technology, cambridge, mass., november 29. rotemberg, julio, and michael woodford ( 1997 ). β an | significant risks to the macroeconomy. then i will explain how the science of monetary policy can help provide a conceptual framework for a systematic approach to managing these risks, and i will briefly discuss how that framework can be useful for understanding the course of federal reserve policy over the past few months. financial disruptions and macroeconomic risk before considering the appropriate policy response to strains in financial markets, it is essential to consider the sources of these strains and the potential consequences for the macroeconomy. in general, the u. s. financial system is an efficient mechanism for channeling funds to individuals or corporations with worthy investment opportunities, because the financial markets are highly competitive and provide strong incentives for collecting and processing information. i appreciate the comments and assistance of william english, andrew levin, brian madigan, roberto perli, david reifschneider, and david wilcox. although financial markets and institutions deal with large volumes of information, some of this information is by nature asymmetric ; that is, one party to a financial contract ( typically the lender ) has less accurate information about the likely distribution of outcomes than does the other party ( typically the borrower ). 2 historically, banks and other financial intermediaries have played a major role in reducing the asymmetry of information, partly because these firms tend to have long - term relationships with their clients. recent years have witnessed the development of new types of financial institutions and of new markets for trading financial products, and these innovations have had the potential ( not always realized ) to contribute to the efficient flow of information. the continuity of this information flow is crucial to the process of price discovery β that is, the ability of market participants to assess the fundamental worth of each financial asset. during periods of financial distress, however, information flows may be disrupted and price discovery may be impaired. as a result, such episodes tend to generate greater uncertainty, which contributes to higher credit spreads and greater reluctance to engage in market transactions. as i noted in another recent speech, financial disruptions are associated with two distinct types of risk : valuation risk and macroeconomic risk ( mishkin, 2007d ). valuation risk refers to the extent that market participants become more uncertain about the returns on a specific asset, especially in cases where the security is highly complex and its underlying creditworthiness is relatively opaque. in recent months, for example, this type of risk has been central to the repricing of many structured credit products, as investors have struggled to | 1 |
shamshad akhtar : monetary policy in pakistan speech by dr shamshad akhtar, governor of the state bank of pakistan, at the federation of pakistan chambers of commerce & industry, karachi, 30 april 2007. * * * mr. tanvir ahmed sheikh, president fpcci, mr. zubair tufail, vice president fpcci and mr. sheikh amjad rasheed, chairman fpcci committee on banking, credit, & finance background monetary policy management and financial sector stability are two primary roles of state bank of pakistan ( sbp ). monetary policy and process of its formulation in pakistan has undergone changes with the evolving economic dynamics within the country and the improved empirical and theoretical understanding of the monetary policy across the world. monetary policy in pakistan, in line with sbp act, has been supportive of the dual objective of promoting economic growth and price stability. it achieves this goal by targeting monetary aggregates ( broad money supply growth as an intermediate target and reserve money as an operational target ) in accordance with real gdp growth and inflation targets set by the government. over the years, while maintaining the broad legal mandate, sbp has improved the quality of monetary formulation and its process quite significantly. this morning, i propose to first outline measures taken by the government and sbp to strengthen the monetary policy management. second, i will discuss the rationale and key elements of sbp current monetary policy stance which i believe is helping bring down inflation without stifling credit or economic growth. finally, i will discuss the impact of sbp β s policy actions, and challenges in its implementation. changes in monetary policy management sbp shifted its reliance from an administered monetary policy regime governed by ad hoc changes in reserve ratio β s, directed credit and regulated interest rate policies in mid 1990s to a liberal and market oriented monetary policy management. abolishing sector and bank credit limits, central bank adopted β 3 - day sbp discount rate β as a major policy instrument to signal easing or tightening of monetary policy which essentially responded to the demand pressures of the economy in line with the growth trends in monetary liabilities and monetary assets β with former capturing the growth in currency and deposit base and latter the growth in domestic credit ( including both government borrowings and private sector credit ). generally monetary module of the economy is the least understood area. this is largely because monetary segment of the economy deals with on one hand the changes in stocks and flows of money supply and on the other hand | crs ) for banks which helps in assessing the market liquidity. sbp β s treasury operations and gradual improvements in its liquidity management have together helped omos and money market development. current monetary policy stance public, businesses and market needs to develop understanding that monetary policy does indeed, over the long run, determine the behavior of the price level. while inflation is precipitated by supply shocks, hoarding, official restrictions, import prices, and so on, but these influence price level in a given year. however, it is monetary policy that can prevent an effect on the rate of inflation over a more extended period. that is, following the initial price level shock, an appropriate adjustment of the interest rate ( if necessary ) can stop a potential second round of repercussions on wages and prices. specialists use measures of core inflation, which exclude volatile prices, as a way to see through oneoff shocks. core inflation is very useful to the central bank itself, as a guide to the appropriate setting of its monetary policy stance. unexpectedly low ( high ) core inflation usually indicates the need for easing ( tightening ) in the policy stance. the ultimate objective of a central bank, and the measure of success of its policy, is in terms of overall ( i. e. headline ) inflation. in this context, the way to deal with price level shocks is to stress their temporary nature with respect to the inflation rate. this involves : ensuring that the effect on inflation is only temporary β this may or may not require a policy action, and realizing that as monetary policy influences the trend of prices with a lag of at least a year and a half, headline inflation should return to its pre - shock rate not within not 1 year but 2 years. price signals in a market economy operate less effectively when the price level is unstable ; in addition, resources are diverted to unproductive speculation and hedging. thus, countries with unstable price levels β high inflation or deflation β almost always experience weak output and growth. thus, low inflation is not merely an end in itself, but also a means to good overall economic performance. the main cause of high interest rates is high inflation, through the expected - inflation premium. conversely, the best prospect for low interest rates is a stable environment of low inflation. in this context, the relatively high interest rates that may be necessary to achieve a desired disinflation represent β short - term pain for long - term gain β. sbp, | 1 |
race - ethnicity. html. - 3their health at risk. black and latinx workers are overrepresented in the fields of work that entail high contact and pose greater risks of exposure to infection. for example, black and latinx workers are overrepresented in most essential positions, including nursing home staff, grocery store workers, bus drivers, postal workers, and warehouse workers. 6 against that challenging backdrop, the national conversation we are having right now about racial justice and racial equity ignited by the tragic death of george floyd could not be more urgent. 7 and the nba β s β mission of creating an inclusive financial services industry and a vibrant business environment for minority business institutions, their customers and the communities they serve β could not be more important. 8 minority depository institutions ( mdis ) are important actors in serving the financial needs of minority customers and small businesses, as well as providing community development resources to invest in minority communities. the covid - 19 pandemic only heightens the importance of the role you are playing. your firsthand experiences of working with minority borrowers and your knowledge of local communities make you essential partners in better targeting our tools to assist low - income and minority small businesses and communities. you have provided valuable input on federal reserve programs, from the paycheck protection steven brown, β how covid - 19 is affecting black and latino families β employment and financial well - being, β the urban institute, last modified may 6, 2020, https : / / www. urban. org / urban - wire / howcovid - 19 - affecting - black - and - latino - families - employment - and - financial - well - being. see raphael bostic, β a moral and economic imperative to end racism, β federal reserve bank of atlanta ( website ), last modified on june 12, 2020, https : / / www. frbatlanta. org / about / feature / 2020 / 06 / 12 / bostic - a - moral - and - economic - imperative - to - endracism, and β series on racism and the economy, β federal reserve banks of atlanta, boston, and minneapolis, last modified on october 7, 2020, https : / / www. minneapolisfed. org / events / 2020 / racism - andthe - economy - series - kickoff - event. https : / / www. nationalbankers. org / - 4program liquidity facility ( ppplf ) to the main street lending program | , to community reinvestment act reform. over the last month alone, the federal reserve board has held three sessions with representatives of mdis, community development financial institutions ( cdfis ), and vulnerable groups to discuss the challenges faced by underserved communities. we have heard about the extraordinary measures mdis have taken to keep their banks accessible, modify loans, and extend paycheck protection program ( ppp ) loans to new and existing customers, predominantly small, minority - owned businesses. preliminary data from an independent community bankers of america report indicate that your work, and the work of other community banks, has been a critical source of lending to minority - owned small businesses, accounting for 73 percent of all ppp loans made to minority - owned small businesses. 9 in addition, some mission - focused institutions have participated in the main street new loan facility, and we continue to welcome your feedback on how to support institutions reaching the businesses and communities most in need. in addition, we are hearing of greater commitments to promote mdis and cdfis on the part of large institutions. a number of black - owned banks, including nba member banks, are involved in new partnerships to address racial disparities in access to credit and provide wealth - building opportunities. 10 these recent developments are only independent community bankers of america, " data show community banks lead economic recovery, " news release, august 19, 2020, https : / / www. icba. org / newsroom / news - andarticles / 2020 / 08 / 19 / data - show - community - banks - lead - economic - recovery. broadway financial corporation and cfbanc corporation, β broadway financial corporation and cfbanc corporation to combine to create the largest black - led minority depository institution in the u. s., β news release, august 26, 2020, https : / / www. cityfirstbank. com / sites / default / files / final _ press % 20release _ merger % 20announcement _ 08. 25. 2020 _ gn _ 9pm. pdf. - 5the latest chapter in how your sector continues to grow and lean into the challenges this nation faces. the community reinvestment act ( cra ) is one of the most powerful tools we have for addressing systemic inequities in credit access for minority individuals and communities. last month, the federal reserve board unanimously voted to approve an advance notice of proposed rulemaking ( anpr ) on the cra | 1 |
##pating and, in some cases, reversing seems likely to play out in durables more generally. over the 25 years preceding the pandemic, durables prices actually declined, with inflation averaging negative 1. 9 percent per year ( figure 5 ). 9 as supply problems have begun to resolve, inflation in durable goods other than autos has now slowed and may be starting to fall. it seems unlikely that durables inflation will continue to contribute importantly over time to overall inflation. we will be looking for evidence that supports or undercuts that expectation. 3. wages we also assess whether wage increases are consistent with 2 percent inflation over time. wage increases are essential to support a rising standard of living and are generally, of course, a welcome development. but if wage increases were to move materially and persistently above the levels of productivity gains and inflation, businesses would likely pass those increases on to customers, a process that could become the sort of β wage β price spiral β seen at times in the past. 10 today we see little evidence of wage increases that might threaten excessive inflation ( figure 6 ). broad - based measures of wages that adjust for compositional changes in the labor force, such as the employment declines in used car prices would begin holding down 12 - month inflation once most of the earlier price increases have fallen out of the 12 - month window. the lower inflation in durable goods is probably due to a number factors, including faster productivity growth in durable goods than in services and globalization. if wages rise in line with inflation and labor productivity growth, then real unit labor costs ( or the labor cost of producing one unit of output ) to businesses are constant. wages may grow slower or faster than inflation plus productivity growth for extended periods because of changing structural factors without being reflected in inflation. ultimately, however, persistently rising real unit labor costs will put upward pressure on prices. - 7cost index and the atlanta wage growth tracker, show wages moving up at a pace that appears consistent with our longer - term inflation objective. we will continue to monitor this carefully. 4. longer - term inflation expectations policymakers and analysts generally believe that, as long as longer - term inflation expectations remain anchored, policy can and should look through temporary swings in inflation. our monetary policy framework emphasizes that anchoring longer - term expectations at 2 percent is important for both maximum employment and price stability. we carefully monitor a wide range of indicators of longer - term inflation expectations. these measures today are at levels | powell, jerome h. ( 2019 ). β challenges for monetary policy, β speech delivered at β challenges for monetary policy, β a symposium sponsored by the federal - 14 reserve bank of kansas city, held in jackson hole, wyo., august 23, https : / / www. federalreserve. gov / newsevents / speech / powell20190823a. htm. figure 1. spending on durable goods has surged, while spending on services remains weak 3. 2 trillions of chained 2012 dollars trillions of chained 2012 dollars 9. 0 8. 5 services ( right axis ) 2. 8 8. 0 7. 5 2. 4 7. 0 2. 0 6. 5 durables ( left axis ) 6. 0 1. 6 5. 5 1. 2 5. 0 note : the data are monthly estimates of real personal consumption expenditures and extend through june 2021. trend spending is shown by the dashed lines and is constructed using the average growth rates from january 2018 to january 2020. source : u. s. bureau of economic analysis. figure 2. the labor market is recovering, but the recovery is far from complete b. measures of unemployment a. change in nonfarm payrolls and total hiring thousands thousands percent monthly adjusted unemployment rate payrolls ( right axis ) hires ( left axis ) - 2000 - 4000 unemployment rate long - term unemployment rate - 6000 - 8000 note : payroll data are three - month moving averages of total nonfarm payroll employment and extend through july 2021. total private hire data are three - month moving averages and extend through june 2021. source : u. s. bureau of labor statistics. - 3 - 3 note : the data extend through july 2021. the long - term unemployment rate is the share of the labor force that has been unemployed for 27 weeks or more. the adjusted unemployment rate begins in february 2020 and is defined in footnote 5. source : u. s. bureau of labor statistics. figure 3. measures of broad - based inflation generally remain moderate monthly percent 18 - month total pce inflation ex. durable goods 18 - month core pce inflation ex. durable goods 12 - month dallas trimmed mean ( pce ) - 1 - 1 note : dallas trimmed mean data are 12 - month percent changes and extend through june 2021. inflation excluding durables are 18 - month annualized changes and extend through june 2021. source : federal reserve bank of dallas ; federal reserve board staff calculations. figure 4. | 1 |
carolyn wilkins : bank of canada β s latest monetary policy report press conference opening statement by ms carolyn wilkins, senior deputy governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 13 july 2016. * * * good morning. governor poloz and i are pleased to be here to talk about today β s interest rate announcement and our monetary policy report ( mpr ). before turning to your questions, let me spend a few minutes highlighting the main points of discussion that took place within governing council. our bottom line is that the underlying forces that underpin stronger growth in canada are intact, and the adjustment of the economy to lower oil prices is well under way. that said, both international and domestic factors have led us to revise down our forecast for gdp growth. most importantly for canada, there is good underlying momentum in the us economy, even if the composition of us growth is somewhat less favourable for canada than it was in april. we are seeing relatively strong labour market conditions in the united states, consumers are confident, and the rate of new firm creation is back near pre - recession levels. all of this suggests that the weak start to 2016 was largely temporary. the us economy remains a key driver for global growth, which we forecast will strengthen gradually to 3 1 / 2 per cent by 2018. however, the results of the referendum in the united kingdom have clouded the global outlook. governing council carefully considered how best to incorporate the effects of the brexit vote into the outlook. it is early days, and there will be a prolonged period of uncertainty as authorities work out how the united kingdom will exit from the european union. governing council decided to incorporate in the base case projection a 0. 2 per cent reduction in the level of global gdp by the end of 2018. this reflects direct trade effects and some confidence effects on business investment. we are assuming that the brexit process will proceed in an orderly fashion. financial markets were resilient despite sharp adjustments in a wide range of global asset prices in the wake of the vote, and financial conditions are generally more accommodative. now let me turn to the canadian economy. our discussions focused on how we should look through the choppiness in recent data to see the underlying trends, and what these trends mean for the inflation outlook. among other factors, the fires in northern alberta, which have been costly for many, represent a sharp, but temporary, hit to the | charles bean : polymer banknotes remarks by mr charles bean, deputy governor for monetary policy of the bank of england, at the bank of england, london, 10 september 2013. * * * good morning and welcome. one of the bank β s most visible responsibilities is the issuance of banknotes. it is a long - standing responsibility that dates back to shortly after our founding in 1694 and over the past three centuries, our objective has remained the same, namely to supply good - quality, genuine banknotes that command the people β s trust. meeting that objective helps us to achieve one of our core purposes, which is to maintain confidence in the currency. following a three - year research programme, we are today announcing the launch of a public consultation regarding the possible introduction of polymer as the basis for the next generation of banknotes. polymer banknotes are made from a durable, yet thin and flexible plastic film. design features of the banknote are printed on the film, meaning these notes can look very similar to notes printed on paper. if the public reception to the proposal is supportive, then the recently announced sir winston churchill Β£5 and jane austen Β£10 notes would be issued on polymer. this change would happen in 2016 and 2017 at the earliest. the bank β s research programme has been wide ranging, investigating the impact of the introduction of polymer notes along several dimensions, including : security, durability, costeffectiveness, the impact on stakeholders in the cash industry, environmental considerations, and the likely impact on noteholders. in undertaking the research, we have worked closely with external stakeholders from the cash industry and have already engaged with the public through several independently - managed focus groups. and we have consulted other countries that have undertaken research into different banknote materials, of which several have already switched to the use of polymer, including australia and canada. based on this research, we are confident that printing our banknotes on polymer would bring several benefits : first, polymer notes are more secure. polymer notes are harder to counterfeit and allow for the inclusion of β windows β or clear portions in the design, which considerably enhances counterfeit resilience. such features also allow users to check whether notes are genuine quickly and easily. second, polymer notes are more durable and resistant to damage. as a result, polymer banknotes last at least two - and - a - half times longer than notes printed on paper. and because polymer banknotes last longer, they don β t need to be replaced | 0 |
policy. and thanks to this credibility, inflation expectations are extremely well - anchored for the next five and ten years in line with our definition of price stability. β would you say yourself that the non - standard measure of buying government bonds on the secondary market β designed to support euro area countries in trouble β did not work and so has to be scrapped very soon, as one of your colleagues says? no! this is not the position of the governing council, with an overwhelming majority. this non - standard measure, like all other such measures, was designed to help restore a more normal functioning of our monetary policy transmission mechanism. and we are withdrawing all the liquidity, euro for euro, that is supplied through this programme. as regards euro area countries in trouble, what is the position of the ecb on what happens when, three years from its inception, the efsf expires? can a permanent resolution mechanism be put in its place? we have said clearly that considerably strengthened fiscal and competitiveness surveillance, as we are calling for, is the appropriate instrument with which to minimise the risk of recurrent fiscal crisis. however, if the risk of debt crisis were to become relevant despite the previous measures, a crisis management framework could be useful. it would have to rely upon very strong policy conditionality and reinforce incentives for pre - emptive fiscal and macroeconomic adjustment. some economists think that a too long period of low interest rates can endanger financial stability. it seems that new financial bubbles are growing in the emerging markets. some politicians, such as italy β s treasury minister giulio tremonti, say speculation is rife again, as strong as ever. the remarks of giulio tremonti are always stimulating. as regards the ecb, we have demonstrated in the past that we are very keen not to embark on policies that would foster volatility and financial instability. the euro area countries can count on the ecb to deliver price stability and to solidly anchor inflation expectations, a necessary condition for financial stability, even if it is not a sufficient condition. i am sure this preoccupation is shared by all the central banks in the world. it is striking to see the extent to which confidence in central banks and in their capacity to deliver stability is important in our democracies. central banks are, by construction, devoted to stability, they are medium and long term - oriented and they are independent. i think these are some of the reasons why the new systemic | jean - claude trichet : how to better protect the euro area against financial instability β interview in la stampa interview with mr jean - claude trichet, president of the european central bank, in la stampa, italy, conducted by mr stefano lepri, 14 october 2010. * * * mr president, is the crisis of the euro over? i interpret your question as applying more to financial stability in the euro area than to the euro itself. i do not think there has been a crisis. the euro is the single currency of 330 million people and enjoys a high degree of confidence among investors and savers because it has delivered price stability remarkably well over the last 11Β½ years. what we had was a situation in which a number of countries had not respected the stability and growth pact. these countries have now engaged in policies of fiscal retrenchment that were overdue. they have to implement vigorously these policies which are decisive for the preservation and consolidation of financial stability in europe. but, from now on, the rules must be strengthened. it was necessary to fully respect the letter and the spirit of the stability and growth pact. we have made that point constantly over the last years. on top of that, the governing council of the ecb β with mario draghi, the governor of the banca d β italia β calls for a β quantum leap β β a very, very significant improvement β as regards fiscal surveillance inside the euro area. we must also engage in surveillance of monopolies and, in particular, of relative competitiveness and of current account imbalances. to that end, we must exploit the possibility of secondary legislation under the current treaties to the maximum extent possible. even by imposing automatic sanctions? france, italy and some other countries would prefer not to. for us, the proposals of the european commission move in the right direction. but more ambitious reforms are needed. with the benefit of hindsight we know now that it is very important to engage in quasi - automatic sanctions, and with an accelerated procedure, with the countries that break the rules. if we want the euro area to better protect itself against financial instability, room for discretion in applying the rules must be reduced. sanctions must be possible in the early stages of macroeconomic surveillance. if this is not a common, it is a collective economic policy. but is it necessary to add a new rule on debt levels? in italy some are afraid a swift debt reduction β 2. 75 points each year in our case | 1 |
