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murray sherwin : institutional frameworks for inflation targeting speech by mr murray sherwin, deputy governor of the reserve bank of new zealand, to the bank of thailand symposium β practical experiences on inflation targeting β, held in bangkok, on 20 october 2000. * * * introduction governor, distinguished guests, fellow central bankers, ladies and gentlemen. it is always a pleasure to find an opportunity to visit thailand and this is no exception. thank you, governor, for the invitation. it is also a considerable honour to be invited to address this symposium on the subject of inflation targeting. the subject of today β s deliberations is an important one and i applaud the bank of thailand β s decision to convene this public symposium to air the issues. that decision is in the best traditions of transparency which characterises inflation targeting central banks. i have been asked to discuss institutional frameworks for inflation targeting. inflation targeting has attracted increasing attention around the world over recent years. we have seen this approach to monetary policy spread from the small, open, oecd economies to a number of the emerging economies - in eastern europe, latin america and now in asia. the concept first emerged in my own country, new zealand, in the late 1980s. in our case, it gained a formal institutional structure with the passage of a new charter for the reserve bank of new zealand in 1989. inflation targeting arose in new zealand in an environment that will seem rather familiar to many of our asian friends - at least in some important respects. it was developed in a very small, open economy that was adjusting to a newly - opened capital account, a newly - floated exchange rate, and newly - deregulated financial markets. it was developed with the recognition that a more traditional structure for monetary policy, perhaps one focused on targeting particular definitions of money supply, was likely to prove inadequate in this newly deregulated and rapidly evolving environment. while many other countries have now adopted inflation targeting, each country brings its own history, traditions and institutions to these decisions. for that reason, we find a variety of institutional structures are utilised. my comments today obviously will draw heavily on the new zealand regime. and while i will attempt to generalise the lessons we have learned, and to draw from the experience and structures of other inflation targeting central banks, it is important to highlight up front that there are few fixed points for the architects of a new inflation targeting regime to fasten on. we are still learning and adapting as we go | ##ary risks and further policy rate cuts by the ecb have faded and focus is beginning to shift towards a normalisation of policy in the future. indeed, as the governing council has recalled recently, if the euro area economy recovers and inflation proceeds further on its path towards the ecb β s inflation aim in a sustained manner, a discussion on policy normalisation becomes warranted in the future. any such discussion should, of course, take place in a structured, orderly and appropriately prudent manner and the governing council is convinced of the need to continue an accommodative monetary policy stance without deviation from the announced measures under implementation to be expected. but we could examine the interaction of our different policy measures and their functioning in a new environment of balanced prospects as opposed to the environment of deflationary risks that prevailed when they were first introduced. as has been stated, our forward guidance needs to be aligned with an evolving assessment to underpin both the consistency and credibility of our communication. prospects for the banking system in this context, it is imperative that the banking sector is well - positioned to foster sustainable growth in the coming years as the exceptional levels of monetary policy support will be adjusted in line with the progress towards our policy objective. a well - functioning, profitable and resilient financial sector is vital for the long - term economic prospects of the euro area. allow me, then, to make three remarks on this topic. my first remark relates to bank profitability. as i have just discussed, the ecb β s unconventional monetary policy measures have been successful in fulfilling their intended purpose. but that is not to say that they did not have any side effects. they have drawn criticism for their 2 / 5 bis central bankers'speeches negative effects on financial sector profitability. i believe such criticism is somewhat unbalanced. in the absence of the recovery generated by these unconventional measures, unemployment would have been higher, credit growth lower and a greater proportion of loans would have been non - performing. all of these things would have weighed on banking sector profitability. moreover, while acknowledging that banks face a charge because of the negative rates policy, internal data show that this burden is alleviated by the benefits gained in wholesale funding markets. between january and march 2017, on average, two thirds of overnight unsecured funding was raised at an average rate of around β 46 basis points, essentially through counterparties having no access to the ecb facilities. similar developments were observed in the secured markets for | 0 |
, present and emerging. https : / / www. rba. gov. au / speeches / 2020 / sp - dg - 2020 - 11 - 24. html 14 / 14 | the limitation of raison d β etat is the question upon which hinges the future of not only small states, but also the large states, and humanity as a whole. ultimately, monnet and paasikivi were talking about the same thing. what is most essential in the eu? it is that the guiding principle is law, not force. legitimacy and the rule of law govern relations between member states. the task of the european institutions is to monitor legality and compliance of all activities with the eu treaties. finally, taking into account the history of finland, a small country, so often shaken by the storms of our continent, it is no surprise that finnish european policies have from the very first day been communityoriented and that it supports strong common institutions. thank you. | 0 |
##saka at which views of various stakeholders on what needs to be done to address binding constraints to the sme sector were considered. the fact that the discourse on sme financing continues underpins two significant positions. firstly, it gives recognition to the fact that we are all aware of the potential of this sector in generating employment, promoting economic growth and reducing existing poverty levels. in low income sub - saharan african countries, smes and micro - enterprises make up about 90 % of all enterprises. however, due to the various constraints they face, their overall contribution to gdp can in some countries be as low as 20 % although estimates show that this could be scaled up to 60 % with the greater realization of the sector β s potential. contribution to employment can be as high as 63 %. for most low income countries, smes are the main bis central bankers β speeches source of jobs and income after subsistence agriculture. particularly significant is that they are a great source of livelihood for women who own more than half of smes while over 70 % of africa β s rural population survives through the formal and informal sme sector. there is little doubt, therefore, that smes form a solid basis for sustainable economic development on our continent. secondly, the continued discourse on smes reminds us of the possibility that we have probably done more talking about the problem than fixing it. although the development of smes is varied extensively across africa, what is clear is that in most countries a major obstacle to their growth is the lack of sustainable and cost effective financial products. south africa and mauritius in this region and north africa have done a commendable job in developing flourishing smes sectors. part of the reasons for success in these countries can be attributed to their modern financial systems and clear policies that support the growth of the sector. however, the fact still remains that for most african countries, a sustainable way of financing smes has yet to be found. as i mentioned earlier, the programme for this meeting is broad and extensive. but i would wish to draw your attention to a number of broad areas of reflection which i believe can help in delivering greater finance to the sector. the first area is that there is a need to accept that not all banks can or should even be expected to provide sme financing products. the cost structure and skills orientation simply make some financing institutions completely unsuitable to deliver sme products cost effectively. the implication of this is that greater effort must be placed on developing financial institutions that see sme financing as the | mr fazio gives an address on the italian capital markets and the need for new strategies in euroland address given by mr antonio fazio, governor of the bank of italy, at the euromoney conference, held in rome on 23 november 1999. * * * between 1985 and 1998 the stock of public and private - sector bonds issued in the group of ten countries rose from 90 % to 130 % of their combined gdp ; the market value of listed shares rose from 30 % to 100 %. the use of derivatives grew even faster : between 1990 and 1997 the notional value of those traded in organized markets rose from 40 % to 200 % of gdp. the flow of loans granted to non - residents by banks of the countries reporting to the bank for international settlements amounted to $ 1, 100 billion in 1997, or 5 % of the reporting countriesaβ¬β’ gdp. the integration of financial markets, the prospects for growth in the emerging countries and the transformation of the economies in transition have created the conditions for an increase in allocative efficiency at the global level. the constraint imposed by the scarcity of financial resources for investment has been eased, especially in the developing countries. the growing dissociation between the generation and use of savings may nonetheless increase the riskiness of investments. strategies aimed at maximizing profits in the short run and herding have added to the volatility of prices. large - scale recourse to derivatives, which are extremely useful in controlling financial risks, has aggravated the adverse effects of speculative behaviour in some instances. the new context calls for careful assessment of the adequacy of national economic policies and the efficiency of the financial system, as well as careful control of borrowersaβ¬β’ creditworthiness and the use to which they actually put the resources they raise. in recent years intermediaries sometimes persisted in directing large volumes of resources towards countries with serious imbalances. this behaviour generated tensions and in the end led to crises. italyaβ¬β’s financial system is increasingly integrated into the global economy ; the adoption of the single european currency has intensified the process of integration. the return to monetary stability has created macroeconomnic conditions conducive to the expansion of the securities market. the size gap with respect to the other leading industrial countries remains to be closed. bonds the reduction at the global level in the volume of savings absorbed by public debt issues has freed resources for productive investment and contributed to the decline in interest rates. in europe, | 0 |
we are increasingly a part of the asian region, and have a vital stake in the prosperity of the region. and in that regard, everybody in this room, and indeed almost everybody in this country, is very much aware of the stresses and strains which several of the countries in the region have been going through in the last few months. even countries which have not experienced severe turbulence in their currency markets in some cases face very considerable pressures on their banking systems, so that it is no exaggeration to say that most of the people in the region live in countries where banking systems are under real strain. oceans of ink have been spilt in analysing the causes of these strains, and this analysis will no doubt continue for a long time to come. most detached observers seem to agree that the underlying problems had nothing to do with the real or imagined activities of foreign speculators but a great deal to do with more fundamental factors, factors which clearly varied from country to country, but which included politically - directed lending by banks, the end of a real estate bubble, sharply increased real exchange rates in a pegged exchange rate situation, a lack of transparency in financial markets, and, dare i say it to this audience, some poor quality credit analysis by some of the banks and other financial institutions. i do not propose to offer my own analysis of the causes of β the asian crisis β this morning. i was originally invited to speak about β the role of central banks, the new zealand experience β. but instead i want to tailor my remarks more specifically to the theme of your conference, β open markets - the implication for banks in the asian pacific region β. so for this reason i want to focus this morning on a question, namely β in a world of open capital markets, how can central banks best help banking systems remain strong? β not surprisingly, my remarks will be heavily conditioned by our own experience in new zealand. while we are all conscious of the strains currently besetting the banking systems in many asian countries, not all of you will be aware that we in new zealand had our own banking system problems less than 10 years ago. as a result of these problems, our largest bank would almost certainly have failed had the government, as majority shareholder, not been willing on two occasions to provide a substantial capital injection. one very major financial institution ( not a bank, but certainly a quasi - bank, and an institution which was in the process of applying for a banking licence ) did | s overall prudential framework for safeguarding financial stability. 4 macroprudential policy is one key part of this prudential framework. we want to use macroprudential tools when risks are particularly high, to build resilience among banks and households, and to mitigate the economic cost of a future crisis. 5 my talk will cover three broad issues. firstly, how does macroprudential policy mitigate risks to the financial system? secondly, looking back, has the reserve bank β s macroprudential policy enhanced i am very grateful to bruce lu for considerable assistance in the preparation of this speech, along with valuable comments from other reserve bank colleagues. the loan - to - value ratio is a measure of the size of the loan relative to the value of the borrower β s collateral held against the loan, usually expressed as a percentage. lu ( 2019 ) assesses the effectiveness of loan - to - value restrictions in enhancing financial stability, and looks for any side effects. ovenden ( 2019 ) discusses the reserve bank β s strategy for operating macroprudential policy. bascand ( 2019 ). macroprudential policy in the new zealand context refers to policies with a time - varying dimension, although internationally the term is broadly used to refer to prudential policies that are focused on the financial system. financial stability, and were there any side effects? lastly, i want to discuss how macroprudential policy should be governed, and the reserve bank β s approach to using the tools. part 1 β the role of macroprudential policy to start with, let β s take a look at how systemic risks are created from the boom and bust in the financial cycle, and how macroprudential policy can increase resilience of banks and households when those risks are high. when the economy is doing well, banks face competitive pressure to relax their lending standards. when homeowners experience house price inflation, their access to credit will generally increase. as a result, lending to less credit - worthy borrows can increase to an extent that is harmful to society ( figure 1 ), without individual lenders bearing the full cost of higher debt levels. it β s no surprise that those dynamics can apply in reverse when the economy weakens : as household incomes fall, the ability of borrowers to service debt is undermined, and defaults increase. this produces losses in the banking system and can trigger a fire - sale of housing, which compounds | 0.5 |