more broadly. however, there are a number of factors that suggest considerable resilience in the household sector to rising interest rates. first, aggregate household balance sheets are in very good shape. while households have high levels of debt, this is accompanied by sizeable holdings of assets ( graph 2 ). strong growth in housing prices over 2021 and early 2022 has boosted asset values for many homeowners, with housing assets now comprising around half of household assets. the small decline in housing prices in recent months has only marginally eroded some of the large increases seen over past years. graph 2 household balance sheet share of disposable income % assets % liabilities 1, 000 1, 000 housing 2022 1992 superannuation deposits other * * other assets include financial assets held outside of superannuation or deposits, consumer durables and all other non - housing non - financial assets ; other liabilities includes personal credit, student loans and all other non - housing liabilities. sources : abs ; apra ; rba furthermore, households have saved a large amount of money since the onset of the pandemic β around $ 260 billion. these savings have been put into redraw facilities as well as offset and deposit accounts. this reflects a couple of factors. considerable government support was provided to households and their employers during the pandemic. this meant that incomes held up very well. the banking system also helped households and businesses to weather the crisis by providing payment holidays and working with their customers to recommence repayments as their situation permitted. both of these factors were good for household cash flows. at the same time, consumption opportunities were curtailed, particularly for discretionary services. even though expenditure on goods increased, households were still spending less than they were prior to the pandemic. as a result, the household saving rate rose sharply ( graph 3 ) and many households therefore built up large liquidity buffers, including those households with mortgages. very low interest rates also helped many households add to their savings through reduced interest payments. since the start of the pandemic, payments into offset and redraw accounts have been substantial, totalling around 3Β½ per cent of disposable income ( graph 4 ). the accumulated stock of these savings could help to ease the transition to higher mortgage payments for many borrowers, allowing them to sustain higher levels of consumption than otherwise. graph 3 household saving ratio share of household disposable income % % scheduled mortgage | - evaluate. that has happened countless times before and will again, no doubt. it means that attention needs to be given to the things that help our economy work to deliver what we need even with a lower terms of trade. these were the sorts of things that made a bis central bankers β speeches difference before the mining boom. they are not my field of expertise. i can simply observe that things such as : β’ open, competitive markets ; β’ education and skill building ; β’ flexibility and adaptability ; β’ quality public infrastructure ; β’ strong public institutions, and pragmatic, balanced regulatory arrangements ; and β’ rewards for entrepreneurial risk - taking are likely to give us the best chance for the kind of prosperity we seek. public policy will have its own contribution in fostering such an environment, but it is businesses ( large and small ) and individuals making their own choices that will ultimately deliver whatever success we are capable of. bis central bankers β speeches | 0.5 |
and codes ; the financial stability forum identified 12 out of them as key for the international financial stability and suggested incentives to implement them. the implementation of these standards is in the self interest of all partners in the process of economic and financial globalisation. the commitment of countries to implement codes and standards is likely to be reinforced if market participants actually reflect information on observance of codes and standards in differentiated credit ratings. 1. 1. 2 Β· international financial institutions have also continued to proceed toward greater transparency, in particular the participation of 60 countries on a voluntary basis in the pilot initiative for the release of imf article iv reports. Β· as regards the private sector, progress may take the form of voluntary improved disclosure, more demanding statistical reporting and extended requirements for nontransparent segments of the financial markets. prevention also lays on sound economic conditions. a sound macro - economic framework and appropriate macro - economic policies are essential as they condition the resilience of any economy to external shocks. three issues are worth being addressed in that respect : - as far as the choice of an exchange rate regime is concerned, the sustainability of any regime depends crucially on its consistency with a country β s domestic macroeconomic and structural policy framework. as a consequence, the so called β corner solutions β are not necessarily the only available options ; β intermediate solutions β remain relevant options, particularly for open economies with close links to a partner country ( or a single currency area ) that maintains price stability, or for countries experiencing high inflation anchoring the currency provides a simple and credible rule for monetary policy ; in that regard, intermediate solutions might be particularly appropriate for countries which apply to join the european union. - the soundness of domestic financial systems is a core element in the ability of an economy to resist external shocks ; furthermore, it is clear that weaknesses in the financial system can lead to financial instability and therefore trigger capital outflows, as experienced in the context of recent financial crises. as a consequence, emerging market economies should establish an appropriate institutional, supervisory and regulatory framework, building on international standards, such as the core principles for effective banking supervision issued by the basle committee on banking supervision. - the implementation of sound macro - economic policies is also key as regards crisis prevention. in that respect, let me just say a few words on reserve and debt management. to mitigate the volatility of capital flows and especially short term flows and reap the benefits of capital account liberalization, one should adopt a risk management | french franc and in the creditworthiness of france in connection with the policies set forth by the president of the republic and the government for the reduction of government deficits, the stability of the franc and monetary union in 1999. in 1996, the banque de france's repurchase tender rate was cut from 4. 45 % to 3. 2 % today. it is one of the lowest rates in the g7 countries in both nominal and real terms. the five - to - ten - day repo rate fell from 5. 85 % to 4. 75 %. short - term market rates eased substantially, with three - month rates shedding almost 400 basis points since october 1995 and currently standing at around 3. 4 %. the easing in short - term rates went hand in hand with a significant decline in long - term rates, which are the reference for a large share of lending to the private sector. ten - year rates have fallen by more than 100 basis points since october 1995. thanks to the credibility of every component of its economic policy, france today enjoys the lowest medium - and long - term market rates in the european union, and the third lowest rates in the world, bettered only by japan and switzerland. this brings me to the monetary policy decisions for 1997. 1. the ultimate goal of monetary policy is to ensure price stability, as required by legislation. the objective of the monetary policy council is that the increase in prices, as measured by the consumer price index, should not exceed 2 % in 1997. as in the medium term. 2. to meet this ultimate goal, the banque de france uses two intermediate objectives, one of which is external and the other internal : - the objective of a stable external value of the currency : as it has been for ten years, the stability of the franc will be maintained against the group of the most credible currencies in the european exchange rate mechanism. - an intermediate internal growth target for the money supply assessed by the development of the narrow and broad monetary aggregates : in 1997, the money supply should be able to show a medium - term growth trend of 5 %. this figure is consistent with price inflation of no more than 2 % and non - inflationary real gdp growth of about 2. 5 %, which could be exceeded, in view of the potential for growth to catch up in the medium term. the monetary policy council has decided to simultaneously monitor the main narrow and broad money aggregates in order | 0.5 |
. this is evidenced by the sharp increase in capital investment since early 1993, especially in hi - tech equipment, which has persisted and even accelerated in recent quarters. underlying this apparent bulge in expected profitability and rates of return, as i suggested in my july humphrey - hawkins testimony, may be a maturing of major technologies in recent years. the synergies of lasers and fiber optics have spurred large increases in communications investments. the continued extraordinary spread of computer - related applications, as costs of manipulating data and other information fall, has also been a major factor in increased investment outlays. the combination of advancing telecommunications and computer technologies have induced large investment outlays to support the internet and utilize it to realize efficiencies in purchasing, production, and marketing. this dramatic change in technology, as i pointed out in earlier testimony, has markedly shortened the lead times in bringing new production facilities on line to meet increased demand, and has accordingly significantly reduced longer - term bottlenecks and materials shortages, phenomena often leading to inflation in the past. indeed, this faster response of facility capacity, coupled with dramatic declines in transportation costs owing to a downsizing of products, has led to speculation that we are operating with a new β paradigm, β where price pressures need rarely ever arise because low - cost capacity, both here and abroad, can be brought on sufficiently rapidly when demand accelerates. before we go too far in this direction, however, we need to recall that it was just three years ago that we were confronted with bottlenecks in the industrial sector. though less extensive than in years past at similarly high levels of capacity utilization, they were nonetheless putting visible upward pressures on prices at early stages of the production chain. further strides toward greater flexibility of facilities have occurred since 1994, but this is clearly an evolutionary, not a revolutionary, process. at least for the foreseeable future, it will still take time to bring many types of new facilities into the production process, and productive capacity will still impose limits on meeting large unexpected increases in demand in a short period. more relevant, by far, however, is that technology and management changes have had only a limited effect on the ability of labor supply to respond to changes in demand. to be sure, individual firms have acquired additional flexibility through increased use of outsourcing and temporary workers. in addition, smaller work teams may be able to adapt more readily to variations in order flows. while these techniques put the right workers at the right spots to | a good out - of - sample forecasting model. economists in r & s and other divisions, as well as academics, have made progress on this front, but there is room for further improvement. in addition to the challenge of how to best use these tools and data at the fed, r & s faces the challenge of understanding what these new technologies mean for labor productivity and the economy. the other challenge i want to highlight is that of making decisions under uncertainty. this is not a new challenge, of course. john maynard keynes and frank knight provided book - length treatments of the subject a century ago ( keynes, 1921 ; knight, 1921 ). in addition, in 2003, alan greenspan observed, " uncertainty is not just an important feature of the monetary policy landscape ; it is the defining characteristic of that landscape " ( greenspan, 2003 ). the fact that uncertainty has been a challenge for so long makes me think that it will continue be a challenge going forward, and in the wake of the pandemic, it is highly salient. in 1967, william brainard argued that uncertainty about the power of monetary policy implied that policy should respond more cautiously to shocks than would be the case if this uncertainty did not exist ( brainard, 1967 ). brainard's attenuation principle is a classic example of what has come to be known as the bayesian approach to uncertainty and is often cited as the foundation for the gradualism in the adjustment of monetary policy. that said, methods based on theories of ambiguity aversion led to antiattenuation. in other words, to protect against uncertainty, the appropriate response may be a quick and strong monetary policy response. of course, the right response to uncertainty is probably context specific and thus varies over time. as chair powell mentioned in a speech in 2018, there are two particularly important cases in which doing too little when there is high uncertainty comes with higher costs than doing too much ( powell, 2018 ). the first case is when attempting to avoid severely adverse events such as a financial crisis. in this situation, words like " we will do whatever it takes " will likely be more effective than " we will take cautious steps. " the second case is when inflation expectations threaten to become unanchored. if 2 / 4 bis - central bankers'speeches expectations were to begin to drift, the reality or expectation of a weak monetary policy response would exacerbate the problem. 4 how to respond to uncertainty is a matter that | 0 |
me point out that the national central banks within the eurosystem regularly monitor and analyse macroeconomic, fiscal as well as structural developments in their respective countries, publishing their findings in their monthly, quarterly or annual reports. these analyses clearly enhance our understanding of euro area developments. however, given its euro area focus, it is natural for the ecb to pay greater attention to the euro area perspective in its explanations of the single monetary policy. as mentioned at the beginning of my remarks, we are currently experiencing truly historic developments. the dream of a united europe stretching beyond former post - war rifts is about to become reality. although major challenges lie ahead, as many of the acceding countries are still developing into fully - fledged market economies, i believe that the signing of the accession treaty at the athens summit in april testified to our joint belief in an integrated europe. the clear endorsement of the treaty in the national referendums that have already taken place in a number of acceding countries provides evidence of this commitment. it goes without saying that an enlarged european union will require a number of adaptations in the working procedures and the internal functioning of european institutions and bodies, including a reform of the voting modalities of the governing council. i am well aware of the views that the european parliament has expressed in this regard, but let me again point out that the nice treaty set clear conditions and limits within which our reform proposal had to be formulated. while the adopted changes in the voting modalities are, admittedly, complex, the tried - and - tested principles of the eurosystem constitution, in particular the ad personam participation of governors and the β one member, one vote β principle for the members exercising a voting right, have been kept fully intact. this will ensure that, also in a significantly enlarged euro area in the future, the governing council will maintain its capacity for timely and efficient decision - making. upon accession, the new member states will join economic and monetary union with the status of β countries with a derogation β, and their central banks will become part of the escb. at a later stage, these central banks will become part of the eurosystem, once their respective countries have fulfilled the convergence criteria for adopting the euro. a key priority of the ecb is to have in place the necessary technical and institutional infrastructure to ensure an orderly enlargement of the escb and, later on, of the eurosystem. an interesting foretaste of the new, | management practices and standards under the more sophisticated approaches of basel ii will be useful for all institutions. admittedly, not all aspects of basel ii will be of use to every bank. for example, some of the quantification tools used in large complex institutions may not be necessary for the smaller and less sophisticated institutions. but, common tenets of good risk management embodied in basel ii - such as good processes to identify risks, the exercise of sound judgment to assess the extent of threats to solvency posed by the risks, and the discipline to control risks if they are disproportionately high - are equally applicable to all institutions, large or small. basel ii and financial stability one of the criticisms of basel ii is that capital cushions required under pillar 1 will tend to become more cyclical, dropping at the peak of economic cycles and increasing at the bottom of cycles when capital can be more scarce and expensive. if not addressed, this pro - cyclicality could erode the solvency cushions that banks should be holding against the effects of economic downturns. addressing this is one of the most important remaining challenges of basel ii and is particularly associated with the implementation of the more sophisticated approaches of the new capital framework. despite reassuring noises from the basel committee, this is not going to be an easy problem to address. few people, and definitely not banking supervisors, can foresee the peaks and troughs of economic cycles. but our inability to perfectly foretell the future should not be a pretext for inaction. an effective supervisory review process will be critical to create a counter - weight to the cyclical tendencies of the new capital framework, in order to prevent increased incidences of failures and financial instability. managers of banks and bank directors have an even more important role to play. they have the primary responsibility for identifying and assessing various threats to solvency of their own bank, including the risks that are partially covered or not covered at all under pillar 1 of the framework. they also need to be cognizant of the cyclicality arising from their quantitative tools and should have sufficient compensatory mechanisms against the cyclicality of regulatory capital requirements. these issues are referred to in pillar 2 of basel ii. this is what we refer to as β supervisory car β, to address risks not covered or not fully covered by the formulae in pillar 1. one of the biggest challenges to supervisors now is to develop more detailed guidance for the implementation of pillar 2 and to follow that guidance in a consistent | 0 |
that the external risk balance is biased downward. however, we must also be clear that this external scenario finds the chilean economy on the right foot. our growth rates have substantially outperformed those of previous years, investment is the most dynamic component of expenditure and our country has been absorbing a significant increase in the workforce without a corresponding increase in unemployment, while wages continue to grow. today β s lower level of inflation and its implications for the two - year convergence, not only allows adjusting the pace of monetary policy normalization, but also provides room to monitor and analyze the evolution of external conditions without the pressure of an imminent adjustment to the policy rate. plus, there the traditional cushioning effect of the exchange rate float and a deep local capital market. summing up, monetary policy is now in an expansionary position, with the policy rate that has remained low for quite a while. although in our baseline scenario we believe that it will still be necessary to raise it in the next two years, we have also been clear about the convenience of taking a break in the coming months. since we began the monetary policy normalization process, we have said that we will conduct this process gradually and cautiously, ensuring that the economy can adapt to a milder monetary stimulus and be on the lookout for changes in macroeconomic conditions that advise adjusting the pace of the process. the recent changes in the international economy and the new inflation measurement associated to the cpi updated belong to this class of changes. true to its commitment, the bank has thoroughly examined these developments, factoring them into its projections, and has concluded that it is necessary to adjust the expected trajectory of monetary policy. accordingly, we have put the normalization process on hold for some quarters, in order to allow inflation to go back to a path of convergence. in the same way, faced with the uncertainty regarding the value of the structural parameters on which the monetary policy is based after important economic changes, we have decided to include an update in the june monetary policy report, which will allow us to gauge its future trajectory. these actions attest to the bank β s commitment to its institutional mission, as well as its vocation to act on the basis of solid evidence and rigorous analysis of background information. in this way, we reflect our purpose of being an institution to which citizens can entrust the protection of price stability and financial stability, as essential determinants of their well - being. thank you. figure 1 accumulated inflation, february - december evolution of cpi and | an address by lesetja kganyago, governor of the south african reserve bank, at the south africa tomorrow conference, new york, 1 november 2018 south africa β s adjustment path good morning, ladies and gentlemen. thank you for the opportunity to share a few thoughts with you today. last year, we had a goldilocks global economy. inflation started picking up in the advanced economies, and in emerging markets, it was generally in line with targets. growth was stronger, but without much evidence of overheating. growth was also widely shared β most economies were accelerating. the world economy felt just right. as you know, at the end of the goldilocks story a family of bears comes home. our goldilocks tale has taken the same direction. the synchronisation of global growth has broken down this year, with the united states ( us ) surging ahead while other countries slow down. with unemployment at very low levels, the federal reserve has been raising rates, just as they told us they would. the combination of stronger us growth and higher rates has appreciated the dollar. this combination of factors has posed challenges for emerging markets. it has interrupted capital flows and prompted wide - scale currency depreciation. countries with substantial stocks of foreign - currency debt have seen their balance sheets deteriorate. inflation pressures have generally intensified. unlike goldilocks, however, most of us in emerging markets weren β t caught napping when the bears showed up. we had frameworks in place to handle such challenges. in particular, most of us could rely on flexible exchange rates to absorb the initial page 1 of 8 shock. this works best when countries have avoided contracting excessive foreigncurrency debt, as in the south african case. in these circumstances, the best thing one can do is to leave the foreign exchange markets to find its equilibrium. it is well understood that currency depreciation creates inflationary pressures. but many emerging market countries have strong central banks who can deal with this problem. given the credibility accumulated by these institutions, inflation expectations have stayed anchored in most emerging markets. 1 emerging markets have also been buffered by substantial stocks of foreign exchange reserves. it is clear that most countries are vastly better positioned than they were during the 1997 / 98 crisis. certainly, a few countries have been sorely tested by events this year, and the international monetary fund has been called into action. most emerging markets, however, should be able to get through without experiencing financial crises or | 0 |