/ service, how do you decide on which activities are remunerative and which are not? how do you decide on your product promotion and pricing strategies unless this information is readily available? why have certain products when there is no demand for them? after all, there is a cost attached to product promotion. as banks are perceived to be offering identical products and services, how does the board / top management set about differentiating their bank from others, unless they have such basic granular details? under rbs, it is essential for the banks to have the capability and infrastructure to support a robust and reliable mis architecture, with data integrity. a data warehouse wherein data flows from the transactional system without manual intervention and is capable of generating various mis reports on all major activities of the bank ( including activity - wise / segment β wise analysis ) is one of the prerequisites for effective risk management. in the absence of a reliable mis, it would be a near impossible task for the bank management to get a true and fair picture of the quality of assets, earnings, etc. risk based pricing of products and services risk - based pricing means determining loan pricing based on the expected loan risk. typically, a borrower β s credit risk is used to determine whether a loan application should be accepted or declined. the same risk level could be used to determine the optimal pricing. this, essentially, translates to higher interest rate for a borrower with higher risk and a lower rate for a lower risk borrower. most large banks with suitable risk management and measurement architecture normally have some form of risk - based pricing strategies based on a measure of probability of default. this is, often, not apparent in small or medium - sized banks due to lack of strategy, process and technology to drive consistent results across various loan portfolios. banks without a formal risk - based pricing approach, typically, use a flat - rate pricing model. the inherent problem with flat - rate pricing is that the bank will end up having a higher share of lower credit quality loans since the higher credit quality borrowers can obtain better pricing at other banks ( i. e. those offering risk - based pricing ). banks are required to maintain capital to cover the risks they assume. as capital always comes at a cost, they need to have a differentiated risk - based framework for pricing of products and services. this involves costing, a quantitative assessment of revenue streams from each segment, activity, product and service, and an efficient transfer pricing mechanism which would | as interest rate signals. there is no explicit interest rate target envisaged in india. nevertheless, a great deal of reliance has been placed in recent years on interest rates and exchange rates in the day - to - day conduct of monetary policy. in the context of increasing openness of the economy and a market - determined exchange rate, the large capital inflows witnessed in recent years have posed major challenges to the conduct of monetary and exchange rate management. a critical issue in this regard is a view on whether the capital flows are temporary or permanent in nature. the recent episode of large capital flows prompted a debate in india on the need for exchange rate adjustment. in a scenario of uncertainty facing the monetary authorities in determining temporary or permanent nature of inflows, it is prudent to presume that such flows are temporary till they are firmly established to be of permanent nature. the liquidity impact of large inflows was managed till the year 2003 - 04, largely through the day - to - day laf and omo. in the process, the stock of government securities available with the reserve bank declined progressively and the burden of sterilization increasingly fell on laf operations. in order to address these issues, the reserve bank signed in march 2004, a memorandum of understanding ( mou ) with the government of india for issuance of treasury bills and dated government securities under the market stabilisation scheme ( mss ). the intention of mss is essentially to differentiate the liquidity absorption of a more enduring nature by way of sterilisation from the day - to - day normal liquidity management operations. the ceiling on the outstanding obligations of the government under mss has been initially indicated but is subject to revision through mutual consultation. the issuances under mss are matched by an equivalent cash balance held by the government in a separate identifiable cash account maintained and operated by the reserve bank. the operationalisation of mss to absorb liquidity of more enduring nature has considerably reduced the burden of sterilisation on the laf window. in its monetary operations, the reserve bank uses multiple instruments to ensure that appropriate liquidity is maintained in the system so that all legitimate requirements of credit are met, consistent with the objective of price stability. towards this end, the bank pursues a policy of active management of liquidity through omo including laf, mss and crr, and using the policy instruments at its disposal flexibly, as and when the situation warrants. way | 0.5 |
marion williams : governance and regulation of the financial sector β post meltdown : what has changed? remarks by dr marion williams governor central bank of barbados, at the seminar on β governance and regulation of the financial sector β post meltdown : what has changed? β, bridgetown, 14 october 2009. * * * senator the hon. darcy boyce, distinguished speakers, members of the board of the central bank of barbados, deputy governors, members of management and staff of the bank, managers of financial institutions, specially invited guests, distinguished ladies and gentlemen : welcome to the central bank of barbados and to today β s seminar on governance and regulation of the financial sector β post meltdown : what has changed? i extend a special welcome to our overseas speakers mr. geoffrey bell, ms. jane darista, mr. amar battacharya and mr. osbourne nurse. we thank you most sincerely for taking time out from your busy schedule to be here. the high level of attendance this morning suggests a keen interest in international and regional developments and their impact on the financial sector. our distinguished speakers will be discussing several critical issues as the world tries to chart a way forward for the financial sector. i will offer some preliminary remarks about the areas which i expect that we will cover. attitudes and perspectives the global financial crisis and its bank failures, collapses, scandals etc. cannot be undone. whatever its genesis β developed and developing countries, offshore or onshore financial centres, we all need to change attitudes, perspectives and strategies in order to ensure that institutions all across the globe are strengthened and that we restore consumer confidence and trust, globally, in financial systems. the interconnectedness of financial systems is such that the failure of an individual systemically important financial institution can reverberate globally. the dramatic changes in the global financial landscape over the past year have been historical in their proportions. in a period of such tremendous changes it will be necessary to take stock of where we are and to question how the financial sector is being governed, regulated and supervised. without doubt there will be changes in global rules as we have already seen and in global cross β border movement of funds, ownership structures and similar types of arrangements. research and discussion is needed on important subject areas that will be discussed today. basic questions even basic questions about who should have responsibility for regulation and whether the lender of last resort function should be separated from the regulatory function are now becoming important issues on the table. in the uk it now has political | legislation. second, the proposed mediation and coordination powers should promote further convergence of supervisory action and practices. in this context, i would like to highlight the crucial role of the new supervisory authorities in fostering consistent and effective approaches within the colleges of supervisors. the participation of their representatives in meetings of colleges should favour information exchange within and across supervisors β colleges. in addition, the establishment of common supervisory databases should enhance the efficacy of the supervisory colleges β action. third, in times of financial distress, the esas can be empowered to adopt decisions fostering a coordinated response by the national supervisory authorities. this can promote effective supervisory action in times of stress. as the financial crisis has shown, swift and smooth coordination among authorities is essential. the esrb let me say a few more words about the esrb. i expect the esrb to make a substantive contribution on two main fronts. first, the esrb will enhance the public sector β s ability to detect and assess systemic risk in the european financial system. this should be achieved by monitoring all components of the financial sector that have a systemic impact as well as the interplay between the financial system and the real economy. a sound understanding of the evolution of the linkages β the β interconnectedness β β between financial institutions, financial markets and financial infrastructures will be a key element for the successful fulfilment of the esrb β s mandate. second, the esrb will fill a gap which β as we know with hindsight β emerged in the run - up to the crisis. this gap consists of the difficulty of translating risk warnings into policy action by the competent authorities. i am confident that the recommendations of the esrb have the potential to foster adequate policy responses. i am aware that there is a wide debate about the scope and addressees of the esrb β s recommendations. in my view, the recommendations should primarily focus on the area of financial regulation and supervision and take a macro - prudential perspective. they should not address individual financial institutions. this is the competence of national supervisory authorities. but the esrb could recommend supervisory authorities to use supervisory tools under pillar ii. examples of such tools are loan - to - value ratios, which are measures of liquidity mismatch. work is ongoing in international fora to identify specific macro - prudential tools. the recommendations of the esrb could also identify systemically relevant components of the financial system or key parameters of measures to reduce the potential pro - cyclicality of regulatory requirements | 0 |
report on the economic governance framework. thank you for your attention. bis central bankers β speeches | mario draghi : plenary debate of the european parliament on the ecb β s annual report 2013 introductory statement by mr mario draghi, president of the european central bank, to the plenary debate of the european parliament on the ecb β s annual report 2013, brussels, 25 february 2015. * * * mr vice - president, mr vice - president of the commission, honourable members of parliament, ladies and gentlemen, i am very pleased to participate in this plenary debate. to lay the ground for our discussion, i would like to discuss three topics : the ecb β s monetary policy, focussing on the rationale for our latest monetary policy measures, the ecb β s commitment to accountability and transparency, and the progress towards building a deeper economic and monetary union ( emu ). i will thereby address most of the issues which the econ committee highlighted in its draft resolution. the ecb β s monetary policy for several quarters now, inflation in the euro area has been on a continuous downward trend. at the same time, in january 2015 market participants were expecting inflation to return to levels closer to our policy aim only over a horizon which stretched well beyond any meaningful definition of medium term. in an environment of weak economic recovery and subdued money and credit developments, risks were increasing that falling inflation expectations would feed back into weakening actual inflation. such a self - reinforcing process could have posed severe downside risks to our price stability objective. against this background, we judged that the degree of monetary accommodation that had been introduced in 2014 was insufficient. a more forceful monetary policy response became necessary. with key interest rates at their lower bound, the governing council of the ecb considered outright purchases of public securities to be the only remaining instrument which could be activated on a sufficient scale to broaden and strengthen the measures already in place. thus, we decided in january to launch an expanded asset purchase programme. under the programme the eurosystem will continue its purchases of simple and transparent asset - backed securities and of covered bonds. in addition, we will start purchasing on the secondary market investment - grade securities issued by euro area governments, public agencies and european institutions. the purchases will start in march. the combined purchases of public and private sector securities will amount to β¬60 billion per month. the programme is intended to last until end - september 2016. in any case, it will last until the governing council sees a sustained adjustment in the path of inflation which is consistent with its aim of achieving inflation | 1 |