detail a bundle of eight policy proposals categorised into several themes β resilience, cash acceptance, cash access and consumer demand5. this could include supporting merchants : to recycle cash at point - of - sale by remunerating them for cash out services by facilitating frequent, affordable cash delivery and collection for merchants through consolidation within the cash system with the creation of utility entities. these options could improve resilience by changing the incentives and commercial realities facing key cash system participants today. we are continuing to collaborate with various stakeholders relevant to the cash system to test the feasibilities of these policies, a result of which will be published for further consultation. we think it β s important that we understand the impacts of these _ _ _ _ _ _ _ _ _ _ _ _ https : / / www. rbnz. govt. nz / money - and - cash / future - of - money / future - of - money - - - te - moni - anamata - - - 2021 - issues - papers - public - responses / future - of - money - - - stewardshipresponses https : / / www. rbnz. govt. nz / - / media / 4c7b5d93b76d4c4099c952e9ed8d98b0. ashx nz β s changing payments landscape and potential responses to it ref # x909373 v3. 0 policies before implementing them however β so we plan to explore them further with a series of small live experiments from next year. to summarise on this aspect : the reserve bank remains committed to ensuring cash β as one form of central bank money - is available to new zealanders for as long as people value and use it. we are very concerned about the wellbeing and inclusion impacts for those that depend on cash to pay and save, yet no longer have free or easy access to it and are therefore looking at alternatives to bolster that. i β ll now move on to consider innovation in digital payments. mainstream innovation in digital payments is too slow electronic payments has been evolving at an ever faster pace globally since their introduction back in the 1970s6. for new zealand, most notably since eftpos was launched in 19857, innovation in retail payments has flourished and has played a key role in supporting our economic growth. for a while, new zealand showed leadership in the retail digital payments space through the adoption of | a whole more robust by reducing interbank and trade settlement risk. we are conscious that undue restrictions may stifle healthy competition, impair market efficiency, and limit cash system innovation, but we are also cognisant of the need to ensure the robustness and financial integrity is maintained. we are reviewing the extent to which the existing access criteria remain fit for purpose noting these points. greater access could increase competition and innovation in our payments landscape going forward but it needs to be weighed against the central importance of esas to our core functions and the risks that may arise from a wider range of institutions having direct access. central bank digital currency work scoping design and benefits approaches as you β ll be well aware, we are also exploring how a central bank digital currency, or cbdc, may support the role and use of central bank money in the digital age. our work on cbdc so far has already attracted a lot of interest from fintechs, financial institutions and the general public alike. we received more than 6, 000 responses to our 2021 cbdc issues paper as part of our first work stage12. many of these were from concerned individuals fearing the imminent removal of cash and assertion of state control through a cbdc. while misinformation drove some of this response, it was a timely confirmation that the people of new zealand still keenly value cash, along with the privacy and autonomy it provides. the key insight from this consultation was the need for any potential cbdc to be privacy centric. we have now embarked on the second stage of our cbdc exploration ( figure 3 ). in this phase, we are expanding beyond the desktop research to explore various aspects to design of a potential cbdc. we are undertaking thematic research on how a cbdc might support wider digital financial inclusion and wellbeing, and also enable an open, innovative and competitive payments ecosystem whilst maintaining user privacy. alongside our thematic cbdc research we will be undertaking proof of concept experiments to better understand what is possible and feasible. _ _ _ _ _ _ _ _ _ _ _ _ https : / / www. rbnz. govt. nz / - / media / project / sites / rbnz / files / consultations / future - of - money / future - of - money - summary - of - responses. pdf nz β s changing payments landscape and potential responses to it ref # x909373 v3. 0 figure 3 : cbdc exploration roadmap stage 1 : develop | 1 |
##wage feedback loop. avoiding this feedback loop from wages, mark ups and prices is precisely the main priority objective of the incomes agreement that we have been advocating in recent months at the banco de espana. it would consist of an agreement between firms and workers, under the framework of social dialogue, to share the inevitable loss of national income that higher commodity import prices entail. and agreement that should also, in our view, include the public sector, by avoiding both an across - the - board fiscal impulse in this context and a widespread use of automatic indexation clauses in expenditure items. the third session of this conference addresses this question. over a longer horizon, the spanish economy faces a series of structural challenges, some of them going back several years or even decades. in our conference we will be focusing on four of these challenges, namely the need to correct dysfunctions in the labour market, to boost productivity growth, to make public finances more sustainable and to address the challenges posed by climate change. first, spain faces the challenge of reducing the unemployment rate and the temporary employment ratio, which have been persistently high in recent decades. in particular, the unemployment rate of the spanish economy was, on average, 15. 9 % over the 2000 - 2019 period, as against 9. 3 % in the euro area. also the share of temporary employment was 28. 3 % over the same period in spain, but only 15. 4 % in the euro area. young people ( those under the age of 24 ) have been particularly affected by this instability, with their rate of unemployment ( 32. 5 % ) and their share of temporary employment ( 69. 5 % ) standing well above the euro area average in 2019 ( 15. 6 % and 52. 4 %, respectively ). reducing this high employment instability is key, especially for young workers, given its adverse economic effects in many spheres. for example, employment instability affects the accumulation of workers β human capital and can thus have very persistent effects on their working lives. furthermore, it also increases uncertainty over the future income path of the affected workers. this not only has consequences for spending decisions, but also for emotional well - being, the formation of new households and the birth rate. in this context, one of the main objectives of the labour market reform enacted in 2022 in spain is precisely to combat the high proportion of temporary employment. and indeed, since the approval of this legislation, permanent hiring has quickened significantly and temporary hires have slowed, with permanent | measures to mitigate the transition costs for the most vulnerable groups, public investment and the regulation of economic activity. the fourth session of the conference addresses this topic. last but not least, the sustainability of public finances is one of the most important challenges facing the spanish economy. the spanish debt - to - gdp ratio increased by 82. 7 percentage points between 2007 and 2021, to reach 118. 4 %, as compared with 95. 6 % in the euro area. maintaining high levels of government debt over time represents an important source of vulnerability for spain and leaves less fiscal space in the event of possible future crises. in the coming years, public indebtedness will remain very close to or even exceed current levels, unless an ambitious fiscal adjustment plan is implemented. specifically, various simulations indicate that if no fiscal adjustment is made in spain in the coming years, the pressure exerted by population ageing on public expenditure will drive up the government debt - to - gdp ratio. conversely, under an alternative scenario in which a consolidation effort is made β one consistent with maintaining the structural primary balance envisaged in the banco de espana β s latest macroeconomic projections for 2024 β, the government debt ratio will stand at levels close to 120 % of gdp in the coming decades. should there be a greater fiscal adjustment, for example if the structural primary balance improves by 0. 5 pp of potential output each year until reaching equilibrium β a path more consistent with the stability and growth pact rules β, public debt could fall to 82 % of gdp by 2040. were this adjustment also accompanied by an ambitious package of structural reforms, the government debt ratio could be around 79 % of gdp by 2040. in this context, the sustainability of spanish public finances needs to be bolstered in the medium term. to this end, a multi - annual fiscal consolidation plan will have to be carefully designed, and rigorously implemented once the spanish economy is firmly set on a course of recovery. the sooner such a comprehensive plan is designed and announced the better, as this would help boost confidence and reduce the uncertainty surrounding spanish economic policies. such confidence is particularly important in the context of monetary policy normalisation ( with the consequent tightening of financial conditions ) in which we find ourselves. this will be the topic of tomorrow β s policy panel discussion. let me conclude. the economy is currently in a highly uncertain environment characterised by the aftermath of two major shocks, the pandemic and the war in ukraine, with consequences that | 1 |
example. in practice this approach has often led us to focus our monetary policy analysis and discussion on the inflation measure und1x, as there is generally always reason to disregard the effects on inflation of indirect taxes and subsidies as well as of changes in interest rates. in some situations we have also decided to study inflation measures from which other price changes have been excluded, e. g. in spring 2001, when the prices of a number of goods such as electricity, heating oil, petrol, telecommunications and different kinds of food rose ; and 2003, when it was primarily fluctuations in electricity prices that had a very sharp impact on inflation for a period. inflation and inflation expectations in line with the target the result of the bank β s policy can be illustrated in different ways. let me begin with the most obvious gauge, the inflation outcome. if we start with the date that was set in the original decision β the beginning of 1995 β cpi inflation up to today has averaged 1. 4 per cent. if we instead go back to january 1993, when the new policy was announced, the same figure is 1. 7 per cent. if we focus on und1x, the underlying measure that guided policy especially in recent years but also during a large part of the period 1996 - 1999, the corresponding figures are 1. 8 and 2. 0 per cent, respectively ( see figure 1 ). whether this constitutes a good result or not is open to discussion, of course. allow me here to simply say that when the target was adopted, and as an observer outside the bank, i thought like many others that it would be very difficult to bring inflation down sustainably to a level around 2 per cent. what is particularly interesting in this context is that it has proved possible to establish a regime with a low inflation rate, close to the target, and to combine it with firm economic growth, which over these years has averaged almost 3 per cent a year, compared with about 2 per cent during the two previous decades. if anything, economic growth also appears to have become more stable since the inflation target was introduced. 2 another way to assess policy is to study whether we have acted in the way that we say we will, i. e. followed our policy rule. figure 2 shows our interest rate adjustments on the vertical axis and our inflation forecasts β deviation from the target two years ahead on the horizontal axis. as we can see there is a clear relationship between forecast deviations from target and our decisions, but there are | points therefore appeared reasonable. the rate for the continued adjustment of monetary policy will depend as usual on the information received. to understand the aim of monetary policy, it is necessary to be aware that monetary policy normally has an impact with a relatively long time lag. it is not aimed at the current low inflation rate, but at the expected inflation rate a couple of years ahead. one must also take into account the fact that even after raising the repo rate to 2 per cent, monetary policy is still expansionary. during the entire forecast period, the repo rate is expected to be lower than what can be considered an average key rate in the long term, and lending is expected to continue to increase relatively strongly, even after an interest rate rise. in my opinion, the information received recently does not significantly change the picture outlined in the inflation report. the national accounts for the fourth quarter of last year were slightly weaker than expected, but at the same time, the outcome for previous quarters was revised up, so that gdp growth for the year 2005 as a whole was as expected. inflation was slightly lower than expected in january, but in february inflation was slightly higher than expected. the moving three - month averages in the labour force surveys in february showed largely the same picture of labour market developments as that on which our interest rate decision was based. conclusion in conclusion, i would like to return to my theme for this talk, namely that things are better now. of course there are problems now, and of course one can discuss whether monetary policy should provide a little more or less stimulation. however, with the long - term perspective i have tried to provide here today, i believe that sweden has a much better economic situation now than during the problem years between the mid - 1970s and the mid - 1990s. we have a regulatory framework for exchange rate and monetary policy, as for fiscal policy, which promotes macroeconomic stability and good economic growth. it is important that we safeguard these regulations. | 0.5 |
ratio ( car ) stood at 16. 7 percent as of end - 2017. this is higher than the bsp standard and the global norm. this is evidence of the industry β s commitment to build adequate buffers for risk - taking. net income of p17. 9 billion in 2017 yielded 12. 7 percent return to shareholders. this came about from the steady growth in net interest income ( nii ) and more cost - efficient operations. these performance results should encourage the industry to stay on its healthy course. fostering stronger partnership for sustainable growth at this juncture, i would like to express gratitude to ctb for its exemplary dedication and commitment in supporting bsp β s mandate and advocacies. notable is ctb β s pivotal role in the industry β s adoption of the ulama and the lendr platform. for this, ctb was chosen as the outstanding strategic industry partner in the 2017 awards for bsp stakeholders. we reaffirm our continued partnership with ctb in the pursuit of prudential reforms, particularly risk and corporate governance standards. we recently issued the minimum prudential liquidity requirements for stand - alone tbs and other small banks. the minimum liquidity ratio ( mlr ) will promote resilience to liquidity shocks. to differentiate risks among bank borrowers, we are currently studying adoption of the risk - based pricing framework for bank loans. this will encourage good borrowers to avail of more loans because of the lower interest on account of their good credit standing. moreover, the proposal aims to reduce potential systemic risk from competitive pressures that may result in lower interest rates even for customers with poor credit quality. 2 / 4 bis central bankers'speeches parallel to this, the bsp fervently hopes to on - board all filipinos into the financial system. to make banking services more accessible, we issued the framework for basic deposit accounts. we trust that thrift banks will be at the forefront of opening basic deposit accounts. we trust that thrift banks will be at the forefront of opening basic deposit accounts. part of our strategy is the deepening of financial education and consumer protection initiatives, as well as leveraging on available digital technology to have greater scale in banking. charting the course towards digitalization a fintq inclusive digital finance report for 2017 β 2018 highlighted the huge opportunities for financial service providers to innovate financial products and services that offer the greatest potential in transforming the country β s financial landscape. thrift banks can take advantage of | inflation outlook is surrounded by significant uncertainty, and we will continue to follow a data - dependent approach to determining the appropriate level and duration of restriction. annexes 7 july 2023 slides english 1. i would like to thank thomas mcgregor, annukka ristiniemi, eliza lis, malin andersson, belen gonzalez, bruno fagandini, anna beschin and giulia gardin for their contributions to this speech. 2. de santis, r. a. and stoevsky, g. ( 2023 ), β the role of supply and demand in the post - pandemic recovery in the euro area β, economic bulletin, issue 4, ecb. 3. hahn, e. ( 2023 ), β how have unit profits contributed to the recent strengthening of euro area domestic price pressures? β, economic bulletin, issue 4, ecb. 4. for a comprehensive discussion of this topic, see lane, p. r. ( 2022 ), β inflation diagnostics β, the ecb blog, 25 november. 5. rubene, i. ( 2023 ), β indicators for producer price pressures in consumer goods inflation β, economic bulletin, issue 3, ecb. 6. the increase in services inflation mainly reflects the increase in services inflation in germany, which increased to 6. 1 % from 4. 4 % due also to an upward base effect following the temporary introduction of the 9 euro ticket in june 2022. 7. arce, o., hahn, e. and koester, g. ( 2023 ), β how tit - for - tat inflation can make everyone poorer β, the ecb blog, 30 march. 8. see also lane, p. r. ( 2023 ), β underlying inflation β, lecture at trinity college dublin, 6 march. 9. the ecb monitors several indicators of underlying inflation. these can be broadly grouped into three categories : ( i ) exclusion - based measures, ( ii ) trimmed measures, and ( iii ) model - based measures. 10. ehrmann, m., ferrucci, g., lenza, m. and o β brien, d. ( 2018 ), β measures of underlying inflation for the euro area β, economic bulletin, issue 4, ecb. 11. hahn, e. ( 2023 ), op. cit. 12. see also lane, p. r. ( 2023 | 0 |
technology, e - commerce, entertainment and other services have increased their reach and influence during the pandemic. globally, microsoft, google, meta ( formely facebook ), amazon and apple are the face of bigtechs. but beyond the united states, alibaba and tencent in china, mercado libre ( online market ) in latin america, ride - hailing services grub and gojek in south east asia, and mobile phone financial services firms in africa are increasingly exhibiting the characteristics of bigtechs though on a more regional scale. the global bigtechs are now estimated at 20 percent of the market capitalization on the new york stock exchange. to paint the picture more vividly, apple took 42 years to reach a market capitalization of us $ 1 trillion and 2 years to hit us $ 2 trillion. shockingly, all of the second trillion in valuation came in just 21 weeks to august 2020! the bigtechs have far and away displaced the traditional bluechips companies in manufacturing and aviation such as general electric and boeing in their dominance. second, is the proliferation of technology and innovations. from mobile banking to cloud computing, artificial intelligence to blockchain technology, internet of things, and robotics. all these developments herald significant opportunities to re - engineer the operations of governments and business and transform lives and livelihoods. indeed, we are at the cusp of the fourth industrial revolution, whose transformative powers are already evident in the financial sector, and will transform the way we live, work, and relate to one another. in the words of professor klaus schwab, who popularized this label : β it is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. β some of these technologies, such as artificial intelligence ( ai ) present significant opportunities to address some of our most pressing problems on the continent. for instance, despite micro, small and medium enterprises ( msmes ) being the engines of our economies, access to credit remains a key challenge. this in part arises from lack of traditional collateral such as title deeds used by financial institutions to secure credit facilities. with the proliferation of digital footprints, ai can be used to generate credit histories of msmes. these credit histories can then be used to appraise and appropriately price credit for msmes that would otherwise be excluded from accessing credit. the potential of ai extends to other critical areas including retail, advertising, manufacturing and health. but these | regional integration and capacity development β as you are aware, the common market for eastern and southern africa ( comesa ) regional integration process is progressing well. milestones achieved so far include the establishment of the comesa monetary institute, currently hosted here at the kenya school of monetary studies in recognition of capacity building as one of the key pillars necessary for achieving successful integration. partner central banks have identified the need to revise the frameworks governing hr policies and strategies in line with international best practice. the call for the establishment of an integrated framework for a holistic approach to capacity building among central banks in comesa is therefore a pertinent one. implementation of such an approach will enable regional banks to realize greater economies of scale by taking advantage of regional institutional and human resources. capacity building must, therefore, take a unified approach, with regional central banks coming together to pool resources and take advantage of regional diversity to achieve greater efficiency in organizational performance. 2. performance management and talent development β traditionally, central banks have had a multi - generational workforce with the older segment forming the majority of the workforce. hr managers are therefore faced with the challenge of balancing the demands of the older workforce with that of the younger workforce using recognized management principles. the younger workforce comes ready to take up responsibilities at a lesser age and experience, but with high bargaining power due to their knowledge and skills at hand and techno - savvyness. a clear shift is thus bis central bankers β speeches seen in terms of organizational career commitment to individualized career management. managing this set of people is essential for the growth of any industry but especially for central banks where the composition of the workforce is rapidly changing. the challenge therefore is on the need to develop individuals who have performance potential on the basis of past record and knowledge - based expertise while at the same time tapping into the expertise of the younger generation without compromising staff morale. furthermore, the hired for life mentality of the past is fast becoming obsolete as workers increasingly change employers. hr must therefore place emphasis on proper work - life balance, while at the same time motivating staff through continuous learning opportunities and positive feedback. 3. managing change β organizations are getting more and more technologically oriented. the banking sector particularly, has undergone revolutionary changes enabled by technology. in the central bank of kenya, for example, a number of technological innovations have been implemented. the success of these interventions is no doubt heavily dependent on managing the people issues surrounding the process. in order to realize acceptance at all | 0.5 |
cast a pall over the economy, resulting in a negative feedback loop delaying autonomous recovery. cognitive psychology tells us that perception creates reality. the prevalence of skewed negativism from the damaging demand shock could have dampened investment and new hires, and that in turn could have depressed potential growth. one can interpret this as one form of hysteresis, as described in economic textbooks. fortunately, various measures of business and consumer confidence are on an upswing everywhere, and what i might describe as a chain reaction of pessimism is almost a thing of the past. meanwhile, we are beginning to see active debate on the desirable policy mix for sustaining the recovery, and more generally on a possible new economic policy framework. if these discourses catalyzed by the launch of the new u. s. administration are uplifting business and consumer sentiment in one way or another, i would view this as a clearly positive development. a caveat regarding the global financial system : circularity of offshore dollars even as the global economy improves, there are still fragilities that should not be overlooked. one that i would like to point out is the dollar - denominated debt of some emerging economies, which has been repeatedly called to attention by observers including economists at the bank for international settlements ( bis ). these economies - - especially firms in these economies - - have increased the levels of dollar - denominated debt under the accommodative global monetary environment following the global financial crisis. now, as the united states embarks on monetary policy normalization, we now need to monitor the debt dynamics of these economies from two perspectives : increasing interest payment burden and exchange rate depreciation. mentioning the dollar - denominated debt of emerging market economies calls to mind the 1980s debt crisis in latin america, which shook the world and led to the establishment of the iif to deal with the problem. the origins of the debt crisis could be traced back to the recycling of excess dollars at oil - producing economies, which ballooned in the 1970s, to latin american economies through u. s. and european banks. when the united states began monetary tightening and the dollar began appreciating under the new reagan administration in 1981, the latin american economies suffered deteriorating debt dynamics and soon fell into arrears on their external payments. reflecting on their experiences during the asian monetary and banking crisis of the 1990s, many emerging market economies today have adopted flexible exchange rates, strengthened risk management at banks, and | at present, the whole society has reached broad consensus in protecting environment, establishing a harmonious society and realizing sustainable development. the financial industry should fully realize the importance of energy conservation and reduction of pollutant emission and take social responsibilities in environment protection. the financial markets should guide financial institutions to play an active role in the establishment of an energy conservation and environment - friendly society and promote economic restructuring and a shift of economic growth mode. commercial financial institutions should establish risk awareness when their clients have problems in environment protection, energy consumption and reduction of pollutant emission. in the first quarter of 2007, industries with high energy consumption and heavy pollution grew relatively fast. six industries, that is electricity, steel, non - ferrous metal, construction material, oil chemistry and chemistry industries, accounting for 70 percent of the total energy consumption and emission of sulfur dioxide, grew by 20. 6 percent, up 6. 6 percentage points. the state council has since required to restrain the relatively fast growth of industries with high energy consumption and heavy pollution. with policy guidance, sound legal system and enhanced supervision, industries and enterprises that cannot meet requirements in environment protection, energy conservation and reduction of pollutant emission will face more stringent policy environment. the financial institutions should establish policy risk awareness and stand vigilant to credit risks from companies with high energy consumption, heave pollution and high pollutant emission from the point of increasing credit assets β quality. ii. establish information mechanism that benefits environment protection, energy conservation and reduction of pollutant emission first, β window guidance β of credit policy should be strengthened. to carry out the comprehensive work plan for energy conservation and reduction of pollutant emission, the pbc, relevant supervisory authorities and the china β s associations of banks should enhance their guidance, and remind financial institutions to consider, when they issue credits, how to effectively control high energy consumption and heavy pollutant industries β excessively rapid growth, accelerate the removal of obsolete production capacities, promote technology advancement in energy conservation and reduction of pollutant emission, assist the development of recycling economy and earnestly enhance the quality of credit assets. second, information related to the illegal activities of enterprises in environment protection and pollutant emission should be included in the enterprises β credit registration system. in recent years, the credit registration system has broadened its coverage of information by including enterprises β and individuals credit information and other relevant information and it will include enterprises β environment protection information in the future. the credit registration system | 0 |
in - depth analysis and seek answers to some key questions. for instance : what kind of financial risks do climate and environmental threats pose for the finance industry? and could these risks weaken the resilience of the financial system, or indeed affect macroeconomic variables and monetary policy? the snb β s goal in joining the ngfs is to engage in dialogue and share knowledge in order to better understand β and anticipate β the potential impact of climate risks. page 3 / 3 | below 1 percent in the 2000s. when the economic growth rate follows a long - term downward trend, firms and households inevitably tend to consider that future growth will continue to be low anyway. such decline in firms β and households β expectations for future growth have restrained actual demand, such as business fixed investment and private consumption, and thus might have been one cause of a deeprooted deflation. deflation is not desirable, and, if the current low growth rate continues, it will become difficult to maintain fiscal conditions and social security in the future. therefore, strengthening medium - to long - term growth potential was a major challenge to japan β s economy since before the earthquake. to tackle that challenge will lead to avoiding the after - effects of the earthquake disaster including the hollowing out of industry. source of economic growth is each person β s power to generate added value the demographic vortex might have had a substantial influence on the long - term downward trend in the economic growth rate. if that is the case, one natural solution to strengthen the growth potential is to correct the demographic vortex. some examples include creating better conditions to support childbearing and rearing to reverse the downward trend in the birth rate or more actively accepting immigrants and labor force from abroad. however, even if we boost the birth rate now, it takes about 20 years before it leads to an increase in labor force. as strengthening the growth potential is a more urgent challenge to tackle, we cannot afford to wait for demographic changes to take place. let us go back to a simple mathematical formula. gdp, which is used to measure economic growth, is a multiplication of the number of workers and gdp per worker. given that the number of workers will be to a large extent determined by demographics that cannot be changed easily, there is no way but to increase gdp per worker in order to increase gdp. gdp is, in other words, added value and is distributed in the form of corporate profits and household income. therefore, creating added value is nothing more or less than firms increasing their own profit while raising employment and wages. in order to do so, it is necessary to tap potential demand of the field that is considered to have a good chance of success and create new markets. as specific directions, i mark four points that are deemed critical. further tapping global demand first, drastic globalization. incidentally, while the export share in gdp is about 50 percent in germany and korea and about 30 percent in china, it remains at about 15 percent in japan. | 0 |
. this should be done in parallel with pertinent measures to further the liberalisation of goods and services markets, the current regulation of which involves in some cases a diminished level of competition. one key area for progress along these lines is liberalisation in the services sector, as it encompasses some of the most dynamic activities and some of those with most job - creating capacity. likewise needed is further headway in liberalisation and competition in the network industries, so that the conditions in which inputs are supplied to other productive activities allow spanish companies to compete on an equal footing with our trading partners. and let us not forget the housing market. further improvements to rental regulations are needed to make this option more flexible and profitable, so that the purchase of housing for investment purposes is encouraged, thus helping reduce the supply overhang, and broadening the possibilities of meeting the population's demand for residential services. finally, i must reiterate that the soundness of the financial system is essential for ensuring the financing flows needed to restore economic dynamism. while the spanish financial system has shown notable resilience to the direct and indirect effects of the international financial crisis, the intensity of the adjustment the spanish economy is undergoing against a background of protracted financial tension adds further factors of pressure in terms of asset impairment, an increase in bad debts and a narrowing of bank margins. faced with these risk factors, not all banks are equally prepared, whereby the availability of appropriate mechanisms, such as those offered by the frob ( the fund for the orderly restructuring of banks ), will help banks face the restructuring necessary with the best results for the functioning of the economy and the least cost to taxpayers. however, i must say that, if reforms are not adopted promptly, high unemployment might be prolonged, which would contribute to increasing financial institutions'difficulties and would prevent the soundness of the financial system from acting, as it has to date, as an essential pillar of economic growth in spain. allow me to conclude by stressing that the spanish economy is at a decisive crossroads. if far - reaching reforms are not promptly adopted, we face the prospect of slow recovery with high levels of unemployment and public spending. conversely, if the right β although not easy β decisions are promptly taken, we will be able to resume a path of high growth based on a more productive and sustainable pattern. to achieve this it is vital to apply medium - term stability strategies and ambitious structural reforms, which should be well co - ordinated and credible | a mechanism to continue to enjoy the benefits of globalisation but on a smaller scale. as an illustration, in 2022, 44 % of global companies were developing regionalised supply networks ( up from only 25 % in 2021 ). evidently, some of the above - mentioned trends may well imply a further slowdown of the globalisation process beyond that observed in recent years, or even result in deglobalisation pressures. the eu response in response to these challenges, the eu has recently been launching a series of policies within the so - called open strategic autonomy agenda : an emerging set of regulatory, structural and fiscal policies that seek to address the eu β s economic vulnerabilities arising from geopolitical considerations. under the framework of open strategic autonomy, three types of policies have been proposed to reduce the eu's vulnerabilities. a first set of measures aims to assess supply chain dependencies and vulnerabilities and increase the resilience of the european industrial system. specific examples are the action plan on critical raw materials - aimed at reducing the eu's external dependence in the sourcing of such goods -, the " repowereu " initiative - aimed at reducing the eu's energy dependence -, and plans to drive the digitalisation of european economies. a second set of measures aims to protect eu countries from possible abusive practices adopted by third economies - practices that may be related to strategic or political objectives. these measures include those aimed at monitoring foreign direct investment flows from third countries and other measures designed to limit coercive actions against european companies. a third class of measures aims to preserve the international level playing field by compensating for competitive disadvantages that eu companies might face due to less stringent environmental and state aid policies implemented by third countries. examples are the regulation on foreign subsidies that distort the internal market and the carbon border adjustment mechanism ( cbam ). other countries have started to include geopolitical considerations in their economic policy decisions as well. foremost among these is the recent move by the us to restrict exports of semiconductors and advanced chip - making manufacturing equipment to china, and the adoption of the inflation reduction act, which provides tax credits to clean energy and electric car producers conditional on assembly and production in north america. in the particular case of the eu, and with a view to at least partially offsetting the costs of deglobalisation and to ensure a more robust and resilient eu economy, in my view strategic autonomy | 0.5 |
confirms our assessments for contained inflation pressures suggesting that money supply growth rates are moderate and in line with the economy β s demand for real money. in average terms, m3 annual growth was 11. 3 % in january β may triggered by a steady growth of deposits in the banking system. demand for money is dominated by public sector demand for funding, while the private sector β s demand was more moderate. lending to the private sector increased on average by 11. 5 % during the first five months of the year, about 1. 5 p. p. higher than 2010 h2. in contrast to previous years, lending is oriented more towards the national currency : all - denominated loans increased by about 14 % as at may. lending continues to be impacted by a moderate demand for loans while the banking system has adopted prudent lending practices, with tightened lending standards for certain market segments. financial markets were calm reflecting low risk premiums and a good liquidity situation. in the interbank market, interest rates fluctuated around the key interest rate, following its latest increase in march. the increase in the key interest rate is also followed by the yields in the bis central bankers β speeches government securities primary market and is reflected less in the all - denominated deposits and loans, due to factors of liquidity and risk that accompany financial intermediation. the yields curve has retained its trend, indicating low inflation premiums in financial markets. summing up the expected economic performance, our projections and assessments suggest that economic growth will continue even in 2011 h2. aggregate demand will be supported less by the public sector and foreign demand, while the private sector is expected to provide a larger contribution to the economy. nevertheless, economic growth is not expected to fill completely the negative output gap. the albanian economy will continue to have spare capacities in the capital and labour markets, avoiding potential wage β inflation spirals and producing contained inflation pressures in the medium run. in addition, imported inflation is expected to decline and administered prices effects are expected to be eliminated in the medium run. in the presence of anchored inflation expectations by economic agents, the bank of albania deems that consumer price inflation will gradually settle close to its target of 3 % in the period ahead. * * * drawing on the information above, the supervisory council of the bank of albania deemed that inflationary pressures remain, in the short run, high. however, they are controlled and in the medium run they are expected to follow a downward trajectory. in the absence | the first and second quarters of 2011 relied mostly on the industry and services sectors growth. owing to foreign demand, industrial output increased by 12. 3 % in annual terms, providing major contribution to the expansion of the economy in the first quarter. the services sector, topped by β trade, hotels and restaurants β, continued to support economic growth, although less than last year β s quarters. this sector β s annual growth marked 1. 8 % in the first quarter of 2011. the services sector performance is closely connected to consumer spending performance, which i will address later. after five quarters of contraction, the construction sector posted annual growth of 4. 6 %, triggered by higher public investments during this period. lastly, agriculture maintained growth and contribution rates similar to the last quarter of 2010. indirect data obtained from business surveys and monetary indicators suggest that this performance is and will continue to be along the same lines even during the second quarter and beyond. on the demand side, economic activity relied mostly on foreign demand and public spending, while private sector contribution was low. indirect data support the assessment for a weak private consumption performance during 2011 h1. in spite of increased available income and improved bank lending β as indicated by higher employment, real wage and consumer and house - purchase loans β consumer confidence was low. the albanian consumer continues to be cautious in spending, displaying added saving preference over a number of quarters. naturally, this behaviour is a structural correction of the consumption model shown over the past years, but the slow performance of consumer spending reflects, also, added uncertainty about the future. while the first component is welcomed, in the context of preserving macro - and micro balances, the second component may and should be corrected : households consumption has the potential to grow and be stimulated in the short and medium run. taking into account the significant impact of consumption on the gdp, its performance will substantially condition economic growth during this time span. bis central bankers β speeches private investments increased at moderate pace during 2011 h1 as illustrated by higher loans for investment and imports of capital goods. although financial terms β availability, liquidity and bank interest rates β are significantly improved, the existence of spare capacities in the economy limits the demand of businesses for investment. in the short run, the position of economic activity operating below its potential conditions a slow performance of investments. in the medium run, investments performance will reflect developments in internal and foreign demand performance. given the need for a more competitive albanian economy and its further orientation towards exports, stimulation of investment | 1 |
they are compensated on the upside. this extends the boom. incentives incentives may be very important in determining whether we have a system that is dampening rather than amplifying. i think bad outcomes are not just about bad luck, they are also about bad incentives. the problem with incentives may be due to faulty compensation schemes, poor risk management or the fact that participants do not bear the full costs of their actions. one problem that we had in the u. s. banking system over the past year was a reluctance of banks to raise sufficient capital to be able to withstand bad states of nature. they didn β t want to do this because this might unnecessarily dilute their shareholders. as a result, many banks did not hold sufficient capital and market participants knew this. this led to tighter financial and credit conditions, which made the bad state of the world more likely. this is an example of both bad incentives and an amplifying mechanism. the supervisory capital assessment program ( scap ) exercise that we undertook in the united states leaned against this. by forcing all the banks to have sufficient capital to withstand a stress environment, we increased the likelihood that all the big banks would be able to survive a stress environment. this generated an improvement in confidence and a willingness of banks to engage with each other. this also made it easier for banks to be able to tap the capital markets. the scap exercise made a bad state of the world outcome less likely, helping to create a virtuous circle rather than a vicious one. the scap exercise was conducted on an ad hoc basis. it probably would be much better to figure out how to do these types of exercises on a systematic basis. such exercises may need to be hardwired into the oversight of the financial system. capital requirements are one area where i think we could adjust the rules in a way to improve incentives. for example, imagine that we mandated that banks had to hold more capital, but that the added capital could be in the form of a debt instrument that only converted into equity if the share price fell dramatically. what would this do? it would change management β s incentives. not only would management focus on generating higher stock prices, but they would also worry about risks that could cause share prices to fall sharply, resulting in dilution of their share holdings. debt convertible into equity on the downside would also be helpful in that it would be a dampening mechanism β equity capital would be automatically replenished, but | ##sson, l. e. o. ( 2006 ), β monetary policy and japan β s liquidity trap β. annex chart 1 chart 2 | 0 |
important, if elementary. individual banks have also been able to increase their exposure to borrowers with which they do not have a lending relationship. ( indeed, some commentators suggest that it may sometimes be more effective for second - tier and smaller banks to take corporate credit exposure via the derivatives market than via participation in the lower tiers of loan syndicates. ) if, overall, the result were a greater dispersion of risk around the banking system and fewer large exposures relative to capital, the system as a whole would probably be safer even if, net, no credit risk had left the banking industry in aggregate. according to various surveys, some credit risk has been shed to non - banks, including insurance companies, pension funds and hedge funds. that too should, on balance, promote the resilience of the system, not least because non - banks are not part of the core payment systems that underpin our financial markets β provided, of course, that banks prudently manage their counterparty exposures to non - bank sellers of credit protection. as others have argued, this is a change of degree rather than kind : with the growth of corporate bond markets, and especially securitisation, non - banks have been my thanks to mike cross, colin miles and david rule for long - running debates on the issues discussed here. for comments, to peter andrews, andrew bailey, alex bowen, alastair clark, paul fisher, damien lynch, peter westaway and simon wells. and to sandra bannister for secretarial support. for an early review, see rule, d, ( 2001 ) β the credit derivatives market : its development and possible implications for financial stability β, financial stability review, issue 10, june 2001, pages 117 - 140 and rule, d, ( 2001 ), β risk transfer between banks, insurance companies and capital markets : an overview β, financial stability review, issue 11, december 2001, pages 137 - 159. running credit portfolios for years. by separating the provision of liquidity from exposure to credit risk, credit derivatives, and the related developments in structured finance, give non - banks new ways of accessing credit risk. as well as more dispersed risk buttressing systemic stability, the innovation of credit derivatives has plausibly taken us a further step towards complete markets, in effect providing a richer market for credit insurance than previously existed. investors and others may, therefore, be able to get a little closer to the portfolios they really | assessing the margin of spare resources in the economy is unusually difficult at present. capacity utilisation within companies, as measured by surveys, has risen. although unemployment has risen further, it is difficult to know how much of the rise in unemployment actually represents increased slack in the labour market. over the past year or so, the labour force has grown rapidly, following strong migration from eastern europe and elsewhere, and a rise in participation rates. there is, of course, great uncertainty about the scale of migration which has clouded estimates of the supply capacity of the economy. moreover, it is difficult to know how far migration affects demand for goods and services as well as supply. so the overall impact of migration on inflation in the medium term is unclear. against a background of firm growth and a limited margin of spare capacity, and with inflation above the target, the mpc judged last week that an increase of 0. 25 percentage points in bank rate was necessary to keep cpi inflation on track to meet the target in the medium term. so that is where we are now. where will interest rates go next? i do not know. and the reason i do not know is that we do not take our decisions in advance, but wait to see how the economy unfolds and then take our decisions one month at a time. the black country is where it all began. but now we must look to the future. the black country has entered a new era. and you are making it happen. i have explained how the mpc sees the prospects for the economy. if we can retain the degree of stability that we have seen now for more than a decade, then you will have the opportunity to start and expand businesses that will compete for black country business awards in the years to come. the winners tonight are shining examples, and i know you are all looking forward to finding out who they are. it has been a pleasure to come back to where it all began for me. and, whether or not you are one of the lucky few to win an award tonight, i wish your business every success. | 0.5 |