central bankers β speeches β’ low and stable inflation is an essential pre - condition for securing medium - term growth. only in a situation of price stability can consumers and investors make informed decisions. β’ the reserve bank's monetary stance has been aimed at restraining demand and at managing inflation expectations. β’ admittedly, monetary tightening has resulted in some sacrifice of growth in the short - term. that is an inevitable price to pay for price stability. but the sacrifice in growth is only in the short - term. in the medium - term, there is no trade - off between growth and inflation. philips curve another facet of this growth - inflation debate that has played out in the recent period has been the growth - inflation trade - off in the context of the philips curve. β’ the argument is that we can raise growth by tolerating higher inflation. this is misguided. β’ relationship between growth and inflation is non - linear. β’ there is a threshold level of inflation. β’ below the threshold, may be, there is a trade - off between growth and inflation. β’ above the threshold, there is no trade - off between growth and inflation, higher inflation actually leads to loss of growth. with wpi inflation at 7. 25 per cent and cpi inflation in double digits, we are way above the threshold. β’ what is the threshold level of inflation? that maybe around 5 per cent. inflation today is above the threshold. dr. patel β s dictum about maintaining growth with price stability is the quintessential objective of monetary policy. β’ that is something that we are deeply conscious of and that is something we are adhering to in the reserve bank even today. ii. communication challenges the second issue i want to talk about is communication challenges. there is a paper by dr. patel and i quote a sentence from the paper : β apart from communicating its own slant on national and international trends, there are three special areas which need attention. the first is the glamorous but elusive area of what the central bank communicates and how it does so in relation to its specific responsibility for monetary and foreign exchange policy ; the second is communication on issues in regard to its regulatory functions ; and the last is communication with the government of the day, including parliament. β oxymoron i am deeply struck by this statement by dr. patel. not so much by the content, not so much by the context, but by the fact that dr. patel chose to say it at all. | when measured in proportion to total assets, for public sector banks relative to private banks ( chart 3b ). 5 / 12 bis central bankers'speeches duration of investment book and the maturity structure of g - secs the high interest rate exposure of banks from their g - sec portfolios is attributable to not only the size of their holdings, but also to the increasing maturity of primary issuance. the weighted average maturity of the stock of government securities has increased steadily from 9. 66 yrs in 2012 β 13 to 10. 67 yrs in 2017 β 18 ( chart 4 ). the average tenor of annual issuance during the last five years has been high at around 15 years. what are implications of this changing maturity structure of g - secs for the duration of bank investment portfolios? the investment portfolio of banks is classified under three categories, viz., β held to maturity ( htm ) ', β available for sale ( afs ) β and β held for trading ( hft ) '. banks normally hold securities acquired by them with the intention to hold them up to maturity under htm category. only debt securities are permitted to be held under htm with a few exceptions, e. g., equity held in subsidiaries. holding securities under htm provides cushion for banks from valuation changes. however, holding in htm book is subjected to a ceiling. afs and hft categories together form the trading book of banks. banks are permitted to decide on the extent of holdings under afs and hft based on their trading strategy, risk appetite, capital position, etc. securities held under both these books are required to be marked to market. hft book is required to be marked to market on a more frequent basis than afs. valuation frequency of investment is typically a determinant in the composition of investment book of banks. correspondingly, shares of htm, afs and hft are 55. 4 %, 42. 5 % and 2. 1 %, respectively, as on september 2017 ( financial stability report, rbi, december 2017 ). the average modified duration of the afs book of banks is currently around 2. 9 years. the comparable figure for psbs is higher at 3. 5 years and for pvtsbs is at 2. 0 years. with relatively high duration and concentration of g - secs in investment portfolio, bank earnings and capital remain exposed to adverse yield moves, especially as the share of investment income has been | 0.5 |
expected to further support growth in economic activity and employment creation. the crawling band exchange rate policy framework has served the country well and will continue to complement monetary policy. this bodes well for maintenance of international competitiveness of domestic industries and macroeconomic stability. as announced at the beginning of the year and broadly consistent with botswana β s trade pattern, the weights of the constituent currencies in the pula basket were maintained at 45 percent for the south african rand and 55 percent for the sdr. an annual upward rate of crawl of 0. 3 percent of the nominal effective exchange rate is also being implemented in 2019, in order to stabilise the real effective exchange rate. overall, both external and domestic pressures on inflation are expected to be benign, and it is projected that inflation will remain within the 3 β 6 percent objective range in the short to medium term. this forecast incorporates the estimated impact of the increase in public service salaries and prospects for continued accommodative monetary conditions. having said that, it is worth underscoring the point that any upward adjustment in administered prices and government levies and / or taxes and any increase in international commodity prices that is substantially beyond current projections present upside risks to the inflation outlook. in contrast, downside risks to inflation arise from the restrained growth in global economic activity, the tendency of the ongoing technological progress to lower costs and the reduction in commodity prices. monetary policy stance distinguished guests, based on available data, the current projections suggest that domestic inflation will, in the mediumterm, remain within the bank β s objective range of 3 β 6 percent. this favourable medium - term outlook for inflation is in the context of moderate growth in economic activity and a sound and stable financial system. therefore, prospective developments augur well for maintenance of an accommodative monetary policy that supports productive lending to businesses and to households, for welfare enhancements that also drive economic activity. the bank β s implementation of monetary policy will continue to focus on entrenching expectations of low, predictable and sustainable inflation, through timely responses to price developments ; while at the same time, taking due care to ensure that policy decisions are consistent with ensuring financial stability and supportive of sustainable economic growth and employment creation. conclusion honourable minister and distinguished guests, as i conclude, it is important to note that the continuing success in containing inflation within the desired 3 β 6 percent medium - term inflation objective, to which the bank remains fully committed, must in the end, involve the cooperation | bank of botswana botswana stock exchange opening bell ceremony commemoration of the acquisition of african banking corporation of botswana limited by access bank plc remarks by moses d pelaelo governor october 7, 2021 director of ceremonies, i am delighted to join the honourable minister in acknowledging today β s two - themed momentous occasion of, one, continuing the tradition of monthly recognition and promotion of capital market activity through the symbolic ringing of the bell to mark the start of share trading, and, two, the coming into the botswana banking sector and market of access bank plc, through the acquisition of the majority shareholding in african banking corporation of botswana limited ( bancabc ). i will, therefore, complement the honourable minister β s insightful observations by projecting a central bank and regulatory perspective on some key aspects. distinguished guests, while the bank of botswana has clear mandates as enshrined in section 4 of the bank of botswana act, i will, for the purposes of today β s event, distill and project three aspects deriving from those mandates. these are the interrelated roles relating to sectoral regulation and supervision ; promoting financial sector development and inclusion ; and safeguarding financial stability. regulation and supervision of the banking sector first, it is important to appreciate that the coming into the market by a new entity, especially an internationally - active banking group, such as access bank plc, requires careful and extensive evaluation that involves several elements. these include evaluation of the ownership and governance structures and scale of operations ; financial strength and performance ; strategic intent, market, and developmental impact ; business conduct, reputation, and integrity issues ; as reflected in performance and strategic direction. context, the β supervisory risk - perimeter β in this takes a consolidated view of the banking group, not only to identify sources of strength, but also likely sources of adverse impact on financial condition, reputation and overall safety and soundness of the financial system. moreover, this evaluation also entails consultations, confirmations, and validations with the home supervisor, in this case, the central bank of nigeria, through which we also make a judgement on effectiveness of supervision ( of a large pan - african bank with multi - jurisdictional presence ) and prospects for continuing supervisory collaboration, as well as jurisdictional facilitation of support to the foreign subsidiary. honourable minister, and distinguished guests, i can confirm that in all these aspects the assessment was positive, leading to the bank of botswana board concluding that access bank plc met the licensing and prudential requirements | 0.5 |
if it is purchased, developed, rehabilitated, or preserved in conjunction with a federal, state, local, or tribal government affordable housing program or subsidy, with the bona fide intent of providing affordable housing. this definition is intended to capture a wide variety of subsidies, including tax credit programs ( such as the low - income housing tax credit ), federal government direct - 8subsidies, and state and local government direct subsidies for the production or preservation of affordable housing. these programs could be for rental housing or homeownership. the suggested language is also intended to capture programs that do not provide monetary subsidies, but that have the express intent of producing or preserving affordable housing, such as a loan in support of a land bank program. in addition, many stakeholders have noted the importance of preserving unsubsidized housing that is affordable to lmi households and ensuring units retain their affordability in gentrifying areas. in response to these concerns, the anpr seeks to clarify the criteria under which banks can receive cra consideration for investing in unsubsidized, or naturally - occurring, affordable housing. we are also considering other options to ensure that housing - related community development financing activities maintain long - term affordability, limit displacement, and encourage affordable housing located in all communities. as experts in this field, we look forward to receiving your feedback on what specific data sources and criteria we should consider to promote the preservation of naturally - occurring, affordable housing. fifth, the anpr seeks feedback on the appropriate cra treatment of mortgagebacked securities ( mbs ) that are backed by loans that finance subsidized multifamily rental housing, loans for mixed - income housing that includes affordable housing for lmi families, or loans to lmi borrowers. while issuance of qualifying mbs can improve liquidity, and thereby increase capacity for lenders that make home mortgage loans to lmi borrowers, some stakeholders have expressed concern that mbs purchases may be undertaken in lieu of other more impactful community development financing activities that may require greater effort. - 9finally, the anpr seeks feedback on extending to cdfis the status that is extended to minority depository institutions, women - owned financial institutions, and low - income credit unions. such an approach would effectively give banks cra consideration for loans, investments, or services in conjunction with a cdfi anywhere in the country. additionally, the anpr discusses granting automatic cra community development consideration | including higher home prices and stricter lending standards. 5 for those who have purchased a home, higher home prices have translated into higher debt levels relative to household income. for renters, available subsidies or programs for affordable housing have fallen short of the need, particularly in higher cost cities, while new higher - end rental housing has increased significantly since the financial crisis. the high cost of renting leaves many families paying a higher share of their income for housing. american community survey data from 2019 show that 45 percent of renter households spend more than 30 percent of their monthly income on rent. 6 while 22 percent of renters pay more than half of their income toward rent, this figure jumps to nearly 38 percent for renters earning below $ 50, 000. 7 this leaves families with little to no room to save for emergencies, such as the covid - 19 pandemic. this growing shortage underscores the importance of the incentives provided by the cra for the production and rehabilitation of affordable housing. with the demand for affordable units significantly exceeding supply, it is essential to strengthen the incentives for these loans and investments as part of cra modernization. increasing access to affordable housing is critical to creating opportunities for homeownership for lmi households and with it the chance to build wealth through home see elliot anenberg, aurel hizmo, edward kung, and raven molloy, β measuring mortgage credit availability : a frontier estimation approach, β journal of applied economics, 34 ( 6 ), 865 - 882 ; laurie goodman, jun zhu, taz george, β four million mortgage loans missing from 2009 to 2013 due to tight credit standards, β urban wire : housing and housing finance ( blog ), urban institute, april 2, 2015, https : / / www. urban. org / urban - wire / four - million - mortgage - loans - missing - 2009 - 2013 - due - tight - creditstandards. united states census bureau, american community survey ( 2019 acs 1 - year estimates, table : b25074 ), https : / / data. census. gov / cedsci / all? q = acs % 20table % 20b25074, % 201year % 20data % 20for % 202019. see united states census bureau, american community survey in note 6. - 4equity. here too, cra plays a role, not only in providing incentives for the provision of affordable housing | 1 |
important to take a step back and explain some of the key factors that my colleagues and i at the federal reserve consider in reaching our policy decisions. the fed has what we call a β dual mandate, β which are two goals set by congress : maximum employment and price stability. with these goals in mind, our focus is understanding developments that affect labor markets, inflation, and economic growth. but we also collect and analyze enormous amounts of other information, both in the form of data and reports from members of the communities we serve, to help us assess the state of the economy and inform our decision - making. the economic outlook i β ll start off with the most common measure of the overall economy : gross domestic product, or gdp. i expect inflation - adjusted, or real, gdp to rebound sharply this year. indeed, with strong 1 / 4 bis central bankers'speeches federal fiscal support and continued progress on vaccination, gdp growth this year could be the strongest we β ve seen in decades. such a robust rebound would be very welcome after the toughest period for the economy in living memory and a winter where the pandemic has been particularly severe. the resurgence of covid - 19 over the past few months caused consumers to pull back on spending, resulting in significant job losses in some sectors β especially in leisure and hospitality. in past recessions, we have typically seen a decline in manufacturing jobs, while the service sector β establishments like hotels, bars, and restaurants β was not affected to the same extent. but the pandemic has flipped the script in that regard. indeed, this time, both the manufacturing and housing sectors have rebounded sharply since last spring, while much of the service sector remains depressed. the pandemic has had a truly devastating effect on employment. overall, as of january of this year, we are down nearly 10 million jobs from the pre - pandemic level, a greater shortfall than we saw even at the worst point of the aftermath of the great recession. locally, we β ve experienced considerable strain, given that much of new york city β s economy hinges on the leisure and hospitality industry. job losses have been dramatic : new york was hardest hit at the start of the pandemic, and almost a year later the data still show a city under stress. while national employment was 7 percent below pre - pandemic levels at the end of 2020, employment in new york city was 12 percent lower. 1 i hope that as workers return | policy coordination in areas such as fiscal policy. putting all the countries using the euro on a clearly sustainable fiscal path would help restore market confidence. assuming that europe ultimately succeeds in managing this situation, a stronger union will emerge that will be viewed as more robust and resilient. this would be a welcome development for the u. s. if, in contrast, europe were not to be fully successful in charting an effective course, this could have a number of negative implications for the u. s. in particular, there are three possibilities that i would like to highlight for the subcommittee today. first, if the european situation were to deteriorate, then the euro area would face even more serious fiscal and economic challenges. as a result, growth within the euro zone would bis central bankers β speeches weaken and this would lead to less demand for u. s. goods and services that are exported to europe from companies and workers here. this would hurt growth here in the united states and would have a negative impact on u. s. jobs. it is important to recognize that the euro area is the world β s second largest economy after the u. s. and an important trading partner for us. also, europe is a significant investor in the u. s. economy, and vice versa. thus, what happens in europe has significant implications for our economy. second, if the european situation were to deteriorate, this could put pressure on the u. s. banking system. the good news is that u. s. banks are much more robust and resilient than they were a few years ago. u. s. banks have bolstered their capital significantly, built up their loan loss reserves and have significantly larger liquidity buffers. also, the direct exposures of u. s. banks to the countries in europe that are facing the most intense fiscal challenges are actually quite modest. the bad news is that the exposures of the u. s. banks climb quite sharply when one also considers the exposures to the core european countries and to the overall european banking system. this means that if the crisis were to broaden further and intensify, this could put greater pressure on u. s. banks β capital and liquidity buffers. third, if the european situation were to deteriorate further, financial markets would likely become more stressed. this could tighten the availability of credit to u. s. households and businesses. it could also cause equity prices to fall and this would | 0.5 |
achievement of monetary policy over the past few decades, and we should not take this stability for granted. models are by their nature only a stylized representation of reality, and a policy of achieving " temporarily " higher inflation over the medium term would run the risk of altering inflation expectations beyond the horizon that is desirable. were that to happen, the costs of bringing expectations back to their current anchored state might be quite high. a final strand of literature has contributed to our policy strategy over the past two years by emphasizing the role of credit and financial intermediation for macroeconomic fluctuations and monetary policy transmission, particularly the literature that developed during the 1980s on nonprice aspects of credit restriction and the importance of such factors in severe economic downturns. 9 from the onset of this financial crisis, we were especially alert to the possibility that limits on the availability of credit to financial intermediaries and in the flow of credit between intermediaries and the household and business sectors could exert unusual constraints on spending. it is fair to say, however, that the core macroeconomic modeling framework used at the federal reserve and other central banks around the world has included, at best, only a limited role for the balance sheets of households and firms, credit provision, and financial intermediation. the features suggested by the literature on the role of credit in the transmission of policy have not yet become prominent ingredients in models used at central banks or in much academic research. 10 for example, the standard framework used in research that discusses the role of communication at the zero lower bound includes taehun jung, yuki teranishi, and tsutomu watanabe ( 2005 ), " optimal monetary policy at the zero - interest - rate bound, " journal of money, credit and banking, vol. 37 ( 5 ), pp. 813 - 35 ; klaus adam and robero m. billi ( 2006 ), " optimal monetary policy under commitment with a zero bound on nominal interest rates, " journal of money, credit and banking, vol. 38 ( 7 ), pp. 1877 - 1905 ; and gauti b. eggertsson and michael woodford ( 2003 ), " the zero bound on interest rates and optimal monetary policy, " brookings papers on economic activity, vol. 2003 ( 1 ), pp. 139 - 211. see, for instance, the discussion and references in lars e. o. svensson ( 2006 ), " social value of public information : comment : morris and shin ( 2002 | jerome h powell : brief remarks on the us economy speech by mr jerome h powell, chairman of the board of governors of the federal reserve system, at rhode island business leaders day, washington dc, 27 september 2018. * * * good afternoon. thank you, senator reed, for the kind words and the opportunity to be a part of the annual rhode island business leaders day. and thank you, all, for sticking with the program for the last speaker of the day. the federal open market committee, the body within the federal reserve that sets monetary policy, just concluded a meeting yesterday. i plan to talk briefly about how my colleagues and i see the economy evolving and our role in keeping it healthy. importantly, i want to hear from you. i very much appreciate your views, as business people, of economic conditions where you live and work. and, of course, i will be happy to respond to questions. our economy is strong. growth is running at a healthy clip. unemployment is low, the number of people working is rising steadily, and wages are up. inflation is low and stable. all of these developments are very good signs. of course, that is not to say that everything is perfect. the benefits of this strong economy have not reached all americans. many of our countryaβ¬β’s economic challenges are beyond the scope of the fed, but we are doing all we can to keep the economy strong and moving forward. that is the best way we can promote an environment in which every american has the opportunity to succeed. each time we meet, we face the same question : how can we set monetary policy to best support job growth and low, steady inflation? for many years, this question called for very low interest rates to help an economy that had been damaged by the deep financial crisis that gripped the world 10 years ago. as the economy has steadily gained strength, the fed has been gradually returning interest rates closer to the levels that are normal in a healthy economy. we took another step on that path yesterday, with a quarter - point increase in short - term interest rates. these rates remain low, and my colleagues and i believe that this gradual return to normal is helping to sustain this strong economy for the longer - run benefit of all americans. as i mentioned, 10 years have now passed since the depths of the financial crisis a painful part of our history that cost many americans their jobs, their homes, and, for some, their hopes and dreams. in addition to holding interest | 0.5 |
deprivation has risen. the fact that the largest increase was recorded among children under 17 years is a serious cause for concern. at the same time, the income inequality indicators for greece, albeit unchanged, are worse than the Ξ΅u - 28 averages. the targeted planning of social transfers has proven to be effective in helping to reduce poverty. actions taken in this direction include : ( a ) the implementation as from february 2017 nationwide of a social solidarity income programme ( succeeding the minimum guaranteed income scheme ) ; ( b ) measures to protect the unemployed and tackle extreme poverty ; and ( c ) an increase in the child support benefit. furthermore, the composition of unemployment and its slow decline, coupled with the high percentage of young people β not in education, employment or training β, highlight a need to focus on life - long learning and a better matching of skills. the active employment policies and the vocational training programmes of the greek manpower employment organisation ( oaed ) can contribute in this direction, with appropriate planning and targeting and the optimal utilisation of available, mostly eu, funds. * * * in an uncertain global environment marked by unpredictable and successive episodes of turbulence, euro area membership today provides greece with a protective shield against emerging risks. this is why greece must consolidate its position as equal partner and be part of the efforts to strengthen european cohesion. but for this to happen, greece must return to normality, by successfully completing the economic adjustment programme. greece must take ownership of the reforms, which are for its own benefit, and take immediate action to modernise and commit to the highest european standards of public administration, institutions and the rule of law, which no memorandum alone can achieve. now that we have reached the final stretch, very little remains to be done compared to the massive changes made since 2010. the process of economic adjustment has largely been completed, as suggested by the latest available economic data. with specific regard to fiscal adjustment, since 2010 about 90 % of the adjustment required by 2018 has already been completed. the greek economy has made a strenuous effort and has succeeded in eliminating 7 / 8 bis central bankers'speeches significant structural weaknesses and imbalances that had accumulated over decades, displaying remarkable resilience. its growth potential and high - quality skills pool, so far unexploited, stand ready to be mobilised under the right conditions and to launch the economy back onto a virtuous circle of growth. 