the spectrum that are part of the bank β s staff tool box. vii chart 5 : estimates of potential output growth from four different models year - over - year percentage change % integrated framework extended multivariate filter multivariate state - space framework basic multivariate filter source : bank of canada estimates last observation : 2018q1 models that incorporate an economic structure are especially useful for projecting tlp growth, since tlp is based on variables and relationships that are difficult to measure and predict. tli growth is comparatively easier to forecast because it is based on accurately observed labour market outcomes : the employment rate, the working - age population and average hours worked. in contrast, tlp growth depends on two variables that are less concrete and therefore more challenging to observe precisely. the first of these, capital deepening, is a measure of growth in the ratio of capital per hour worked. viii the second is a more elusive concept called trend total factor productivity, or tfp. while we have some observable measures of investment and capital stock growth, we do not have the same for trend tfp β which essentially includes everything affecting firms β productivity that isn β t captured by capital stock growth. these β residual β factors include, for example, technological improvements and the impact of education and training. ix another way that the bank manages the uncertainty around potential output growth is by conducting an in - depth review of our projections on an annual basis. first, economic data are regularly revised, so for that reason alone an annual review makes sense. also, our empirical techniques are β living β in a sense β we are continually improving them as we learn from experience and ongoing research. x plus, in the annual reassessment, we further account for uncertainty by publishing ranges around our estimates and projections that expand with time. we also list the factors that could lead potential growth to be lower or higher within those ranges. xi i would like to stress that the bank recognizes the difficulties associated with measuring potential and the related uncertainty, and so takes a deliberate and rigorous approach to managing this uncertainty. we work hard to ensure that our models evolve in line with prevailing best practices. and on top of using multiple techniques, we corroborate the models β results against other measures of capacity and inflation, and then apply wellinformed judgment. finally, the uncertainty around these estimates is taken into account in the formulation of monetary policy. this helps us ensure that our estimates and our policy decisions are consistent with our broader economic outlook | ? when banks double the value of the assets and liabilities on their balance sheet, this does not necessarily double the number of transactions, or the amount of labour or physical capital required to produce the necessary services. this observation seems to undermine the justification for deflating asset values using a general price index such as the gdp deflator or the consumer price index. furthermore, the recent fall in asset prices and the de - leveraging process under way may lead to some surprising results in the breakdown of financial services into prices and quantities. let me turn to my second set of remarks, concerning existing measures of productivity in the financial sector and what they tell us about its sources. perhaps the most natural starting point is the measurement of scale economies, an issue on which academic researchers have long provided advice for competition policy. empirical evidence on returns to scale in the banking industry has sometimes suggested that larger institutions benefit from greater cost efficiency. however, studies of mergers and acquisitions have often failed to find such improvements. i think it is important to improve methods in this area for at least two reasons. first, increasing european financial market integration is likely to raise the size of the average bank. central banks often repeat that the european financial services industry is excessively fragmented. increasing integration should allow a more efficient provision of financial services, improving the allocation of capital to investments with better risk - return profiles and therefore raising the potential for economic growth. second, the recent depressed value of financial equity and public intervention in the banking sector to rescue distressed institutions will probably accelerate the process of mergers and acquisitions as the outlook recovers. thus the existence and extent of scale economies remain timely questions for research and policy. scale economies are only one source of productivity growth. what used to be called scope economies are improvements in efficiency obtained by altering the mix of outputs or the mix of inputs. in academic research, these have proven even more difficult to measure than scale economies. however, i would encourage you to think about these issues in light of recent events. the demise of the investment bank suggests a return to universal banking, with large groups taking over specialised financial institutions. such a development may be motivated by a need to improve risk management, but it could also bring benefits in terms of an improved mix of different financial outputs that are jointly produced. finally, an additional source of productivity growth is efficiency change, meaning the extent to which individual banks move towards ( or away from ) the best - practice frontier. again, looking at the conference programme, i notice a | 0 |
we face the following trilemma : we cannot have all three things at once : ( a ) full, global market liberalisation, ( b ) national sovereignty, and ( c ) democracy. we must choose two of these three, and give one up. 1 if we choose full economic globalisation, without any obstacles to free trade, then we must give up either our national sovereignty or our democratic ability to oppose global rules. for example, if we give up democracy, an autocratic ruler could decree that everyone has to accept the global 1 / 4 bis central bankers'speeches rules. if we give up national sovereignty, we could have a global democracy. i think it is fair to say that we would rather not give up democracy or national sovereignty. what remains is to limit market liberalisation, where our societies deem this necessary. this is not a convenient truth, because it means we have to look for answers in less clear waters : we need to find those areas where global cooperation and harmonisation is sensible, and how far it can go. this strategy must then go hand in hand with more national autonomy for finding domestic solutions to national challenges. given these constraints, a realistic middle ground would be focused global cooperation : continuing to cooperate and to harmonise regulations, where possible β but also focusing and improving our efforts. focused global cooperation would also offer greater scope for solutions that respect the legitimate interests of countries wanting to run their economies independently. 3. brexit i β d like to discuss briefly what focused cooperation would mean for brexit negotiations and the future relationship between the european union and britain. i think it is fair to say that we are searching intently for a workable solution that ensures friendly collaboration. yet the scope of possible solutions is limited by the british decision for a hard brexit, as well as by the eu β s understandable prerogative to prevent cherry - picking. one of the possible scenarios we now have to imagine is making cooperation possible in two legally distinct jurisdictions, with different legal frameworks. this would mean that firms would have to comply with partially - differing rules. to continue serving their clients in the other jurisdiction, it might be wise for banks to check if it is viable to open branches or subsidiaries in the respective economic area. in such a scenario, close coordination between supervisors becomes crucial. when regulations differ, it is our responsibility as supervisors to facilitate cross - border activity without imposing undue operational burdens. the fact that sam woods and i are | john c williams : the economic outlook - getting back to " more like normal " remarks ( via videoconference ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at one hundred black men of new york, 25 february 2021. * * * hello, everyone. i β m really pleased to be joining your meeting today. your work in bringing together leaders and visionaries in support of black communities across our city is invaluable. we β re approaching the one - year mark since the pandemic took hold. at this time last year there was an increasing sense of fear and uncertainty about the future. and the events since then have posed tremendous challenges to families, communities, and the economy. the ongoing human toll is a tragedy we won β t forget in our lifetimes. what has been an extraordinary public health crisis also has had profound consequences for the american and global economies. the cause of this recession β a global pandemic β means that our economic future will be determined in large part by the path of the virus and our collective success in overcoming it. we still face many hurdles on the road to recovery from both covid - 19 and the severe economic hardship that has ensued. a lot depends on the success in quickly getting a large part of the public vaccinated against a backdrop of the spread of emerging new strains of the virus. despite these challenges and uncertainties, i have become more optimistic about the mediumterm outlook for the economy. i don β t expect our lives to look like they did a year ago β our sense of β normal β may be forever altered β but with vaccinations well underway and a significant decline nationwide in confirmed new cases, i do expect that we can start to look toward a time that will be β more like normal. " in my remarks today i β ll set the scene for the economic picture locally, and for the u. s. economy as a whole. i β ll also highlight some of the disparities we are seeing in the labor market. finally, i β ll share more about the federal reserve β s response and how i view the path forward. before i continue, i need to give the standard fed disclaimer that the views i express today are mine alone and do not necessarily reflect those of the federal open market committee ( fomc ) or others in the federal reserve system. dual mandate prior to sharing the outlook, i think it β s | 0 |
shocks, both at the macro and the micro level, crystallise into permanent institutional arrangements that put downward pressure on the effective retirement age and, hence, undermine future governments'capacity, if not to ward off the ageing crisis, then at least to soften its impact. if we do not want the famous lisbon objectives to become just a slightly offbeat alternative scenario in our projections, rather than realistic targets, then, clearly, more action is needed in these areas. all in all, it is essential that policy makers fully understand that the window of opportunity that we have now, will not last forever. we should be aware of the fact that we still have a lot of convincing to do. earlier on i have likened the ageing problem to an earthquake. contrary to a regular earthquake, however, we can predict almost exactly when and where it will hit us. in addition, the quake will not take the form of a big bang but will reach its full impact only very gradually : its disrupting ripples will be felt throughout the following decades. and although it is hard to give precise estimates of the amount of damage that it will do, this is the kind of earthquake that is certain to shake the very foundations of our modern welfare states. it is our task, as economic researchers, policy advisors and, ultimately, policy makers, to make sure that, by the time ageing really starts to kick in, these foundations can withstand the blow. i firmly believe that conferences like this one bringing together a host of distinguished researchers from both sides of the atlantic are a crucial step in reaching this objective. | guy quaden : ageing and welfare systems : what have we learned? introductory speech by guy quaden, governor of the national bank of belgium, at a conference organised by ceps in the framework of the european network of economic policy research institutes ( enepri ), in brussels on 24 - 25 january 2003. * * * ladies and gentlemen, i am very pleased to welcome you all at the national bank of belgium and to open this ambitious twoday conference on population ageing. the steadily increasing life expectancy in our countries is very good news but, as you know, combined with the dramatic decline of birth rates after the baby boom in the 1950s and the 1960s it implies that populations in a large number of countries are ageing rapidly. ultimately, the elderly dependency ratio will rise gradually but substantially. to put it more clearly : our children will have to cater for a growing number of pensioners. even if ageing pressures will in most cases only culminate from the second decade of the current century onwards - when the baby boom generation starts to retire from the labour market - the economics profession has a long - standing interest in population ageing. as early as the 1980s, individual authors or international bodies singled out ageing as one of the biggest economic challenges of the future. the first task at hand for economic researchers was obviously to estimate the size of the problem : what is it that we are facing? how bad will it be? most studies initially focused on the pensions problem and the budgetary impact of ageing. two remarks in that respect. β subsequent studies revealed that, contrary to what is still often thought, pension expenditure is not the only budgetary item that will soar because of population ageing. the ageing problem is as much a health care problem, for instance, as it is a pension problem. on the other hand, one should not forget that ageing will have a beneficial effect on other spending categories like child allowances and education expenditure. hence, the net budgetary cost of ageing can be somewhat lower than the projected increase in pension and health care spending. all in all, even taking into account the large degree of uncertainty inherent in this kind of exercise, ageing will undoubtedly weigh substantially on future governments'budgets. β one should refrain, however, from simplifying a problem as complex as population ageing into a kind of bill for the governments to pay. ageing will have a substantial impact on a wide range of economic variables - without | 1 |
the region. you have our unremitting cooperation and support. thank you. | ##s down, and vice versa. as far as discretionary measures resulting from specific fiscal policy decisions are concerned, their usefulness as a an anti - cyclical tool has been a matter for debate for a long time now, both in the euro area and in the united states. all in all, the evidence points to discretionary fiscal policy having a moderately positive impact on economic growth in advanced economies. yet the effectiveness of such measures depends on the way in which they are taken and their timing, in particular with regard to delays in the recognition, decision and implementation process. precisely because of such difficulties, a budget policy which is aimed ex ante in an anti - cyclical direction tends to produce pro - cyclical effects ex post. the effectiveness of discretionary measures also depends on the temporary nature and on the possibility of withdrawing them in a timely manner once the shock has passed so as to guarantee fiscal sustainability. 3. 2 comparing the importance of automatic stabilisers and discretionary policies in the euro area and in the united states if we compare budget policy on the two sides of the atlantic, we see that the automatic stabilisers play a more important role in the euro area. first of all, the greater the percentage of government spending over gdp, the greater the budget position β s response to fluctuations in economic activity. automatic stabilisers are smaller in the united states, where government is smaller in relative terms ( government spending is worth 37 % of gdp, whereas it tops the 45 % mark in the euro area countries ). furthermore, the level of government welfare services ( including unemployment insurance, social security and welfare services, and senior citizens β assistance insurance ) is systematically lower in the united states than in the euro area countries ; at present it stands at 12 % of gdp in the united states and at 15 % of gdp in the euro area. thirdly, the importance of automatic stabilisers depends also on the taxation system, in terms of its level cimadomo, j. ( 2008 ), fiscal policy in real time, ecb working paper, no 919. see, for instance, brunila, a., m. buti and j. in β t veld ( 2002 ), cyclical stabilisation under the stability and growth pact : how effective are automatic stabilisers?, bank of finland research discussion paper, no 6 ; darby, j. and j. melitz ( 2008 ), β social spending and automatic stabilizers in the o | 0 |
. first, there is an important role for a permanent institution as a provider of internationally consistent information, impartial expert analysis, assessment and advice. today β s world economy is no longer dominated by a small group of like - minded industrialised countries at similar stages of development ; tomorrow β s will be even less so. a shared knowledge base will facilitate effective consultation and collaboration on complex and politically charged issues. this is essentially a public good. and while it is possible to envisage alternative arrangements for supplying it, a permanent international institution is likely to offer clear practical advantages. second, the fund already exists. it has the reach and experience to respond flexibly to the changing structure of the world economy. it has nearly universal membership, ( now totalling 184 sovereign nations ), an agreed legal framework, extensive relevant institutional capacity and a reputation built up over sixty years. given the costs of acquiring such unique capacity from scratch in the modern world, the benefits of starting again would need to be very substantial indeed. this adds up to a strong pragmatic case for working with what we have. so what role should the fund be playing? mervyn king, in his speech in delhi earlier this year, likened the role of the imf to an umpire in cricket, β warning the players not to attack each other verbally and making it clear publicly when they believe the players are not abiding with the spirit of the game β. while i would be the last person to argue with mervyn, at least about cricket, i initially found this analogy rather unconvincing. in my mind, the term umpire conjures up a portly old gentleman in a white coat and straw boater. surely the modern imf should have a more dynamic and up to date image? but it turns out that even cricket has moved on. i am not referring to the recent abandonment of the england pakistan match, for the first time ever, after a heated disagreement between an umpire and players. no, what i have in mind is the advanced computer technology which i gather now exists, aptly named hawk - eye, which could assist umpires in making the most difficult calls β those about which the players of the game are most likely to disagree. so we should think of the imf as the cricket umpire of the future, with hawk - eye in her toolkit β where the fund β s hawk - eye will be its impartial analysis, assessment and advice, enabling it to di | successful lion city bond issuances worth rmb10. 5 billion to - date, and we will look to promote greater bond issuance activity on a sustained basis. β’ second, enhance market infrastructure to facilitate growth of rmb activities. in response to market demand, mas has recently introduced rmb overnight liquidity bis central bankers β speeches facility to meet end - of - day rmb liquidity needs in the market. we will work with the industry to develop a rmb real time gross settlement ( rtgs ) system to raise the efficiency of rmb payment settlements in singapore. investment gains stable but profits higher due to translation effects 55 finally, i shall touch on mas β financial results. 56 mas recorded overall profit of s $ 15. 8 billion for fy2013 / 14. in fy2012 / 13, we recorded a loss of s $ 10. 6 billion. however, focusing on these numbers misses larger point about how mas β investments have performed. 57 as i had explained on previous occasions, mas β overall profit position is strongly influenced by currency translation effects β these are the effects of converting value of our reserves in foreign currency to singapore dollars ( sgd ). β’ a weaker sgd means a positive translation effect, i. e. investment gains on our foreign assets are amplified when reported in sgd. β’ conversely, a stronger sgd means a negative translation effect, i. e. investment gains are smaller or even negative when measured in sgd. but these translation effects have no bearing on the international purchasing power of mas β reserves. 58 therefore, it is important to look at the underlying investment gains holding the sgd exchange rate constant to strip out currency translation effects. when we do this, for fy2013 / 14, mas posted foreign investment gains of s $ 10. 6 billion, comparable to investment gains of s $ 9. 4 billion for fy 2012 / 13. 59 for this financial year, we recorded positive translation effects as sgd weakened against the usd, euro and gbp. in the last financial year, we had negative translation effects because the sgd appreciated against these three currencies as well as the jpy. 60 to help make sense of mas β underlying investment performance, we have provided a write - up on page 27 of annual report, showing the overall profit position, currency translation effects, and investment gains. 61 as shown in the chart on page 27, mas β investment gains have been relatively stable. this reflects | 0 |
alongside financial stability comes another topical issue in development debates across the globe, financial inclusion. for the financial system to be relevant to society, it needs to ensure that as much of the eligible target population has opportunity to access a variety of financial services ranging from credit, savings and payments, transfers, pensions, capital markets and insurance services. inclusion is an essential pre - condition to enhancing wealth creation and poverty reduction and ultimately broad based economic development. the consultative group to assist the poor ( cgap ) defines financial inclusion as a β state in which all people who can are able to have access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients β. these financial services are bis central bankers β speeches delivered by a range of providers, most of them private, and reach everyone who can use them, including disabled, poor, rural, and other excluded populations. ladies and gentlemen : why should we, as regulators, be concerned about the levels of financial inclusion in our respective jurisdictions? individuals and households lacking adequate access to a full range of responsibly delivered, affordably priced, convenient, formal financial services would be severely constrained in participating fully in the economy. as an entity, the financial sector would also face bleak prospects in terms of expansion and longevity, which holds back overall economic development. but more importantly, financial inclusion is supported by financial stability. in kenya, the proportion of the population totally excluded from formal financial services, as revealed by the finaccess 2006 and 2009 surveys, stood at 38. 3 % and 32. 7 % respectively. the proportionate reduction between the years is largely attributable to the advent of mobilebased financial services which have indeed revolutionized the provision of formal financial services and availed these to the market affordably and conveniently. for us to bring costs of financial services down, we need full inclusion. ladies and gentlemen : given the statistics above, as financial sector regulators, we share common aspirations of making the financial sector more stable, efficient and accessible. though these objectives may at times appear competing, they are for the most part complementary. stability is a pre - requisite for efficiency, while both are in turn required to raise inclusion. in cognizance of this, the central bank, jointly with other players, has undertaken several initiatives and reforms aimed at boosting overall inclusion. these include : licensing of deposit taking microfinance institutions ( dtms ), focusing | in the past few years : large increases in commodity prices, notably oil prices, and geopolitical tensions ; the pressures of global competition ; uncertainty and the short - term impact of certain reforms to modernise the welfare state and prepare social security systems for population ageing ; and β last, but by no means least β uncertainty about the current and future stance of fiscal policies in many euro area countries. if we can agree on this diagnosis of the reasons for low growth in europe, the elements of a remedy are already emerging. the lisbon agenda β especially after its recent refinement and refocusing, which the ecb strongly supports β addresses many of the structural weaknesses of the euro area economy. it is no coincidence that countries which score highest with regard to the achievement of the lisbon goals are also the ones with the most robust growth performances over recent years. the example of the nordic countries shows how reforms of tax and benefit systems can encourage labour participation ; how investment in education and training and how greater diffusion of advances in information and communication technologies can spur productivity growth ; and how structural reforms in labour and product markets β in a process of schumpeterian β creative destruction β β can open up new avenues for growth. robust growth in europe is not a β mission impossible β. it can be done. and it can be done without abolishing the basic features of what we call the european social model. can it be done inside monetary union? the single monetary policy, conducted for the euro area as a whole, is playing its part already β notably by providing a low inflation environment with favourable financing conditions. and, of course, the euro has eliminated, once and for all, the intra - euro area exchange rate volatility. the revised fiscal framework of the stability and growth pact β if implemented in a rigorous and responsible fashion β still has the capacity to guide national fiscal policies on a sustainable path, thus bolstering confidence, reducing uncertainty and fostering growth. but clearly, the onus is on national policies, especially structural policies to promote growth, competitiveness and employment. thankfully, things are moving : throughout the euro area, we see governments embarking on structural reforms, some courageously, others somewhat more timidly. some euro area countries β notably germany, but also france, austria, belgium and finland β have made significant progress in improving competitiveness over the past few years. and competitiveness is a key determinant of longterm growth. of course, europe | 0 |