8 / 8 bis central bankers'speeches | on reforms there are significant risks posed by the lack of progress towards completing the emu architecture. so far, actions have not matched the rhetoric on completing emu with the risk of missing what may be a limited window of opportunity to introduce fundamental reforms at a time of prosperity. the euro area recorded its fastest growth rate for a decade and has been expanding robustly for more than five years, but the fog of uncertainty thickens, when it comes to growth prospects in the years ahead. the jean monnet principle applies : β europe is the sum of the solutions adopted to address the crises it is faced with β. if the flaws in the design of the euro area are not addressed at this opportune time, given that the next crisis may be around the corner and the job of fixing the emu remains unfinished, this will come with a heavy price for the single currency. the collective memory tends to remember the costs rather than the benefits of european integration. many people, including myself, feel that we need to strike a balance in the classic struggle between solidarity and national responsibility, or the β new wine in the same old bottle β, namely risk - sharing ( namely mutualisation of costs ) versus risk reduction. especially in the south of europe, there is a strong feeling that this balance is unstable and in order to make it more stable and more symmetrical ; what we need are stronger european institutions. to quote winston churchill, a great european, β to do our best is not enough ; sometimes we must do what is required β. the ultimate risk is a rise in populism and anti - europeanism. there is a rising populist trend across the world, as the following figure ( figure 3 ) shows. populism is no longer a marginalised trend, but is coming increasingly into the mainstream. figure 3 the global rise of populism source : rodrik, d. ( 2018 ), populism and the economics of globalisation. we can identify two major root causes of populism in europe. first of all, it may be attributed to the failure of globalisation to reach some segments of the population, which have been left behind in terms of its economic benefits, for instance in europe through chronic unemployment. secondly, increased migration flows which triggered immigration fears and a stronger anti - euro sentiment and broader support for populist forces. in italy, the eurozone β s third - largest economy, two anti - establishment parties, the 5 star movement and the | 0.5 |
short supply. the demand will not only stem from domestic institutions but it will also be from foreign institutions and countries. the challenge before indian banks is therefore to revitalise themselves by hiring the right talent, investing in training and bringing about a vibrant transformation in their dna, in effect doing what sumantra ghoshal, the management guru and founding dean of the indian school of business, called changing the β smell of the workplace β. successful organizations, he felt, exude a vibrancy which uniquely defines the β smell of the workplace β. ghoshal describes the smell of the air in the forest of fontainebleau, 40 miles south of paris, the vibrancy which spurs the casual walker to run, jog or do something, and is in essence revitalising. he compares it to downtown kolkata in summer which is hot and drains energy and vitality. most large companies in india and abroad, he felt end up creating downtown kolkata in summer inside themselves. the smell of the workplace then becomes encapsulated in an environment of constraints, where jobs / relationships are only contracts and actions are defined by control and compliance. as opposed to it, successful companies promote stretch, which means doing more with self discipline, as opposed to control there is support and enhancing collaboration across the organisation through combination of support on the one hand and trust on the other. the real bis central bankers β speeches source of competitive advantage in organizations is not merely in technology but in the behaviour of individuals in the organisation where each one of them takes initiative, collaborates, has self confidence, has commitment to himself, to their teams, to their units, and to their organisation. the challenge before management is to use the vast unused potential in people and make ordinary people produce extraordinary results thereby changing the smell of the workplace. b. leveraging technology a recent article in the economic times dated december 27, 2011 detailed how e - governance initiative helped check grass root pension fraud. in keregodu village in karnataka β s mandya district, senior citizens, all 65 - plus, face an endless wait in front of the local post office for their pension money orders. hours later they are told by a post office official β β the money had already been collected by someone β. in this south - eastern district of karnataka, thousands of pensioners haven β t received their pension and entitlements for months β it is siphoned off in transit. even worse, out of the 2, 95 | price risks correctly. they are mark - to - model instead of mark - to - market. to put it bluntly, if my pension is invested in long - term illiquid assets, i would prefer my pension company to be run by a younger ceo. that way, i would be able to hold him or her accountable for how these investments pan out β avoiding moral hazard problems. a second risk relates to liquidity. a larger share of illiquid assets in portfolios increases liquidity risks. from 2023, pension companies'liquidity needs will become even larger when the requirement for central clearing of interest rate swaps and other derivatives is introduced. central clearing reduces the systemic risks of derivatives transactions. but potentially large liquidity needs require sound liquidity management in order to avoid the risk of forced sales of assets. setting aside more liquid assets to cover liquidity risks also means fewer funds available to invest countercyclically. pension funds will then have less flexibility to buy assets traded at distressed price levels. this may also be side 5 af 7 unfortunate from a systemic perspective, if pension funds are less able to play a stabilising role in periods of market stress. as a central banker, i am not β as many of you β burdened with promises of delivering certain levels of return to pension scheme members. however, i am tasked with keeping tabs on the stability of the financial system as a whole. therefore, i would have serious concerns about investment strategies based on continuously increased risk - taking in the search for yield. in its recent financial stability report, the imf also identifies increasing holdings of riskier and more illiquid assets by institutional investors as a key vulnerability in the global financial system. expectations and behaviour should be adjusted to avoid insecurity this brings me to my last and most important point today. going forward, there is no substitute for ( 1 ) acknowledging the conditions we face today, ( 2 ) increasing transparency about implications for pension plans, and finally, ( 3 ) adjusting expectations and behaviour accordingly. a growing number of pension plans are recognising the impact of the low rate environment and adjusting expected return assumptions. in denmark, the council for pension projections recently reduced their return assumptions over a ten - year horizon for eight out of ten asset classes. by reducing the stock of defined benefit plans, pension funds have transferred a large share of the risk from the low yield environment to present and future pensioners. today, many pension savers have a higher | 0 |
contact groups β discussions, are available to the public via the ecb β s website. only if we reach out to all relevant stakeholders can we hope to improve our understanding of the functioning of the market and of new or emerging trends in exchange rate developments. the proper functioning of the market is particularly important for us, of course. the global foreign exchange committee ( gfxc ), which was established last year, is a forum that is exclusively dedicated to promoting the highest standards of conduct and a robust, fair, liquid, open and appropriately transparent fx market. integrity, compliance and accountability have become even more important as the set of market players has grown more diverse. responsible investment is critical for financial markets to be 1 / 2 bis central bankers'speeches able to fulfil their important social role of facilitating the flow of capital across the globe and to support trade, investment and, ultimately, growth and employment. so i β m pleased that all of you have signed up to the code. effective change can only come from within. the industry has to lead this process. and the code provides the benchmark around which market participants can discuss what is acceptable behaviour, and what is not. the fact that all of you are signatories to the code not only promotes the effective functioning of the fx market, it also sends an important signal about the integrity of euro area financial markets. i welcome this. but acceptance is increasing globally, too. the statement of commitment, which was developed as a way for market participants to voluntarily demonstrate their adherence to the code, now has more than 500 adherents from all over the world. 1 of these adherents, the majority are banks, while nearly 10 % are central banks and a further 10 % are buy - side institutions. in order to foster further buy - side adoption of the code, the gfxc agreed to establish a working group on buy - side outreach. this working group is led by the ecb and aims to enhance transparency around the benefits for buy - side institutions of adopting the code. this process will be facilitated by the first tangible improvements following the implementation and adoption of the code, improvements that are becoming increasingly visible. we have seen examples of improved execution quality, as evidenced by reduced rejection rates and hold times. improved disclosures increasingly allow market participants to make more informed decisions. and we have seen a higher degree of transparency as market participants are now more comfortable in judging what information to share and how. the code also reflects a much broader movement | benoit cΕure : welcome remarks welcome remarks by mr benoit cΕure, member of the executive board of the european central bank, at the foreign exchange contact group meeting, frankfurt am main, 28 november 2018. * * * i am very pleased to welcome you here today to the foreign exchange contact group ( fxcg ) meeting. thank you for coming to frankfurt to share your views and insights with us. in my short introductory remarks, i would like to address the importance of strengthening the foundations of the foreign exchange ( fx ) market. i will argue that we all have a role to play here, and that adopting and adhering to the fx global code ( β the code β ) is a powerful way to support change and engage non - signatories in the change process. let me start by briefly illustrating a few of the most notable changes to the fx market structure in recent years. since our market contact group was set up in 1999, the fx market landscape has undergone a deep and broad structural evolution, which has gained significant momentum in recent years. on the sell side, one of the most notable changes relates to the execution of trades. fx trading has become increasingly electronic and automated, reflecting technological advances. the share of spot fx trading that is conducted electronically has almost doubled in the past ten years and now constitutes a substantial majority of daily turnover. the process of growing digitalisation coincided with the emergence of new market participants, trading venues and innovative services. despite these developments, however, liquidity provision has become more concentrated. today, fewer market participants account for an increasing share of fx turnover. we have observed similar changes in market structure on the buy side. for instance, over the past few years asset managers have generally increased their activities in fx - related products and have, over time, collectively emerged as important players in the fx industry. together, these structural evolutions have had implications for how the market functions and how central banks monitor the fx market. on the monitoring side, one tangible implication was the need to broaden the fxcg β s outreach to appropriately reflect the new, and more diverse, investor landscape. the ecb β s market contact groups are open to all interested market participants that apply for membership. it is important for us to follow a transparent application and governance framework. this is why the fxcg terms of reference, application forms and meeting material, such as agendas, the list of participants, presentations and summaries of our and other ecb market | 1 |
banks. bis central bankers β speeches 28. as i mentioned earlier, containing frauds means focussed action by all stakeholders, not leaving any flank uncovered. one of the flanks was the criminal investigations done by law enforcement agencies and bringing to book fraudsters soon after a fraud is committed. to facilitate this and smoothen the process of commencing the investigations the reserve bank has been working with the ministry of finance and coordinated actions have been initiated. fraud prevention 29. i have dwelt on loan frauds at length as they form a major portion of frauds reported by banks. however the aspects of continuous monitoring and timely action on the basis of any early warning signals apply equally well to other types of fraud like deposit frauds, cyber fraud, etc. 30. it is here that i am sure that adhering to the kyc norms and real time transaction monitoring, transaction analysis, centralized databases, etc. rigours will come in handy for banks. fraud risk and governance 31. it is when we think of the dynamic nature of frauds β landscape that we need to pay attention to certain systems and enduring values in a bank. without a strong system guiding the anti - fraud initiatives of a bank, the responses to quick changing fraud risks may end up being knee jerk reactions than the flexible and appropriate measures that are called for. this requires a look at the corporate governance in banks and board level ownership of the antifraud initiatives. 32. the board of a bank should be proactive in understanding the fraud risks facing the bank and also put in place a robust anti - fraud machinery. they should have a deep understanding of the institution β s strengths and weaknesses and be able to steer the institution in the right direction. for this they need to retain their common sense in the face of an information overload. as a famous saying goes, you can find out if a man is clever by his answers, but you can find out if a man is wise by his questions ( naguib mahfouz ). as another saying goes, the wise man doesn β t give the right answers, he poses the right questions ( claude levi - strauss ). 33. the board needs to ask the right questions. they need to assess the robustness of the internal controls, with each new threat detected and be in a position to get the data analysed in a holistic fashion. 34. our recent initiatives in separation of the post of chairman and managing director in banks is also aimed at giving the | and draw these down during downturns so as to be able to continue lending while absorbing losses. the underlying rationale is sound, but somewhat counter - intuitive. experience shows that markets demand that banks maintain higher capital and provisioning during a downturn to withstand higher risks. if markets continue with such expectation, banks would likely β hoard β capital and stop lending which will exacerbate the downturn. the communication challenge, therefore, is to educate the market on the basel iii notion of buffers and their manner of use so that these safeguards function the way they are intended to. 34. the second communication challenge under the proposed basel iii package comes from the β comply or explain β framework under which countries have the option to deviate from certain components of the package and explain why they have deviated. the concern really is that the market, known for its unfailing ruthlessness, will penalize any deviation, and the communication challenge for regulators is to persuade the markets to evaluate the country β s compliance based on the explanation. ( viii ) systemically important financial institutions ( sifis ) 35. the basel committee on banking supervision ( bcbs ) and the financial stability board ( fsb ) are currently engaged in devising a framework for regulating and supervising systemically important financial institutions ( sifis ). sifis, as is well known, were at the centre of the recent crisis. since they are β too big to fail β and β too interconnected to fail β, they had to be rescued at a huge cost to the tax payers. the international level work, currently in progress, is engaged in identifying ways to reduce the moral hazard of sifis, defining the criteria for their identification and designing differential capital and liquidity surcharge for them. 36. under the arrangement presently under discussion, sifis will be pre - identified on the basis of some defined criteria and subjected to graded prudential surcharges and other safeguards. these are intended to eliminate the moral hazard, reduce their systemic risk potential, and should it become inevitable, allow them to fail in an orderly manner. the intent β post crisis reforms to banking regulation and supervision β think global, act local β, inaugural address by dr. duvvuri subbarao, governor, reserve bank of india, at the ficci - iba conference on β global banking : paradigm shift β at mumbai on september 7, 2010. bis central bankers β speeches is | 0.5 |
could ask for the same conditions and adjustments? that β s exactly the key problem. there is a discussion about relaxing the conditionality emerging in ireland and portugal, and also in greece this debate is gaining new traction. but foot - dragging on addressing the structural problems will perpetuate the crisis, and the market reaction reflects this concern. why not change those principles and make a softer adjustment? once more, the financial assistance can only buy time but does not address the root causes of the crisis. it is like a painkiller. if you do not ensure that you cure the illness you will be worse off once the effect wears off. i would also doubt that public support for the necessary reforms increases if they are spread even more over time, not to mention public support in the countries guaranteeing the rescue mechanism. bis central bankers β speeches in greece, there β s a lot of debate on the need to renegotiate parts of the program. is there space to make some changes? the key point is that there is an agreement that all involved parties including the greek government have signed. if the agreements were now seen as being open to renegotiation, then for instance the portuguese prime minister would have difficulties facing his parliament and explaining that he is to implement reforms. i think that would be a very dangerous strategy. it would harm those countries that are implementing reforms very quietly. greece is usually described as a special case. could that be so in this case, in a positive sense, allowing greece to adjust the program? greece is already receiving special treatment. adjustment will be spread over a much longer time. greece benefitted from an exceptional debt relief. you see, greece got much more support than any other country. relaxing this already softened framework even further cannot be an option. one of the leaders of the two parties that could win says that the greek government would request a total change of the program. what response would a unilateral move from greece create? who will be elected in greece is a democratic decision that we all have to accept. but also the newly elected greek government is bound by existing agreements. if it unilaterally opted out of the programme, it would mean that in my view the basis for more financial help will no longer be given. greece would have taken its decision but would also have to bear the consequences. we will all be affected, but my assessment is that greece will be worse off than everybody else. have you prepared any contingency plans | of europe β, however, it was self - evident that such incremental measures would gradually move europe deeper into federalism. indeed, this clear sense of direction was, in their way, a key motor to keep the integration process moving forward. since then, the european integration process has tended to move in waves. there have been times when it has stalled, such as the during the β empty chair crisis β in the 1960s. and there have been times when it has unexpectedly sped ahead, such as with the launch of the single market act in the 1980s, and the commitment to economic and monetary union ( emu ) in the 1990s. but today, there is some confusion as to where we stand. in some ways, the degree of ambition to achieve a full political federation seems to have become more limited, which has led some to wonder whether the integration process will lose its forward momentum. this reflects in part the failure of the constitution for europe in 2005. the unsuccessful referendums in france and the netherlands can be interpreted in different ways, but they clearly suggested that the people of the european union were not ready to embark on 1 / 4 bis central bankers'speeches the road towards full political federalism β or at least not at that point in time. it is also fair to say that the appetite for such federalism today is not much different from in 2005. in recent years there have been growing doubts about the european project. at the same time, polls consistently show that european citizens support federal decisionmaking in a wide range of areas, ranging from energy to migration to the fight against terrorism. this reflects the fact that the benefits of federalism are much broader than its economic, fiscal and monetary dimensions. indeed, since the eu was originally devised as a peace - keeping device, it is not surprising that one of the early initiatives for european integration was a motion to establish a european defence community, although this failed in 1954. while a full defence union is probably still unrealistic, there are increasing signs that further integration in this area could happen in the near future. the commission reflection paper published on 7 june of this year lays out proposals for establishing a european defence fund, which could form the nucleus of a future defence union. last week, the european council welcomed the significant progress made by member states in preparing a permanent structured cooperation ( pesco ) in the field of defence, and the work done on the commission β s proposal for a european defence industrial development programme ( edidp ). | 0 |
mr. sherwin considers growth, productivity and monetary policy : the longer - term perspective address by the deputy governor of the reserve bank of new zealand, mr. murray sherwin, to the annual conference of the new zealand forest owners association in auckland on 12 / 11 / 97. introduction : competitiveness and productivity i have been asked to discuss the new zealand economy in a medium - term context, with particular reference to the place of forestry. i am conscious also of the overall theme of this conference - - the competition gap. i applaud the association for choosing to focus on that theme, because while that is clearly a very relevant issue for the forestry sector to be debating, it is equally relevant to the broader economy. we all wish to raise living standards in new zealand. the reform effort of the past 13 years has been focused on precisely that goal. to achieve it, we require a sustained lift in productivity, across the new zealand economy. improved productivity and β meeting the competition gap β are one and the same thing. it is not my intention to provide a substantive projection of new zealand β s economic prospects over the growth cycle of a gf17 pine tree. nor do i intend to discuss the likely prospects of the forestry sector. rather, i will try to lay out a few of the very broad factors that will shape the development of the new zealand economy over the medium term, and to reflect a little on the factors that influence interest rates and exchange rates over longer time horizons. the determinants of economic growth last month, governor don brash delivered a speech to the auckland rotary club under the topic β how fast can the new zealand economy grow? β the key theme of that speech was that our growth potential is determined ultimately by quantities and quality. the quantity of people and the quantity of capital - - in the form of factories, forests, trucks, roads, computers and all the tools of a modern economy. and the quality of those same inputs - - how well they work, and how efficiently they are deployed. as dr. brash went on to say, the reserve bank believes that new zealand β s longer - term growth potential is probably of the order of 3 percent annually at present - - a result of a trend growth in the working age population of around 1. 5 percent and trend growth in output per person, or productivity, also of around 1. 5 percent. lifting that growth potential requires bigger quantities or better qualities - - of people, attitudes, and equipment | do about that, and there is nothing the government or the reserve bank can do about that. we live in a world of floating exchange rates. while it is conceivable that we could fix our exchange rate to the us dollar, or the australian dollar, or even the twi ( as we once did ) we can β t fix to all simultaneously. inevitably we have to learn to cope with exchange rate variability. in fact, on measures of shorter - term exchange rate volatility, the new zealand dollar is a surprisingly good performer. day - to - day volatility of our currency is modest when measured alongside the experience of other developed countries - - even those much larger than new zealand. to assess the impact of longer - term exchange rate trends, we need to look to measures of the β real β or inflation - adjusted exchange rate - - because that is what matters for exporters. on that basis, we find that the new zealand dollar moves through the inevitable cycles, but will typically be found within about 15 percent to 20 percent of its longer - term average. our recent experience has been consistent with that. the real twi was around 10 percent below its long - term average at its last trough in 1992. at its recent peak, in april of this year, it was around 17 percent above that same longer - term average. while cycles in the real exchange rate of that amplitude can certainly create discomfort for exporters, it is clear that they are well within the range experienced by other currencies. in essence, exporters should be factoring cycles of that sort into their business planning. it is clearly relevant to the variability of their future earnings stream, and therefore, to the value of their assets and to the nature of the capital structure they require to stay in business. of course, it is also relevant to their balance sheet management and to risk - hedging strategies they may need to adopt. the best contribution that governments and central banks can make to moderating real exchange rate cycles is to embrace policy consistency and transparency - - in monetary policy, fiscal policy, and in tax and regulatory policies. the decline in exchange rate volatility in recent years provides some evidence to support that. one point we should all be clear on. there is no future in thinking we can pursue competitiveness, in forestry or any other sector, through attempts to use monetary policy to engineer a weaker exchange rate. i say that for several reasons : β’ competitiveness and the productivity | 1 |