covid19 pandemic are driving a β historic and dramatic shift in consumer behavior β β according to the latest research from pricewaterhousecoopers or pwc. the consulting and accounting firm β s june 2021 global consumer insights pulse survey also reported a strong shift to online shopping as people were first confined by lockdowns, and continued to work - from - home. other significant finding from the report that may change the business models of companies is that consumers do not think they β ll go back to their old ways of shopping once the pandemic is over. in the philippines, the study conducted by visa also showed that around 70 percent of filipinos who used digital payment channels during the lockdown will likely continue to do so. since the release of the regulatory framework for digital banks in december 2020, a number of 2 / 4 bis central bankers'speeches proponents have expressed interest and actual intent to apply for a digital banking license in the country. as of june 2021, the monetary board ( mb ) has approved the applications of four ( 4 ) banks. the mb approval refers to the first of the three - stage licensing framework of the bsp on the establishment of banks. on march 25, 2021, the mb approved the first application which is from the overseas filipino bank ( ofbank ) seeking to convert its banking license from a thrift bank to a digital bank. on june 3, 2021, the mb approved the applications of ( 1 ) tonik digital bank, inc., for conversion of its rural banking license to a digital bank license, and ( 2 ) unobank, inc. for the establishment of a new digital bank. then on july 15, 2021, the mb approved the application of union digital bank, a wholly own subsidiary of ubp. with the framework β s promising benefits, we must also be cognizant of its attendant challenges and risks. data privacy concerns, money laundering, and electronic frauds are among the issues that can undermine the confidence in this policy initiative. we therefore expect that the key stakeholders particularly the financial institutions, to adopt adequate measures and controls to manage such risks. foremost of which is the conduct of an effective information campaign to ensure that consumers are aware of the risks and how they can perform their transactions securely. consumers must also be aware of the available mechanisms that can promote consumer protection. on the other end of spectrum, other government agencies are also expected to collaborate and address the digital divide. it entails ensuring access to it infrastructure | by people from all walks of life to achieve inclusivity. with the framework β s promising benefits, we must also be cognizant of its attendant challenges and risks. data privacy concerns, money laundering, and electronic frauds are among the issues that can undermine the confidence in this policy initiative. we therefore expect that the key stakeholders particularly the financial institutions, to adopt adequate measures and controls to manage such risks. foremost of which is the conduct of an effective information campaign to ensure that consumers are aware of the risks and how they can perform their transactions securely. consumers must also be aware of the available mechanisms that can promote consumer protection. on the other end of spectrum, other government agencies are also expected to collaborate and address the digital divide. it entails ensuring access to it infrastructure by people from all walks of life to achieve 3 / 4 bis central bankers'speeches inclusivity. we are living in exciting times and we each have a role to play. let this initiative be just one of many more opportunities for us to work together to truly provide better ways of serving our constituents whenever they require and wherever they are. be at the comforts of their homes, in the office, in digital devices, or who knows tomorrow even from outer space! thank you and a pleasant day to all of you. 4 / 4 bis central bankers'speeches | 1 |
. but one should not forget what depends less on us but can have a great impact on the securitisation market. i am talking about rating agencies. it is now clear that rating agencies β models failed in the recent past as a result of wrongly basing their ratings on the correlations observed during good times. in my opinion, the recent methodological changes, imposing stricter rating caps ( above the rating of the sovereign ), in particular for emu countries, amount to treating crisis times as structural changes making the new methodologies based again on extreme assumptions. thus, the error is the same, this time in the opposite direction. policy - makers timely acknowledged the fragilities in the design of the emu, identifying the most crucial reforms needed. these will increase the robustness of the euro area economies against adverse shocks. rating agencies do not fully recognize the ongoing process. instead, they decide to change their procedures exactly at the moment in which the institutional framework of the emu is responding to the very same conditions that motivated such move. in this regard, it is important to emphasize that emu countries are about to be equipped with a banking union, which will contribute towards breaking the link between sovereigns and the banking / financial system. further relevant institutional changes include the creation of the european stability mechanism, the fiscal compact, the new role of the ecb in eliminating runs on sovereign debt ( through the outright monetary transactions programme ) and a comprehensive set of eu regulations aimed at avoiding fiscal and macroeconomic imbalances. therefore, rating agencies are moving countercyclically with the eu institutional advances and risk becoming irrelevant. on the methodological side, it is quite obvious that imposing caps in ratings based on the sovereign is equivalent to constraining the results of whatever quantitative models rating agencies use. this is arbitrary and reduces the information conveyed by the ratings while leading to severe pricing distortions in assets across countries. investors in capped securities will require a premium over similar but higher - rated securities while other investors are limited by regulation in their incentives to buy poorly rated securities. additionally, it should be mentioned that abs originated in countries under stress have performed considerably well even during the crisis. indeed, abs default rates have remained low in these countries and at levels comparable to non β stressed jurisdictions ( including the us ). thus, unless clients and regulators have ( also ) access to ratings without the cap, there should be minimal regulatory reliance on the ratings. in any case, additional transparency on loans, | level of an individual country? if only global risks are addressed, vulnerabilities will persist at the local level ; however efforts to address local problems could disadvantage domestic banks relative to those headquartered abroad. third, we need to improve our ability to resolve systemically important institutions without generating spillovers that spread systemic risk across firms or across borders. clearly, each country should have the legal authority to wind down a systemically important institution in an orderly way, taking account of the international dimensions. beyond this, there is not yet a consensus on exactly what to do, but a range of promising proposals have been suggested to facilitate orderly resolutions. one is for supervisors to press firms to strengthen their ability to quickly provide the information on exposures, funding, and counterparties that would be needed for crisis management. another would have supervisors recommend changes to simplify the organizational structures of systemically important firms to make it easier to deal with their failure. a related proposal would require firms to maintain a so - called living will, a written contingency plan that provides for an orderly wind - down should severe financial distress lead to failure. fourth, we need to address home - host issues that arise in the supervision of cross - border firms. for example, some global banks can expose a host country to a withdrawal of risktaking caused by problems outside its own borders. this exposure understandably makes host countries uncomfortable with the traditional division of responsibility that restricts a hostcountry to supervising only the activity of a global bank within its own country. one possible response here would be more information sharing from home to host, to better enable host countries to protect themselves. another response would be restrictions by host countries on cross - border operations of global banks, perhaps going so far as requiring global banks to operate through separately capitalized subsidiaries. however, this requirement, in addition to imposing costs on the banks, might also impede the ability of the global financial system to channel capital to where it is most likely to enhance productivity and growth. conclusion i've touched on only a few of the international aspects of the crisis. we face a difficult set of decisions regarding how best to reform our national regulatory and supervisory frameworks in response to the lessons we have learned. but perhaps chief among the lessons learned from the past two years is that in an integrated global financial system we cannot make those decisions in isolation ; we must collaborate internationally if we are to build a more resilient financial system for the future. | 0 |
the economy. however, derivatives markets do not create new risks in the economy ; instead, they allow the management of the imminent risk. the origin of such thoughts is a common misperception with regards to transactions carried out speculative purposes. especially in foreign exchange markets, the level of exchange rate is determined not by futures transactions, but by spot market transactions. as transactions in the derivatives markets do not affect one - to - one the supply or the demand - side liquidity, they equally do not affect the price formed in the spot markets. in this case, speculative transactions that might be observed in the derivatives markets should not be expected to have a drastic impact on the spot markets. furthermore, as i have already pointed out several of my speeches, there are two groups of speculators in markets. the first group buys when prices go up, expecting prices to rise further or sells when prices go down, expecting prices to decline even more ; we can describe this group as bad speculators. this is the type of speculator mostly seen in turkey. also in the process of the fight against inflation, this group held its assets in foreign exchange, in line with old habits ; thus continuing to buy foreign exchange at high rates, with the belief that turkish lira would depreciate anyway, used no instruments whatsoever for risk management ; and when turkish lira appreciated under the floating exchange rate regime due to market conditions, the group criticized the stability program and policies implemented. this group of speculators, despite increasing volatility to a certain extent, cannot remain in the market for long, as they generally lose money. the second group or the good speculator, on the other hand, in line with his / her forecasts, sells when it is a bull market and buys when it is a bear market. leaving aside the problems of causing volatility, this group contributes to stability in the markets. within this framework, it is possible to see members of both groups in any market. in an effective market, it is not possible to make a profit continuously guided by bad speculation, nor do the prices formed in the market approach those prices indicated by economic variables. consequently, speculation does not have much effect on prices created in an effective market ; on the contrary, it may make a positive contribution to the markets by increasing liquidity. hence, speculation is not a threat in derivatives markets, but a guide in activating the spot market by increasing liquidity. another important point with regards | erdem basci : central bank responsibilities, global financial stability and payment systems opening remarks by mr erdem basci, governor of the central bank of the republic of turkey, at the β payment systems conference β, organized by al bank wal mustathmer group, istanbul, 5 december 2012. * * * distinguished governors of the central banks, distinguished guests and esteemed members of the press, i would like to thank you all on behalf of the central bank of the republic of turkey and myself for your participation in the β payment systems conference β organized by al bank wal mustathmer group. welcome to istanbul and turkey. participants to the conference, who are all experts in the field, will be discussing payment systems, their significance and contemporary approaches. before moving onto the topic of payment systems, i would like to briefly mention the main responsibility areas of central banks. distinguished guests, price stability, financial stability and the development of the financial sector are three significant fields central banks are responsible for, either partially or fully. the primary objective is price stability. the social costs to be incurred from the loss of price stability have been thoroughly understood by economists. academic studies indicate that an inflation rate that is on average higher by 10 percentage points may cause, on average, a quarter point decrease in the long term growth rates of the countries. 1 while the average inflation rate in turkey during 1974 β 2003 β the period with chronically high inflation rates β was 56 % ; average real growth per person was a mere 2 %. on the other hand, during the period of 2004 β 2011, when inflation was expressed with single digits, average real growth per person increased to 3. 3 %. our inflation target for the 2013 β 2015 period is set as 5 %. loans, exchange rates and inflation expectations are three crucial variables that are the determinants of price stability. therefore, decreasing excessive volatility in the credit growth rate and exchange rates highly contributes to price stability. the second area of central bank responsibility is financial stability. the loss of financial stability has deep and long - term impacts on both growth and employment. 2 the cost of preventing a financial crisis is much lower than the cost of the crisis itself. turkey β s recent history is a very good example of this statement. the economic crisis turkey went through in 2001 increased the country β s sovereign debt by 30 percentage points and severely affected growth and employment prospects. as of 2002, turkey focused on establishing price stability, financial stability and introducing structural reforms | 0.5 |
taken from the report regarding japan's energy issues released by the agency for natural resources and energy of ministry of economy, trade and industry on its website in august 2022 ( available only in japanese ). environment caused by the pandemic, compared with the united states and europe. i consider this to be one of the reasons for the delayed recovery in japan's economy. the output gap, which captures the utilization of labor and capital, has also been consistently negative since the april - june quarter of 2020 ( chart 6 ). tightening monetary policy when demand remains insufficient compared with supply capacity would put significant downward pressure on the economic activity of firms and households, and could draw japan's economy back into deflation. the second reason i believe the bank should continue with monetary easing is that the current price rises have not been accompanied by wage growth. let us compare price developments in japan with those in the united states and europe. services prices have been increasing while the hourly wage growth rate is in the range of 4. 0 - 6. 0 percent in the united states and 3. 0 - 4. 0 percent in the euro area. the inflation rate excluding energy and food remains at a high level - - 6. 3 percent for october 2022 in the united states and 5. 0 percent for november in the euro area. this has prompted central banks to continue to make rapid policy rate hikes in an effort to prevent a wage - price spiral. in japan, the inflation rate excluding fresh food and energy has indeed risen, to 2. 5 percent for october. the breakdown shows that the inflation rate for services - - which account for more than half of the total price increase, and in which wages make up a large proportion of costs - - has increased but is still below 1 percent. in my view, concern about a wage - price spiral in japan is far from warranted. i consider continued accommodative monetary policy to be essential to support firms'initiatives as japan's economy recovers from the pandemic and to develop an environment conducive to wage rises necessary for the sound development of the national economy. iii. japan's economic growth to achieve the 2 percent price stability target in a sustainable and stable manner and realize sustainable economic growth, it is essential that wages rise in tandem with economic growth. however, this expected situation has not yet been realized as japan's economy has long been mired in a state of low growth, low inflation, and | . 8 national institute of population and social security research, " the financial statistics of social security in japan ( fiscal 2020 ), " august 2022 ( currently available only in japanese ). individual savings account ( nisa ) and ideco pension plans, the government's doubling asset - based incomes plan will promote lifelong household asset formation over the course of 30 to 50 years, focusing on the long term, on risk diversification, and on regular contributions. i expect that this would generate stable income and stimulate private consumption, thereby forming a virtuous cycle from income to spending. thank you. economic activity, prices, and monetary policy in japan speech at a meeting with local leaders in nagano december 7, 2022 nakamura toyoaki member of the policy board bank of japan chart 1 imf projections in the world economic outlook ( october 2022 ) y / y % chg. imf projections - 2 - 4 japan united states - 6 china world output euro area - 8 cy 80 source : imf. chart 2 consumer prices japan - 1 - 2 united states y / y % chg. cpi ( less fresh food ) < 100 % > cy 18 temporary factors energy < 7 % > housing rent < 19 % > services ( less housing rent ) < 31 % > goods < 40 % > cy 18 y / y % chg. - 1 - 2 - 1 - 2 energy < 7 % > housing rent < 32 % > services ( less housing rent ) < 31 % > goods < 30 % > cpi < 100 % > euro area y / y % chg. cy 18 energy < 11 % > housing rent < 7 % > services ( less housing rent ) < 35 % > goods < 47 % > hicp < 100 % > notes : 1. figures for temporary factors for japan are bank staff estimates and consist of the effects of the reduction in mobile phone charges, the consumption tax hike, free education policies, and travel subsidy programs. 2. figures in angular brackets show the share of each component. figures for 2022 / q4 are those for october. sources : haver ; ministry of internal affairs and communications. chart 3 forecasts of the majority of the policy board members y / y % chg. ( reference ) cpi ( all items less fresh food and energy ) real gdp cpi ( all items less fresh food ) fiscal 2022 [UNK]. 8 to [UNK]. 1 [ [UNK]. 0 ] [UNK]. 8 to [UNK]. 9 [ [UNK]. 9 | 1 |
few decades reflects deep underlying factors on the supply side of the economy. as these underlying factors β trends in technology and demographics β only move slowly, it is not unreasonable to expect that r * will remain low. this means that, even as we now respond to rising inflation by raising bank rate, interest rates will not necessarily have to return fully to, and remain around, the higher levels they once had. but let me add a caveat : β it β s important to note that forecasting the future path of r * is challenging and subject to a significant degree of uncertainty. economic developments and policy decisions can have unpredictable and complex effects on the economy, and it is difficult to predict their outcomes with complete accuracy. β this was not said or written by an economist of the human sort. this is a caveat added by chatgpt. the β artificial intelligence β underlying it reminds us that technology sometimes progresses in leaps, which can lead to a sudden emergence of productive investment opportunities across the global economy. new rounds of technological revolution are amongst the factors that could shift up global r *. monetary policy would have to move with it. so even if monetary policy is neutral in the long run, long - run supply does affect monetary policy by anchoring the level for interest rates. over the short term, moreover, the actual equilibrium interest rate, r *, will fluctuate around the trend level, r *, driven by shorter - term influences from both demand and supply. this is what matters for monetary policy here and now. why? because r * is the rate at which demand is in line with supply so that there is no output gap β neither excess demand nor excess supply in the economy. responding to shifts in r * is what helps keep inflation close to target. this does not mean that monetary policy should always align bank rate exactly to r *. sometimes, monetary policy faces trade - offs between inflation and the balance of supply and demand. but it does mean that supply matters for monetary policy also in the short run. by determining the level of demand the economy can sustain without generating excess bank of england inflationary pressures, it affects the appropriate level of interest rates, effectively by setting the speed limit for the economy. and when shocks drive inflation away from target in the way we have seen, monetary policy responds by steering demand to a level β relative to supply β that ensures that inflation returns to target sustainably. monetary policy cannot affect this level of supply. but the level of supply will | β s invasion of ukraine. this appalling act had a massive impact on energy prices last year, and has substantially affected other prices, notably food. for a variety of reasons, particularly in energy markets, those effects are now unwinding. it is primarily for this reason that we expect to see a sharp fall in inflation during the course of this year, starting probably in a couple of months or so from now. bank of england growth in the economy has suffered too, as a consequence of the sheer scale of the hit to the terms of trade. there has been a very large impact on national real income, from which i am afraid there is no hiding. but there is better news on that front, the economy has been more resilient of late, helped by the sharp fall in energy prices. the same is true for the world economy more broadly. what does this mean for monetary policy looking forwards? the remit is clear. the adjustment and response to the shocks we have experienced must return cpi inflation to the 2 % target sustainably. we must avoid these very large shocks leading to persistent inflation, and that is why we have raised the official interest rate eleven times, to 4. 25 %. recently, the evidence has pointed to more resilient activity in the economy, and likewise employment ; signs that nominal wage growth has been rather weaker than expected ; and two months in which there was first some downside news on inflation relative to our expectation and then a bit more upside news. this reminds us that the path of inflation will not be entirely smooth and cost and price pressures remain elevated. alongside all of this news, we have seen some big strains in parts of the global banking system emerge. assessing this would be another speech, which i am not going to make this evening β you will be relieved to hear. suffice to say that we believe the uk banking system is resilient, with robust capital and liquidity positions, and well placed to support the economy. we have a strong macroprudential policy regime in this country. with the financial policy committee on the case of securing financial stability, the monetary policy committee can focus on its own important job of returning inflation to target. we have to be very alert to any signs of persistent inflationary pressures. if they become evident, further monetary tightening would be required. with this in mind, the mpc β s response will be firmly anchored in the emerging evidence. thank you. i am grateful to ben | 1 |
faced by community banks. one way that we further our understanding is by talking to the bankers themselves. the entire board of governors meets twice a year with the community depository institutions advisory council, which includes representatives of community banks, thrifts, and credit unions in each of the 12 federal reserve districts. 3 individual governors also take advantage of opportunities to meet with community bankers from time to time. during last year β s conference i met with a group of st. louis area community bankers to hear what was on their minds. i will conduct a nationwide webinar with community bankers next month. in fact, i speak regularly to a number of bank executives, including those who run smaller institutions. i find these types of for more information on the board β s committees, including membership, see http : / / www. federalreserve. gov / aboutthefed / bios / board / default. htm. federal deposit insurance corporation ( 2012 ), β fdic www. fdic. gov / regulations / resources / cbi / report / cbi - full. pdf. for more information on the community www. federalreserve. gov / aboutthefed / cdiac. htm. bis central bankers β speeches community depository banking institutions study β, advisory december, council, see conversations β with people who live and work in the world outside the capital beltway and far from wall street β to be particularly enlightening. and, of course, this conference, which was conceived as the result of a successful collaboration between the federal reserve system and the conference of state bank supervisors, provides an annual opportunity for community bankers, bank regulators, and academic researchers to come together to share ideas and insights surrounding the issues that matter most to community bankers. this year β s program includes presentations by the authors of a number of excellent academic research papers, the unveiling of the results of a new survey of community banks conducted on behalf of the conference organizers, reactions by community bankers to the research and survey findings, and several compelling speeches. the primary focus of today β s agenda is research. the response to the conference β s call for papers was quite impressive, and the conference research committee faced the challenging task of selecting the most relevant, interesting, and high - quality papers to be included in the program. the authors of these papers include academics and policymakers, with backgrounds in law, economics, and finance. the topics covered clearly demonstrate a desire, on the part of the | like to note that the current economic expansion is now entering its seventh year. that makes it already a long upswing by historical standards. and yet, looking ahead, the prospects for sustaining the expansion are quite favorable. the flexibility of our market system and the vibrancy of our private sector remain examples for the whole world to emulate. we will endeavor to do our part by continuing to foster a monetary framework under which our citizens can prosper to the fullest possible extent. | 0.5 |