a first nations - led framework to get around many of the systemic barriers that continue to impede access to credit, investment and development in first nations communities. chart 2 : recent fnfa bond spreads are comparable with similar canadian municipal bonds spread over sovereign benchmark basis points fnfa rolling spreads note : fnfa is the first nations finance authority. source : bloomberg bloomberg canadian municipal bond aggregate spread last observation : march 30, 2022 in fact, the fnfa β s impressive track record has enabled first nations governments to borrow at rates that are comparable to canadian municipalities, as we can see in chart 2. consequently, over 300 first nations ( about half ) have opted to join this innovative and effective framework. nonetheless, despite issuances from the fnfa totalling $ 1. 63 billion, 22 access to finance continues to be a significant issue in indigenous communities. huge investment gaps remain. a recent report estimated that first nations communities face a $ 30 billion infrastructure deficit, including housing, roads, water treatment, internet access, health centres and schools. 23 the newly formed mi β kmaq coalition β a grouping of seven mi β kmaq communities in the atlantic provinces β boasts one of the most compelling success stories to emerge from this unique financial framework. its acquisition of 50 % of clearwater seafoods represents the single largest indigenous investment in the seafood industry. while this framework has helped first nations communities obtain better access to capital, it is important to note that individual indigenous firms β including first nations, inuit and metis β have not similarly benefitted. this is where nacca comes in. the aboriginal financial institutions ( afis ) that are part of the nacca network have made greats strides in removing many of the historical obstacles to financing. they provide direct access to finance for many small and mediumsized indigenous businesses. since the first afis were founded some 40 years ago, the network that nacca represents has been remarkably successful. 22 this amount has been raised from nine debenture issuances since june 2014. external ratings started at a3 ( moody β s ) in 2014 and have improved over time to aa3 ( moody β s ) and a + ( s & p ) for the most recent issuance in february 2022. 23 canadian council for public - private partnerships, p3 β s : bridging the first nations infrastructure gap ( 2016 ). chart 3 : nacca has increased it's lending while keeping loan loss rates very low can $ | the non - indigenous population in recent years. 16, 17 furthermore, indigenous businesses are performing well. recent evidence indicates that small and medium - sized enterprises ( smes ) in indigenous communities export their products and services at rates that are comparable to β or even higher than β non - indigenous smes. 18 export participation is typically associated with businesses that enhance productivity through innovation. 19 in addition, many indigenous firms are involved in environmentally sustainable activities. i don β t mean to gloss over the many challenges that continue to hinder indigenous prosperity. i simply want to stress that tremendous untapped potential 11 between 2006 and 2016. 12 statistics canada, β aboriginal population profile, 2016 census, β statistics canada catalogue no. 98 - 510 - x2016001, 2019. 13 between 2017 and 2021. 14 statistics canada, β educational attainment in the population aged 25 to 64, off - reserve aboriginal, non - aboriginal and total population, β statistics canada table no. 37 - 10 - 0117 - 01 ( march 2022 ). 15 d. lamb, β aboriginal early school leavers on - and off - reserve : an empirical analysis, β canadian public policy 40, no. 2 ( 2014 ) : 156 β 165. 16 more than 62, 000 indigenous people reported that they were self - employed in 2016, an increase of 44 % since 2011. canadian council for aboriginal business, understanding intellectual property awareness & use by indigenous businesses : 2019 intellectual property survey of indigenous businesses ( summer 2021 ). 18 a. belanger baur, β indigenous - owned exporting small and medium enterprises in canada, β global affairs canada & canadian council for aboriginal business ( 2019 ). 19 canadian council for aboriginal business, promise and prosperity : the 2016 aboriginal business survey ( 2016 ). exists. this potential will only be realized when private firms and public agencies commit to economic reconciliation. the possible returns should be substantial, both for indigenous communities and for the entire country. access to credit and capital β an important barrier the challenges indigenous peoples face when it comes to restoring their prosperity are the direct result of colonial policies that violated their basic human rights and undermined their political and economic sovereignty. these policies have led to geographic and economic isolation, financial dependence and widespread poverty and suffering. i know you are keenly aware of the obstacles that limit indigenous economic inclusion, but more canadians should understand them. indigenous peoples face numerous barriers to accessing financial services β most notably, credit and capital β compared with the non - indigenous | 1 |
anand sinha : it and governance in banks β some thoughts address by mr. anand sinha, deputy governor, reserve bank of india at the program for independent directors of banks organized by idrbt, hyderabad, 15 β 16 june 2012. * * * assistance provided by mr. p k chophla is gratefully acknowledged. shri sambamurthy, director, idrbt ; shri prabhakar, chairman and managing director, andhra bank, shri rao, managing director, sbh, shri siva kumar, member of faculty, idrbt, distinguished fellows of idrbt ; other members of the faculty ; and directors on the boards of banks. wish you all a very good morning. independent directors are looked upon by both the stakeholders and regulators as important contributors to the value additive and ethically positive oversight of executive management activities. the organization of this programme, by idrbt and its director, mr. sambamurthy, which focuses on it governance, information security and the role of board therein, is very timely as these factors have assumed critical importance in the sphere of corporate governance in general and bank governance in particular. while talking about this programme organized by idrbt, it would be appropriate to recall, in brief, that this institution, conceptualized in 1994 and established in 1996 by the rbi to function as a centre for research and development in banking technology, has been commendably striving to meet its objectives. it has to its credit several achievements like launch of structured financial messaging system ( sfms ) and national financial switch ( nfs ) management ; besides publication of guidance on best practices and a number of research papers on topics of contemporary relevance to the indian banking industry. now, with the reviewed and redefined goals, the institute is all set to support the banking industry, by working at the intersection of banking and technology, mainly in the areas of financial networks and applications, electronic payments and settlement systems, security technologies for the financial sector, financial information systems and business intelligence. i am sure the institute will continue to enrich the banking industry in the times to come through its good work. corporate governance coming to the theme of this programme, i would dwell, first of all, on the concept of governance. at the core of corporate governance is the principle of fiduciary duty, centered on oversight of management functioning in order to optimize stakeholder interests, within the limits of legal and regulatory compliance. this had its origin and | proposition. financial inclusion, apart from its social welfare enhancing role, should make a lot of business sense for banks in as much as they can get a large stable pool of retail deposits which will contribute very significantly to the robustness of the individual banks and to financial stability at the systemic level. additionally, there would be small value but large volume of lending and other business. what is constraining the full realization of this business potential is the comparatively large transaction costs. several technological efforts and innovations have been made for increasing the reach which has reduced the transaction costs. however, much more needs to be done to make the financial inclusion an attractive and profitable business for banks. it in banking β concerns while the increased deployment of it certainly has its own benefits in terms of enabling banks to meet the business requirements and enhance their service delivery capacity, such it usage and dependence, however, bring in some new challenges and concerns. these challenges keep on getting more complex and qualitatively different, as technology keeps on evolving rapidly. for instance, technologies like cloud computing bring in advantages and efficiencies along with new risks which have to be managed. any delay in adoption of new technologies would only let the competition pass by the laggard institutions. cloud computing is an innovative concept which enables participants to leverage on collaborative sharing of resources, which not only brings down costs but also facilitates the participants to concentrate more on their core activities, leaving the management of it resources to the service providers. this facility, by making the sophisticated applications affordable, has the potential to enable even the marginal players to make use of the technology and develop their businesses. however, this being a new technology data integrity and confidentiality seem to be a major concern at this stage. further, if too many participants rely on a single service provider, it may lead to a risk of over - concentration inasmuch as the failure of the service provider will be catastrophic. banks will have to assess the pros and cons of new technologies and put in place adequate safe guards while adopting them. as regulator and supervisor of the banking system in india, inter alia, its many other roles, rbi is concerned about the soundness of the financial system in general and banking system in particular. while it usage contributes to efficiency, it brings, along with it, certain issues such as, issues of technology selection with strategic, financial and compliance considerations ; process management to ensure cost effective and timely service delivery ; security of customer and business data at access, storage | 1 |
a rate below the floor of the corridor. to keep the cash rate near the target, the rba needed to accurately estimate the demand for reserves, forecast changes in the supply of reserves, and conduct omos daily ( and sometimes more than once in a day ). the system worked well for many years, with the cash rate almost always at the cash rate target. compared with the other two options, this system has a couple of attractive features. because it entails a smaller balance sheet than under excess or ample reserves systems, it naturally implies lower interest rate risk for the rba. similarly, it implies a smaller footprint of the rba in financial markets. indeed, this system supports more cash market activity than the other options because on any given day it is more likely that some banks are facing a shortage of reserves and need to borrow from other banks to meet their needs. despite these benefits, the board has decided not to return to a scarce reserves system. such a system entails the highest risk of the banking system running into liquidity shortages. a scarce reserves system requires the central bank to have accurate estimates of reserve demand and supply on a daily basis and respond actively to shortterm fluctuations as needed. in the past, this appeared to be very successful, with only a few trivial deviations in the cash rate from the target ( graph 4 ). however, a large part of that may have been because of the convention by cash market participants to almost always conduct trades in the cash market at the target rate set by the board. having moved away from that environment, such a convention may not re - emerge. graph 4 cash market by monetary policy implementation system * daily cash market volume * $ b $ b 5. 0 5. 0 excess reserves 2. 5 2. 5 scarce reserves bps bps spread to the es rate * rolling 30βday average. source : rba. r e s e r v e b a n k o f au s t r a l i a cash rate cash rate target moreover, even though the cash rate in the past would trade close to target, there were lengthy periods when liquidity was tight in broader money markets, such as for repo and bank bills. this was evident when market rates traded noticeably above the cash rate or overnight index swaps ( which measure expectations for the future cash rate ), even though the cash rate was trading at the target ( graph 5 ). this tightening in financial conditions reflected, in part, the | we must act now, and we must act together, to secure a cleaner and greener future. 1 link to β ngfs glasgow declaration action β : www. ngfs. net / sites / default / files / ngfsglasgowdeclaration. pdf 2 / 2 committed to bis central bankers'speeches | 0 |