eddie yue : renminbi β a new era and the role of hong kong keynote address by mr eddie yue, deputy chief executive of the hong kong monetary authority, at the global offshore rmb funding forum 2012, hong kong, 23 may 2012. * * * tony ( shale ), mark ( johnson ), distinguished guests, ladies and gentlemen, thank you for being here this morning, and thanks to euromoney for inviting me to speak at this β global offshore rmb funding forum β. it β s indeed an honour to have this opportunity to discuss this important topic in such distinguished company. i understand that we will have a very comprehensive programme today, with editors, economists, bankers and financiers talking about the exciting developments of dim - sum bonds and other innovative products in the offshore rmb markets. by way of opening the dialogue, i β d like to focus my remarks on the bigger picture, and on three things in particular : first, the scale of change in the global economy, which is the backdrop for our discussion ; second, the expanding role of the rmb, past and future ; and third, the impact this all has on our role and opportunities here in hong kong. china β s increasing integration with and contribution to the world economy so, first, the scale of change. the foundation for any discussion on the role of the rmb, of course, is china β s growing economy. now, we β ve all become very familiar with breathless reports on china β s β economic miracle, β so i won β t go over this at length. still, the startling pace of growth does warrant underlining. in a little over a decade since the year 2000, the mainland β s nominal gdp increased sixfold from 1. 2 to 7. 2 trillion us dollars ; and its external trade expanded more than sevenfold, from less than 500 billion to over 3. 6 trillion us dollars. at the same time, its cross - border direct investments rose fourfold, from just over 40 billion to approaching 180 billion us dollars. these are all impressive indicators of the vast amount of business opportunities present. it is perhaps even more astonishing that, by 2016, the mainland is expected to contribute over a third of total world economic growth, according to the projections of the international monetary fund. change in the international financial system such shifts in the global economy have inevitably foreshadowed a change in the international financial system. as the mainland economy has grown, its currency and financial | mainland β s external trade and accounts for some 60 % of cross - border direct investments in both directions. against this backdrop, hong bis central bankers β speeches kong is well - placed to serve as a key commercial and financial gateway, continuing to facilitate trade as it expands and is increasingly conducted in rmb. through its long history as an international financial centre, hong kong has built up the necessary infrastructure to support a growing rmb market. indeed, hong kong has been steadily gearing up its capability to handle rmb servicing since it started back in 2004. this is what has enabled hong kong to become a global hub for offshore rmb businesses. hong kong today provides the largest and most effective platform for the complete range of rmb transactions, from banking and financing to asset management, at both customer and wholesale levels. just to give an illustration of hong kong β s status as a global rmb hub, consider its recent record : rmb deposits in hong kong, including certificates of deposits, grew by a factor of ten between end - 2009 and march 2012, from around rmb 60 billion to over rmb 660 billion yuan. rmb trade settlement transactions handled by banks in hong kong has also increased phenomenally, from less than rmb 2 billion yuan in 2009 to nearly rmb 2 trillion yuan in 2011. over the same two - year period, the hong kong rmb dim - sum bond market has seen issuances growing from rmb 16 billion to rmb 108 billion yuan. i know many of you have come here today to hear more about how to tap into this rapidly developing market to finance your business in the future. now of course, as a global hub, it does not mean that all offshore rmb businesses are to be conducted only in hong kong. quite the contrary. as rmb becomes more widely used and accepted by trading companies and investors worldwide, it is natural to see financial institutions providing rmb services to meet the demand of their customers. that said, even as its role evolves over time in line with market changes, we do see hong kong continuing to be an ideal place for companies to conduct their rmb banking and financing activities. in addition, hong kong will develop its ability as a rmb hub to serve a growing network of financial institutions around the world. and in this last respect we are seeing real signs of development. more foreign banks are either choosing to have a base in hong kong or are using rmb correspondent banking services provided by banks in hong | 1 |
for achieving the best possible performance of the company. this means maximizing profits, increasing growth and market share, expanding business lines, and doing all that it takes to maximize the company β s share value. on the other hand, the board of directors has to oversee the operations of management, ensuring that they operate well within the bounds of acceptable risks in order to ensure business continuity. the board of directors, thus, needs to act as a check - and - balance against the management with a view to ensuring the safety and soundness of the enterprise. meanwhile, shareholders also expect the board to perform its role as a watchdog or guarantor that the corporation would not incur losses or go into bankruptcy. they also expect the board to check management against excessive risk taking. therefore, it goes without saying that if the roles of chief of management and the chairman of the board are performed simultaneously by the same individual, then other board members cannot fully perform their duties of providing the check - and - balance required by good governance. worse yet, shrewd ceo will tempt other board members with stock options so that they would go along with his policy direction. this would especially be the case when the ceo aims for high growth or business expansion, which usually implies a quick rise in the company β s equities. though, these policies are often prone to higher risks, board members may become less inquisitive and more optimistic in their judgment as a result of the personal interests in potential profits from stock options. at the end of the day, their own personal interests would overtake their sense of conservatism and responsibilities. one can think of an even worse scenario when the ceo would like to cover up any wrongdoings or poor performances. since this ceo is also chairman of the board, he can easily influence the agenda of the meeting. thus, board members may never be aware of the company β s problems. if and when they have been informed of the problems, it may already be too late, as evidenced in the case of enron. it is for the above reasons that the authorities here in asia, are pushing for the separation of chairman and ceo positions so that they cannot be occupied by the same person in order to properly balance the powers and functions of the two roles. it is also fortunate for us that the practice of issuing stock options to directors of financial institutions is not yet widespread among banks in asia. ladies and gentlemen, what i have highlighted is only one face | m r pridiyathorn devakula : efficiency enhancements and risk management remarks by mr m r pridiyathorn devakula, governor of the bank of thailand, at the asian bankers β seminar, bangkok, 16 march 2006. * * * distinguished guests, fellow bankers, ladies and gentlemen, today β s seminar covers wide - ranging topics of interests to the banking community ranging from efficiency enhancements to risk management needed to achieve sustainable business growth. while these issues are topical and useful to bankers, i believe that one cannot simply reduce risks by relying on risk management process alone. an effective risk management system has to be supported by proper governance of the bank β s management and its board of directors. one of the painful lessons of the 1997 crisis was that improper governance practices at the board level were amongst the root causes of the downfall of too many financial institutions. back then, it was not unusual for banks to lend to related parties with close connections to their owners, directors, and management without the proper credit analysis. board members of banks often neglected their responsibilities to blow the whistle against these imprudent activities. many board members also did not have adequate and timely access to the necessary information to detect such misdeeds so that appropriate actions could be taken to prevent the resultant damages. the concept of β governance β as understood in western society and now introduced into our business organizations, including financial institutions, has served as a good starting point to rectify some of the root causes of the crisis. the western governance concept including the appointment of an independent director in the board of directors, the introduction of an audit committee, and other new initiatives to improve the governance structure, have helped to address some of the problems of the past β but only to a limited extent. unfortunately, there have been some actual practices in the western corporate world which are contrary to the intended ideals of good governance. the notorious examples of enron and worldcom are all too well - known, notwithstanding the fact that both corporations had boards of directors established in accordance with the western concept of good governance. yet both eventually faced severe financial difficulties. as i see it, there are two critical aspects of the western practices which may potentially lead to serious financial difficulties for the firm. the first is that the chairman and the ceo is one and the same person. the second is the practice of allowing company stock options to be part of the compensation for company directors. allow me to elaborate. a ceo is by designation the chief of management, responsible | 1 |
do not see pressures that have the potential to get out of control, then we have a mandate to be a little more flexible in our response. is this increased flexibility justified? in other words, can we be a little more flexible than in the past without taking risks with price stability? i think we can, because keeping prices stable gets easier when prices have already been stable over an extended period. if inflation suddenly rises just after a period, like in the 1980s, when it was out of control, then there is a risk it will spark a self - fulfilling belief that it is out of control once again. in other words, if people believe that inflation is out of the bag, they may translate that into higher prices for the goods and services that they sell and higher demands for increased salaries and wages. by contrast, after inflation has been low and stable for a long time, people are much less likely to see price fluctuations as the start of something serious. then a self - fulfilling prophecy is much less likely. our freedom to be more flexible without compromising our price stability goal is thus a consequence of the hard - won achievement, during my predecessor β s tenure, of an environment where prices are expected to be broadly stable over time. in operating monetary policy, we will continue to carefully monitor people β s perceptions of the inflation outlook, to confirm that their confidence in price stability remains strong. what then of new zealand β s current economic situation? as you know, the new zealand economy has been going through a strong period, stimulated by international conditions favourable for us. we have had record tourist numbers, and excellent returns on dairy products and many other agricultural commodities. we β ve also had a very quick turnaround from a net outflow of migrants a year or so ago to a very strong net inflow, which has more than doubled new zealand β s population growth. in combination, these factors have led to pressure on new zealand β s resources. for example, many firms have seen strong demand for their products. this particularly applies to firms in sectors like retailing and construction that supply new zealand households. when they β ve tried to expand to meet that demand, employers have reported difficulty finding additional staff. this tends to create pressure on prices, and indeed, at present, inflation is near our price stability ceiling. but we run policy looking forward, and it has not been clear how long the effects of that offshore stimulus will last. in the united states the long expansion has given way to recession | into law. maintaining price stability, as i am required to do, is different from firstly having to achieve it, as was required then. as you know, before becoming governor, i signed a new policy targets agreement with the minister of finance. this new agreement offers monetary policy a bit more scope to take evolving circumstances into account. in particular, the new agreement makes clearer that the reserve bank should maintain price stability in a flexible way that does not unnecessarily disrupt the real economy. the key change in the agreement is that the inflation target has been explicitly defined in terms of β future inflation... on average over the medium term β. this implies that monetary policy should be forward - looking, and avoid getting distracted by transitory fluctuations in the inflation rate. in typical circumstances, we expect to give most attention to the outlook for cpi inflation over the next three or so years. if the outlook for trend inflation over that period is inconsistent with the target, we will adjust the official cash rate. our intention will be that projected inflation will be comfortably within the target range in the latter half of the three year period. this means we will set policy so that inflation will be within the target range in the medium term, unless we are hit by a major surprise event. if a major surprise does occur, we will explain what has caused inflation to be higher or lower than we wanted, and what steps we will take to ensure that it goes back comfortably within the band. i said the new policy targets agreement offers us a little more flexibility, but it β s a flexibility that needs to be applied with care. the language of the new agreement makes clear that inflation should not be persistently outside either end of the band. this is because a sustained breach of the target could affect people β s perceptions of the trend inflation rate. that in itself could create a major inflationary problem. thus, if one of the disturbances i mentioned earlier appeared to be strongly stimulating or weakening activity in new zealand - suppose there was a sharp and persistent increase in tourist numbers for example - then the inflationary consequences might not be transitory. so, to keep inflation from rising and activity from going through a boom - bust cycle, monetary policy still needs to act to counteract the impact of these disturbances. and monetary policy still needs to respond particularly assertively when inflation is expected to be well outside the target range, or persistently outside it. but, at other times, if inflation is fairly stable and if we | 1 |
cleviston haynes : cash will remain a part of the mix speech by mr cleviston haynes, governor of the central bank of barbados, bridgetown, 4 june 2019. * * * just over a decade ago the bank hosted its first currency exhibition, as ensuring a steady supply of money in circulation is a natural extension of one of our core functions. thirteen years later, much has changed. for some, the assertion that β cash is king β has been replaced by the question β is cash dead? β in many ways this is not surprising. alternatives to cash are increasingly popular. credit cards, debit cards, mobile wallets, etc., appear to be displacing traditional payment instruments such as cheques and cash. globally, smartphone apps and other technological advances seem poised to transform payment systems as we know them. now, for the younger persons here today, the idea of paying for something using your phone probably doesn β t seem extraordinary, but this is something i certainly did not imagine when we were your age. nevertheless, the bank understands the need to adapt in general. more specifically, we have to adapt to the requirements of the new digital age. being able to collect and make payments more efficiently is a key part of the digital transformation that the economy will undergo. it has the potential to enhance productivity and overall competitiveness. we are committed to working with government to improve the payments infrastructure, including through the reduced use of cheques and cash. this should contribute to speedier, secure settlement of transactions. so why an exhibition celebrating cash? while we aim to decrease significantly the use of cash, we cannot ignore that at present it accounts for a significant percentage of the transactions made in barbados. currency in circulation is about 7 % of gdp. however, there is already increasing usage of credit and debit cards the transactions through the automated clearing house. while cash remains relevant now, it is facing increased competition as an instrument for payments. but we believe that there will remain a place for cash. a wholesale shift to digital payments or even debit and credit cards has implications for financial inclusion. for the traditionally unbanked, access to cash allows participation in the economy. the same is true of many older persons and other vulnerable members of society. cash also serves as a backup in the event that the networks that power other forms of payment go down during and after a natural disaster or due to technological glitches or security breaches. the importance of retaining some level | 3 %. tourism continuous recovery shall give a better support to growth this year. the tourism sector has a significant impact on thai economy as the sector accounts for 12 % of gdp and employs over 20 % of total employment, both directly and indirectly. 1 / 4 bis - central bankers'speeches the drag factors that will drop off in 2023, there was a huge inventories drawdown, which equivalent to 4 % of gdp. we expect that to happen much less this year. more fiscal spending would be disbursed once the fiscal budget is approved in april and accelerate in the second half of the year. exports will expand as global good cycle returns ( expect export value to be positive in 2024 compared to - 1. 7 % yoy in 2023 ). on the inflation front, the disinflation process has been faster than expected ( peaked at 8 % in august 2022 / 7 months later back to our target range of 1 - 3 % ). recently, headline inflation figures were negative and will remain negative until april, but deflation risk is quite low for several reasons. first, the recent negative headline inflation was mainly due to supply factor, especially government subsidies on energy and electricity prices. if we exclude the subsidies, the headline number would still be positive. second, the price decreases were not broad - based, the categories of goods and services with price declines were around 25 % of total cpi basket, while the other 75 % are either stable or increasing. third, inflation expectations are well - anchored within the target range around 2 %, and we do not observe broad weakness in consumption that would usually be observed in deflation circumstances. on the financial front, we expect non - performing loans ( npls ) to increase, but low chance of an npl cliff ( npl is at 2. 7 % as of q4 / 23 ). in addition, some corporate bonds may face repayment difficulties, especially in the high yield segment, but impact should be limited and contained. meanwhile, financial markets will remain volatile. why an increase in npl is not a surprise : during the crisis, a lot of measures were implemented to support borrowers, such as regulatory forbearance measures to encourage debt restructuring. when the economy is going back to normal, it is not appropriate to continue with these measures as their continued existence could create undesirable and unintended consequences. with the fact that we have significant shares of borrowers under various kinds of supporting | 0 |
benoit cΕure : interview with france info tv interview with mr benoit cΕure, member of the executive board of the european central bank, and france info tv, conducted by mr jean - paul chapel on 9 november 2017. * * * global indebtedness is at record levels. government debt in the rich countries stands at over 100 % of gdp. isn β t that sowing the seeds for the next global crisis? it β s a matter that calls for attention, but i don β t think it will be the cause of the next financial crisis. what will cause it then? i don β t know. but at the ecb we are more concerned about the rapid rise in private debt. corporate debt? yes, corporate debt, and shadow banking β those loans that are not made by banks. dark banks... shadow banks. they are insufficiently regulated. also, there β s a widespread temptation to relax banking regulations, at a time when, as you say, interest rates are very low. all that is a source of risk. government debt is a concern, but it doesn β t threaten to trigger a financial crisis. when the next crisis hits europe we want to be sure that member states, governments, have budgetary firepower. today, that power is very limited or even non - existent. that β s why countries have to deleverage. but in the meantime, you, the central banks, the european central bank and other banks, with low interest rates, ample liquidity, you are inflating these bubbles β¦ it β s true that the low rates can create financial stability risks ; we β re aware of that. the longer we conduct these policies, the longer the rates will remain low and these risks will exist. that shows how urgent it is to have growth policies which do not rely mainly on monetary policy. a full mix of policies would be healthier from this point of view, since they would not create financial stability risks. we are closely following this and at the moment we see no financial bubbles at euro area level. there are some small, worrying signs in some countries. in france, for example, corporate debt is rising very quickly. but there is nothing that would justify the ecb withdrawing its support for growth. monetary policy supports growth and job creation. for that reason we won β t be withdrawing support now. let β s talk about europe, about its construction. it β s the issue that β s stirring up anger | . jean - baptiste duval of the huffington post would like to ask a question on that. β europe was a great success β, you said in [ your interview with ] le journal du dimanche, but what exactly are you talking about? about the β no β in the 2005 referendum, wonderfully ignored? about the support for greece, just like a hangman β s rope? or the return of nationalist flames in the united kingdom and in eastern europe? joking aside, benoit cΕure, do you live in an ivory tower in frankfurt, or do you know things that europeans are unaware of? do you know things that europeans are unaware of? no, we don β t know things that europeans are unaware of. we try to do our work as best as we can, which is to ensure price stability in the euro area. and i don β t think we have to be negative 1 / 2 bis central bankers'speeches about europe. not everything is going very well. there are plenty of things which don β t work well and which need to be improved. but what would we say to the millions of eastern europeans who have returned to prosperity thanks to europe, if europe didn β t exist today? what would we say to the millions of french people who work in companies which are exporting to europe? and when you travel round the world, europe is admired. why? because it is a prosperous region, but also because it is a place of security, and of social protection. europe is one of the few places in the world where, if you go to hospital, you won β t be asked for your credit card. that β s what we need to safeguard, but we need to safeguard it together, as europeans. emmanuel macron wants a euro area budget and greater solidarity between the member states. will that be achieved soon? it β s necessary because the member states have to regain budgetary firepower. it would not be reasonable to expect the european central bank to sort out all of europe β s economic problems indefinitely. economic capacity and budgetary capacity have to be recreated. but that won β t happen overnight ; french ideas won β t be imposed on europe by magic, it will be a long discussion. to do that, trust should be rebuilt between the countries of europe. trust is vital. from a french perspective, how can that trust be re - created? by carrying out reforms, and france is doing that. and by reducing deficits even more? | 1 |
slightly against the dollar during the same period. since our march assessment, the actual depreciation of the swiss franc, i. e. weighted in terms of exports, amounts to 1. 7 %. the corresponding relaxation in monetary conditions is weakening the effects of our policy of lifting interest rates and is increasing inflationary pressure through two channels. one the one hand, it is bringing about an increase in import prices, which could have an effect on consumer prices. even though the impact of this channel may have diminished during the past few years due to increased competition, there is no guarantee that β against the current backdrop of near full employment β it will not again be reactivated. on the other hand, it is strengthening the competitive position of our economy, thereby giving exports and economic activity a boost. as a consequence, the weak franc could heighten inflationary pressure in an economy already running at full steam. on the credit market, growth in mortgage lending is slowly receding, with the current rate of increase below 5 %. the β other loans β category continues to expand rapidly, while matching observations of the past in comparable phases of the economic cycle. this category is now growing at a rate of about 8 β 10 %, as at the beginning of the 2000s, when their level in fact considerably exceeded the levels we are currently experiencing. m1 and m2 shrank, which is nothing out of the ordinary during a phase of rising interest rates. when this happens, savings and sight deposits are shifted into time deposits. m1 and m2 are affected by this substitution. m3, which is not affected, is growing at a rate of 2 % to 3 %, which is appropriate for an expanding economy. inflationary risks in the current environment, price stability is subject to three types of risk : the first risk is connected with the development in the price of oil. the barrel price for brent crude rose by 40 %, from usd 51. 0 in january to usd 71. 7 in may. this will lead to higher inflation during the course of the year. unlike oil price hikes between 2004 and 2006, the most recent rally took place when capacity utilisation was higher. if the current surge in oil prices were to continue, it could affect prices more easily than previously. the second risk is due to the fact that demand is growing at too rapid a pace in relation to the development in production capacity. we estimate the gdp growth rate that can be sustained without pushing up inflation β potential gdp growth β at | . in addition, more than 40 percent of respondents adopted more - restrictive terms on commercial real estate loans, compared with 26 percent in november. yield spreads on corporate loans, consistent with risk premiums observed in the corporate bond market, have also widened. adjustments in standards and pricing are clearly a necessary and important part of the transition that banks must make in moving from overly optimistic assumptions to more - realistic assessments of borrower prospects. as i have said previously, however, lenders and their supervisors, should be mindful that in their zeal to make up for past excesses they do not overcompensate and inhibit or cut off the flow of credit to borrowers with credible prospects. there is doubtless an unfortunate tendency among some, i hesitate to say most, bankers to lend aggressively at the peak of a cycle and that is when the vast majority of bad loans are made. a more disciplined, less pro - cyclical, long - term approach to lending that provides higher average risk - adjusted returns to shareholders is obviously in the self - interest of banks. it is interesting to note that the length of the current expansion, coupled with the absence of problem commercial loans until recently, has led to some depreciation in both bankers'and supervisors'skill in handling weakened or troubled credits. such problems either are a faded memory or are outside the experience of some lenders and examiners, despite the serious credit work - out problems of the late 1980s and early 1990s. as a consequence, institutions have had to brushup and re - institutionalize their policies and practices for managing weakened and problem credits, and supervisors have had to similarly bolster their training programs. recent problems have also helped vividly illustrate the longstanding virtues of sound lending practices. for example, losses related to leveraged finance loans have reminded institutions that these credits present unique challenges for an institution's risk - management systems and that proper safeguards are necessary to conduct this business prudently and profitably. leveraged borrowers, by virtue of their high interest costs and dependence on third - party funding, have a diminished ability to adjust to unexpected economic events and changes in business conditions. as a consequence, leveraged credits require more - intensive tracking and monitoring than typical commercial credits to ensure that their unique risk characteristics are adequately understood and controlled by the banking organization. institutions with sound practices translate the results of their monitoring into appropriate internal ratings, classifications, and loss recognition to develop a timely and accurate picture of their institution's | 0 |
the recession at the end of the 1980s was followed by a period of low wage growth and gains in competitiveness. this may help to explain why the decline in manufacturing employment came to a halt in the 1990s. however, wage costs increased again in the late 1990s. the relative wage level in manufacturing industry compared with trading partners is now back at the level in the 1970s. two forces were behind economic developments from the beginning of the 1970s. first, the deterioration in competitiveness was caused by the expansion of the norwegian welfare state and a transfer of real resources from the exposed sector to the sheltered sector. second, inflation expectations took root as a result of low administered interest rates and competitive devaluations. nominal interest rates were kept low although price inflation and the value of tax - deductible interest expenses rose. frequent devaluations in the period from 1976 were ultimately ineffective with regard to preventing a relative decline in manufacturing industry. on the contrary, the devaluations proved to be self - reinforcing. chart 7 over a period of 15 years from 1973 to 1988 consumer prices in norway rose twice as much as in germany. in the same period, the value of the krone was virtually halved against the mark. while we paid around 2 kroner for one mark in 1973, 15 years later we had to pay close to 4 kroner. since then the krone has remained relatively stable against the deutsche mark. today the exchange rate is around 4 kroner and 10 ΓΈre. the last devaluation came in 1986 after the fall in oil prices. thereafter, the krone exchange rate was fixed. the norwegian economy had to go through a severe economic turnaround. confidence in the krone had to be restored in order to avoid persistent inflation. this required very high interest rates. the norwegian economy entered the worst recession experienced since the interwar period. unemployment rose from about 2 % in 1987 to almost 6 % in the winter of 1992 / 1993. many companies went broke and households were faced with debt problems. the financial sector was hit by crisis. the fixed exchange rate regime led to a gradual decline in price inflation, but not to deflation as was the case in the 1920s. an improved wage - setting process, in conjunction with an active fiscal policy, contributed to curbing the real economic costs. hence, the experience of 1986 and the beginning of the 1990s probably provides a realistic picture of the minimal costs associated with stamping out high inflation. | a real and well - known risk of fiscally overburdened states possibly infecting their own banking system and triggering a solvency crisis at banks. and this sovereign - bank nexus, in turn, affects the ex - ante likelihood of a european deposit insurance scheme becoming involved. in order to improve the current situation, a crucial element has to do with current incentives contained in banking regulation. at present, sovereign bonds from member states of the euro 3 / 5 bis central bankers'speeches area have a zero risk weight under the capital requirements regime. essentially, this means that the economic risk attached to sovereign debt ( which is larger than zero ) is not reflected in capital requirements. nor is there any upper limit for exposures to specific sovereigns. this preferential treatment is a factor that actually contributes to the sovereign - bank nexus and therefore needs to be altered. please bear in mind that given the risks that are currently not resolved in several areas, a third pillar is not only unjustified because of the heterogeneous levels of risk at national banks. it would also reduce incentives to address those national issues if a mutualised insurance scheme were in place. so as you can see, the reasons for postponing edis are founded not on an ideology - based rejection, but very much on stability considerations. 4 the road to stability : are we locked in a stalemate? this brings me to a second mindset i frequently encounter when discussing the future of the banking union. it concerns the idea of a trade - off between crisis mitigation and crisis prevention measures. essentially, some interpret the ongoing risks for the euro area as a sign that we are approaching a stalemate situation, where self - recovery potentials in the financial system will be exhausted β as will options for action. in this situation, the reasoning goes, would it not be better to compromise on short - term oriented β flexible β measures β however counterproductive in the medium and long term? and would this not be an argument for an immediate completion of the banking union? the great value of systemic analyses is beyond doubt. but at the same time, i wonder whether a simple trade - off between short - term and long - term goals might not be the result of over - hasty generalisations. let me set these thoughts in the context of our main topic of european deposit insurance. my guess is that here, too, hasty calls for new policy agendas are partly the result of a too - narrow | 0 |
of that work into the current international effort to develop and implement a single global code of conduct for the foreign exchange market and to enhance adherence to that code among all market participants. work of the financial stability board β s foreign exchange benchmarks group ( fxbg ) given the global nature of the fx market, as well as the number of jurisdictions in which wrongdoing has been uncovered, efforts to strengthen the market must be global in nature as well. recognizing this imperative, the financial stability board ( fsb ), an international body that monitors and makes recommendations about the global financial system, established the foreign exchange benchmarks group ( fxbg ) in early 2014. the purpose of the fxbg was to review fx benchmarks and associated market practices, including potential misaligned incentives, and make recommendations for change. the fxbg, which consisted of representatives from more than twenty countries, engaged with a range of market participants to analyze the market structures and incentives as they related to trading around benchmark fixings. the group produced a series of recommendations to enhance the structures and behaviors around fx benchmark trading. i would like to focus on two particular aspects of these recommendations β first, changes to the wm / reuters calculation 10 and second, changes aimed at strengthening market conduct. the fxbg report highlighted the dominant use of the wm / reuters ( wmr ) 4 p. m. london fixings by many different sets of market participants, including some not otherwise active in the foreign exchange market. the fixings, provided across many different currency pairs, were used in many different ways β including for multicurrency portfolio valuation and for the valuation of key financial market indexes. in regard to the wmr 4 p. m. london fixings, the group identified important changes to strengthen the construction methodology and reduce the scope of potential manipulation. specifically, it recommended that the length of time over see the u. k. β s fair and effective markets review final report for related insightful discussion on fixed income, currency and commodities ( ficc ) markets. available at : http : / / www. bankofengland. co. uk / markets / documents / femrjun15. pdf. in the united states, the cftc has regulatory responsibility for most fx products. the wmr london fixing is now subject to regulatory oversight by the financial conduct authority ( fca ) in the u. k., in addition to the fsb initiatives | state one of the particular strengths of new york state is its diversity β and this is especially true from an economic perspective. in western and central new york there are top - tier universities, manufacturing businesses, a thriving professional services industry, as well as popular tourist destinations. since the 2008 financial crisis, the declining population trend in upstate new york of earlier decades had largely stabilized. in recent years, new businesses had sprung up and unemployment had fallen to historic lows. 1 / 3 bis central bankers'speeches all of this was against the backdrop of a strong national economy. at the start of the year, most forecasts anticipated continued moderate growth throughout 2020 and into 2021. according to the data for april, the unemployment rate now stands at a staggering 14. 7 percent β a figure i hoped that i would never see in my lifetime, and one that is sure to get worse before it gets better. if i think back to the economic picture of february, nobody could foresee this would be our reality within a few short months. it β s likely that the latest numbers do not reveal the full extent of the financial devastation faced by millions of american families. the data don β t capture those who had to leave their jobs, either for their own health or to take care of loved ones. many more people have had their hours reduced or have been forced to take a pay cut. it β s going to be some time before we have a detailed understanding of the full economic effects of the public health measures necessary to combat the coronavirus. what we do know is that the pandemic has put a large question mark over the positive trends experienced in our state, as well as the nation as a whole. as social distancing measures are relaxed, we will get a better understanding of how different industries are affected. we know that travel, hospitality, and retail have all been hard hit. what we don β t know is what the shape or timescale of the recovery will be. it β s going to be some time before we have a clearer view of the effects on other industries, including autos, higher education, manufacturing, and professional services. our response despite this extraordinary uncertainty, at the federal reserve we worked quickly to put measures in place to support the economy and set the foundation for a strong recovery. during the first half of march, the federal open market committee ( fomc ) brought the target range for the federal funds rate to near zero. 1 the fomc has indicated | 0.5 |
stanley fischer : the growth of the israeli economy in the long run address by professor stanley fischer, governor of the bank of israel, to the sderot conference for society, sderot, 6 november 2007. * * * the subject for this evening is " evaluating the socio - economic situation of israel in 2008 ". i prefer, with your permission, to take a longer perspective, and to speak about the growth of the economy in the long run. in this context, i will focus on economic policy, and the importance of sustainable growth. the rate of growth is critical for the future of the economy, and the future of the state. if we manage on average to grow in the next 25 years at a rate of 5 percent a year, in 2032 we will attain a level of gdp of nis 2, 235 billion ( in 2007 prices ), compared to a gdp of nis 660 billion in 2007. to compare, if we were to grow by only 3 percent a year, gdp would reach only nis 1, 380 billion. that's an enormous difference, of more than 60 percent. it is important that we understand that if we can achieve persistent high growth, then we will have the necessary resources to address existing problems in critical areas, such as social welfare. with regard to sustainable growth, i will not speak here of the importance of continuing the strategy of macroeconomic stability, free markets, the opening of the economy, and its integration into the global economy. instead, i will speak today on three structural and no less important issues : education, welfare and investment. i have listed welfare among these three topics, because israeli society cannot succeed β certainly not in the long term β if there are wide social gaps, and if a large part of the population has to subsist on a very low standard of living. a. education in principle, we all understand the importance of education in israel. we have no natural resources but we have human resources, which should be constantly developed in order to maintain and increase the qualitative edge of the state of israel. over the years the country has placed great stress over the years on the subject of education, and if this topic does not continue to hold a high enough place in our priorities, then we shall find ourselves in a continually deteriorating situation. and in some ways this erosion has already begun. when looking at our spending on education in international comparison, we find a very interesting and important picture : on average, spending | with these barriers to growth. and for the long run, there is nothing more important for the israeli economy and the economic well - being of israelis than sustained rapid growth. | 1 |
acquire stressed loans under the transfer of loan exposure framework. similarly, for standard assets, the securitisation framework permits diverse set of investors to subscribe to the securitisation notes of underlying loans. by having a wider set of participants, it is envisaged that credit markets will become more vibrant, effective, and transparent. permitting securitisation of currently restricted asset classes the market for securitisation products is quickly catching up in india and is poised to grow manifold in years to come. our framework on securitisation issued in 2021 carries a negative list restricting a few asset classes from being securitised. but this is not a fixed exclusion. we constantly monitor the growth and maturity of market and are ready to take a well - thought - through call if some restricted assets could be securitised in current environment. conclusion to sum up, while credit is an important driver for the growth of economy from the financialisation perspective, we need a robust risk management framework to manage credit risk. the array of tools for credit risk management have evolved with prudential limits providing the regulatory back stops. to facilitate transfer of credit risks between entities in a fair and transparent manner several policy enablers have been put in place by the reserve bank with the objective of developing robust credit markets. as you may have observed the discussion of β risk β was at the core of my deliberation today. as a regulator, we do acknowledge that risk cannot be avoided. after all, risk - and - reward dynamics is the soul of entire edifice of finance! it may be appropriate to recall few lines of a famous poem β risk β by the poet william arthur ward β¦. to hope is to risk despair, to try is to risk failure. but risks must be taken because the greatest hazard in life is to risk nothing β¦ so, some risks must be taken. however, it is in our collective interest that we know the risk we are taking, assess it adequately, and acquire the capabilities to manage it. thank you, everyone. * * * * * * * | olli rehn : eternal challenges in monetary policy speech by mr olli rehn, governor of the bank of finland, at the 2023 bank of japan and institute for monetary and economic studies ( boj - imes ) conference, hosted by the institute for monetary and economic studies, tokyo, 1 june 2023. * * * accompanying presentation of the speech thank you, athanasios, and my sincere thanks to governor kuroda for the invitation. this conference, now under the firm leadership of governor ueda, continues to be a key event after 40 successful years. let me make two points on what i would call, neither old nor new, but perennial, eternal challenges in monetary policy. i will start with inflation expectations, and then discuss our monetary policy stance. the heavy cost of a de - anchoring of inflation expectations is one of the most agreed upon issues in central banking. after all, steering inflation towards our targets is largely about steering inflation expectations. slide 1 in the euro area, the inflation outlook continues to be too high for too long. although most measures of longer term inflation expectations currently stand at around our 2 % target, some indicators have edged up and warrant continued monitoring. a lasting rise in inflation expectations is an upside risk to inflation, also over the medium term. persistently high inflation rates are risky, particularly since they could make inflation expectations adaptive. this would be a dangerous development and must be decisively avoided. thanks to the increased extraction of information from micro data, we are now learning more about the formation of inflation expectations. professor weber, who is no stranger to the bank of finland, has shown us that we should analyse inflation expectations more deeply to gain a more profound understanding. this said, when going from the macro to the micro level, the issues tend to become more complex. this goes for survey data, as well, in that we also need a fuller psychological interpretation of expectation formation to better understand survey behaviour. my second point is on the policy stance in the current context. for central banks, there are substantial common global denominators. so, i found it particularly interesting when, yesterday, professor obstfeld drew our attention to the importance of global factors in determining real rates. in his recent work, professor obstfeld has also pointed to a risk that central banks may collectively go too far, as their restrictive policies would reinforce each other. 1 / 2 bis - central bankers'speeches it is fair to note that the | 0 |
framework. * * * ladies and gentlemen, i believe the discussions you are going to have today and tomorrow will provide important insights for addressing these issues too. i would like to thank the organizers of the workshop : francesca lotti and francesco manaresi from the bank of italy, salome balsandze from the einaudi institute of economics and finance and the cepr, and luigi marengo from luiss - guido carli university. i also thank alessandra piccinini from the bank of italy for taking care of the logistics. i welcome you once again and wish you a fruitful exchange of ideas, as well as a pleasant stay in rome. designed by the printing and publishing division of the bank of italy | maximum amount that the counterparties can borrow through these operations will be raised to β¬3, 000 billion. as a bridging measure, until june 2020 additional ltros will be conducted at favourable conditions and with full allotment of the amounts requested. alongside the asset purchase programme already under way, equal to β¬20 billion in monthly purchases, banca d β italia address by governor ordinary general meeting of shareholders a further β¬120 billion has been allocated for additional net purchases until the end of the year, with a significant contribution from the private sector purchase programmes. these measures were further reinforced at the meeting of 18 march last, when the governing council announced a new programme for the purchase of public - and private - sector securities amounting to β¬750 billion this year. this new pandemic emergency purchase programme ( pepp ) will continue until the end of 2020 but may be extended if the public health emergency continues. ample flexibility is envisaged for purchases of public - sector securities to enable, should market conditions require it, divergences with respect to the current allocations, both in respect of jurisdictions and asset classes. the range of eligible securities issued by private firms has been extended to include commercial paper of sufficient credit quality ; the eligibility criteria for collateral have been relaxed further, to facilitate recourse to refinancing by banks. within our mandate, we stand ready to increase the volume of purchases, adjust their composition and explore all possible options for supporting the economy in this acutely difficult phase. it was also decided to consider revising past self - imposed limits in carrying out these operations, to the extent necessary to make the interventions proportionate to the current risks ; any impediment that might hamper the effective transmission of monetary policy will not be tolerated. the balance sheet at the end of 2019, the bank of italy β s total assets amounted to β¬960 billion, a decrease of β¬8 billion compared with the year before. assets continued to consist mostly of securities purchased for monetary policy purposes, equal to β¬384 billion, of which around β¬320 billion made up of italian government securities. refinancing operations, totalling β¬220 billion, decreased by β¬24 billion owing to early repayments on tltro ii operations, only partly offset by amounts allotted under the new tltro iii operations. overall, monetary policy assets make up more than 60 per cent of the total balance sheet. the value of gold rose by almost β¬20 | 0.5 |
##ly. the bank will play its role in enabling a blissful dawn to unfold ; to set the budding rose above the rose full blown. more broadly, sir charlie bean β s independent review of economic statistics highlighted the impact on economic data arising from inadequate sharing of data across the public sector, something that i am pleased that the cabinet office is taking steps to address. bis central bankers β speeches | eddie yue : how hong kong is prepared for macro - economic challenges on the horizon in 2019 opening remarks by mr eddie yue, deputy chief executive of the hong kong monetary authority, at the hong kong - paris financial seminar, co - organised by the hong kong monetary authority and paris europlace, hong kong, 16 january 2019. * * * denis ( beau ), arnaud ( de bresson ), distinguished guests, ladies and gentlemen, 1. good morning. let me extend a very warm welcome to you all for attending today β s hong kong - paris financial seminar, co - organised by the hkma and paris europlace. and a special welcome to our guests from france. 2. hong kong and france have always had strong ties. we are home to more than 20, 000 french people and about 800 french companies. apart from food and beverage and luxury goods that people are familiar with, french companies are also actively engaging in different industries in hong kong, ranging from finance, construction and infrastructure. about 170 of the french companies use hong kong as the regional headquarters. given the existing strong ties, it is particularly good to have forums like today β s seminar to talk about how hong kong and france can further strengthen their relationship through financial collaboration. 3. before i talk about the opportunities for further collaboration, let me spend a few minutes to talk about the risks and the rather challenging macro environment that we are facing. i am sure you are familiar with the major global risk areas : china - us trade conflict, brexit, tightening of global financial conditions and moderation in growth of the mainland chinese economy. they are likely to remain relevant in the coming year. as a highly open economy, hong kong is sensitive to these external risks. 4. if the past offered any lesson, it is that we must build a robust regulatory framework with very strong buffers, so that whenever these shocks strike, we will be able to come through smoothly. the key is to keep your house in order and get ready for the shocks. let me highlight three areas that hong kong has prepared well for the potential challenges. 5. first is the strong confidence in our monetary system, which is the linked exchange rate system. second is the strong buffer in the banking system : our banks β capital ratio of 15. 8 % and liquidity ratio of 158 % are well above the international standards. third is the strong buffer provided by the high level of fiscal reserves, amounting to 40 % of gdp | 0 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.