ecb of significant banks. the ecb plans to devote two directorate generals to this direct supervision of significant banks, dgs i and ii. additionally, a dg iii will be created to deal with the indirect supervision of the less significant institutions. finally, a dg iv will carry out horizontal functions such as supervisory quality assurance, methodology and standards, enforcement and models approval. overall, including the secretariat, the ecb will need around 1, 000 new staff, 750 of them directly involved in supervision. as said before, each joint team will be responsible for the overall supervisory activity in respect of a credit institution. to conduct such supervision, the jst will first determine the risk profile of the bank. in this regard, it is of paramount importance to have a common assessment system that guarantees consistent valuation across the population of banks and the different jurisdictions. to that end, part of the effort in the preparatory work is being devoted to designing a β risk assessment system β anchored in objective data and ratios. some final remarks on key issues let me conclude with some comments on the comprehensive assessment of all banks that will come under direct ecb supervision. this will consist of three elements : a supervisory risk assessment, a balance sheet assessment and a stress test, and shall be concluded before the ecb assumes its supervisory functions in a year from now. the supervisory risk assessment will incorporate supervisory judgment on all risk factors, aiming to evaluate measures and summarise in a comparable form across banks all potential sources of risk. this risk assessment will also be used for the portfolio selection to be undertaken as part of the balance sheet assessment. the second element, the balance sheet assessment, will be carried out at a given point in time and on an accounting basis. this assessment will be broad and inclusive, covering credit and market exposures, on and off - balance sheet positions, domestic and significant non - domestic exposures. one key issue is going to be the capital threshold used for this exercise, which, in accordance with the definitions of the capital requirements regulation and capital requirement directive iv, based on basel iii recommendations, will take into account the need for a demanding threshold. the main content and details of this exercise will be made public in the next few days. the third element, the stress test, will review the major risks of banking groups under various scenarios, testing the sensitivity of bank balance sheets to hypothetical external shocks. the features of the stress test will be defined in conjunction with the eba, and publicly disclosed at | report this morning. i would like to present the main points to you now. i will start with the domestically focused banks before moving on to the globally active banks and, in particular, the crisis at credit suisse. domestically focused banks for the domestically focused banks, the operating environment has changed markedly over the past year. interest rates have risen significantly and there are signs of a slowdown in the real estate market. overall, the domestically focused banks have benefited until now from the rise in interest rates. this rise has helped to restore their interest rate margins. the banks have been able to increase their profits and strengthen their capital buffers. at current interest rate levels, domestically focused banks β profitability is likely to continue to improve. an unexpected upward interest rate shock in the future, however, would likely have a negative impact on these banks. first, in this scenario their interest expenses would increase faster than their interest income. this is because interest rates on many outstanding loans are fixed for several years. by contrast, rates on deposits are likely to react faster to a further interest rate rise. second, higher interest rates could lead to credit losses in mortgage lending. this constitutes a significant risk for domestically focused banks because mortgages are often their main line of business. against this backdrop, the results of our stress tests are crucial : thanks to their capital buffers, most banks should be able to cope with such a scenario. page 4 / 8 zurich, 22 june 2023 thomas jordan, martin schlegel and andrea m. maechler news conference globally active banks β observations on the crisis at credit suisse as far as the globally active swiss banks are concerned, this year β s financial stability report focuses on the crisis at credit suisse and its acquisition by ubs. the snb supported this acquisition, in particular, through the provision of ample liquidity assistance. in addition to its existing liquidity facilities, the snb deployed two new instruments based on emergency law : ela + and the public liquidity backstop ( plb ). comprehensive lessons need to be drawn from the crisis at credit suisse. the goal must be to continue to strengthen banks β resilience in order to prevent, wherever possible, a loss of confidence such as that seen in the case of credit suisse. if a crisis does still occur, a broad range of effective options must be available. from the snb β s perspective, three observations are especially important here. first, compliance with capital requirements does | 0 |
and the monetary policy committee face uncertainty about when, and in what stages, it will be possible to lift the controls. in line with transparent monetary policy implementation, the monetary policy committee has explained how this uncertainty affects its decisions. to that end, the committee has given an account of various factors that affect the prospects of continuing the phased capital account liberalisation that began in november 2009. uncertainty about key supreme court decisions and the third imf review increased the likelihood that the next stage of liberalisation could be delayed quite a while. the bond market appeared to interpret this delay to be more fundamental in nature than the monetary policy committee intended to convey in its statement, thus contributing to the decline in yields that had begun somewhat earlier. the uncertainty had abated by the time the monetary policy committee met in september, and the committee explained this in its statement. furthermore, the committee implied that it would inevitably consider this point in its next interest rate decisions. this shift represented not a change in policy but a response to changed circumstances. one of the prerequisites for lifting the capital controls without causing exchange rate instability is a sufficiently strong external balance β preferably a surplus. that prerequisite has already been met to the extent that the central bank has initiated regular foreign exchange purchases in the market. excluding the estates of the failed banks, there is a sizeable trade surplus. when winding - up proceedings conclude, there will be a net debt to non - residents ; however, it will probably not be large enough to eliminate the underlying surplus. the fundamental problem lies not with the current account balance but with capital movements. residents β payments on foreign loans will probably exceed inflows of new borrowed funds or other investments as long as iceland β s access to foreign credit markets is constrained and economic recovery is delayed. however, landsvirkjun β s recent bond issue indicates that foreign credit markets are not entirely closed, although few firms are in a position to obtain foreign credit and the terms are far from favourable. it would arguably be wise to commence capital account liberalisation while the real exchange rate is relatively low. with a relatively low real exchange rate, owners of isk assets en masse are less likely to view the removal of capital controls as a selling opportunity, and it is more likely that foreign investors will view it as an opportunity to acquire kronur from those wishing to sell. the real exchange rate of the krona is somewhat below its likely long - term average, although it has risen in the past | been undervalued by the markets, for example relative to comparable businesses in other countries, and another that bold and determined investment ventures have driven up their value. but risk and gain often go hand in hand. sometimes the stakes may be raised too high. it has long been customary to pay a premium for attractive investment options. such goodwill used to be depreciated in companies β accounts over a long period and rarely affected their operations. the situation has changed whereby companies now need to make impairment tests of the goodwill they enter on the asset side of their balance sheets. if their original ventures fall flat, the goodwill must be depreciated accordingly. thus there is a risk, if conditions deteriorate, that this rule could amplify a company β s negative results at the worst possible time. goodwill totalling more than 500 b. kr. was entered in the financial statements for 2006 of companies listed on iceland stock exchange, and at certain companies, goodwill and other intangibles account for more than half of the total assets on their books. this is a cause for some deliberation. although the central bank β s main function on occasions such as this is to draw particular attention to causes for concern, it should of course take note, like everyone else, of the factors conducive to strengthening the long - term economic outlook. iceland β s economy is advanced, transparent and vibrant. its strong fiscal position is exemplary, and the population is relatively young, well educated and quick to adapt to technological and scientific innovations of all kinds. a strong pension system has been built up and β unlike other countries that have great fears about the future of their pension systems and their sustainability β it is clear that iceland β s pension system is becoming increasingly stronger. admittedly it is still not mature enough to have begun to pay out a representative proportion of its owners β lifetime earnings, but this proportion is growing every year and all the pointers indicate that, for the foreseeable future, it will be highly sustainable. thus the pension system is going from strength to strength in iceland, at the same time as significant weaknesses are coming to the fore in many comparable economies. real incomes in iceland rank with the highest in the world, and unemployment with the lowest. large - scale investments have recently been made which will generate handsome export revenues. traditional sectors currently enjoy secure markets and high product prices. undeniably this picture looks very bright and many more positive signs could be cited. | 0.5 |
balanced picture of the current situation in the indonesian economy, banking system, and of the treatment of the broader financial obligations of the indonesian private sector. | operative and the government β s determination to tackle this problem. at the same time, we recognized that the trade finance arrears that had been built up by some indonesian banks during the currency and financial turmoil were prejudicing current access by indonesian entities to trade financing across the entire economy. we agreed to settle these arrears and have paid the due amount. most recently, in december 1998, we cleared additional arrears. this was, we believe, an important signal to the international banking community. in addition, for those banks that agreed to maintain their trade financing activities in indonesia, we agreed to guarantee all new trade finance facilities for a year after we received confirmation of these banks β commitment. turning again briefly to the corporate sector which had been reluctant to enter discussions with its creditors, we also agreed in june 1998 to set up an agency, the indonesian debt restructuring agency or indra, to provide foreign exchange protection to those borrowers that had renegotiated their debts with their creditors. strengthening these borrowers by reducing their residual foreign exchange risk improves their creditworthiness, thereby creating an incentive to complete a restructuring. these efforts were followed by the jakarta initiative in september 1998 which aimed at setting the right framework and incentives for bilateral debtor / creditor negotiations. these measures combined, and the real money that has been paid to foreign creditors, in particular by bank indonesia, show our real determination to resolve the current situation. indeed our support has been proven with the expenditure of very large sums of our scarce foreign exchange resources reflecting the high priority we give this subject. i would urge you, therefore, not to adopt a reflexive reduction in your activities in indonesia. instead, please do focus on the systems in place now and the opportunities open to you within our new strengthened framework. another very important point i would like to mention here is the high levels of capital - backing required in some jurisdictions on new lending to indonesia. we believe these levels of provisions are excessive and that they constitute a great hindrance to a resumption of activity in our economy. let me also take this opportunity to share with you some developments in our banking restructuring program. it is not a secret that the pre - crisis indonesian financial system was unhealthily fragile and vulnerable to external shocks. we certainly underestimated the vulnerability of our domestic banking system to a crisis in the corporate sector and its potential to paralyze the banking sector ; we also probably underestimated the riskiness of many loans | 1 |
2002. see lagarde, c. ( 2021 ), β happy anniversary to euro cash! β, the ecb blog, 31 december. 2 / 2 bis central bankers'speeches | global financial system. russia β s invasion of ukraine has increased our concern about cyber security. globally, state - sponsored cyber attacks have increased in frequency and sophistication since the war in ukraine began. that increases the risk of attack on a canadian bank, other financial institution or our financial market infrastructures. given the interconnected nature of financial markets, the impact of a successful cyber attack on one institution could spread to the broader financial system. the war has also further added to the level of uncertainty around the transition to a low - carbon economy. in the short term, it threatens global energy security, increasing the dependence on higher emitting fossil fuels like coal, and risks slowing the transition. over the medium term, transition uncertainty means that assets exposed to the fossil - fuel sector, including those found in the pensions and retirement savings of many canadians, are at risk of large and rapid repricing. we need better transparency about climate exposures by businesses and financial institutions. we also need clear transition plans by global policymakers. together these can help mitigate the risk of a disorderly and painful transition that hurts both our financial system and our economy. finally, cryptoassets are a growing vulnerability. more canadians are investing in cryptocurrencies. but the growth of these markets has outpaced global efforts to regulate them. like other speculative assets, cryptocurrencies are vulnerable to large and sudden price declines. and recently, some stablecoins β a type of cryptocurrency β have failed to deliver on their promise of stability. while cryptoassets do not yet pose a systemic risk to the canadian financial system, the lack of regulation means they don β t have the safeguards that exist for more traditional assets. and their risks may not be well - understood by investors. regulators around the world and in canada have recognized this risk and are working to address it. let me conclude by underlining that vulnerabilities are best thought of as weaknesses in the financial system. in normal times they may not have much impact. but large shocks can cause much more economic and financial damage when vulnerabilities amplify their effects. we have summarized the main vulnerabilities that are highlighted in the fsr. the report also outlines what is being done to mitigate them and to develop contingency plans because even the best planning can β t eliminate risk. it β s a very comprehensive report and offers just a snapshot of the work | 0 |
and inflation deviations in the setting of our policy rate. however, the taylor rule is a rule - of - thumb, whose claims of empirical validity are based on its ability to track policy during periods of relatively modest volatility. 2 the current recession is outside of the empirical experience of taylor rules calibrated to describe federal reserve actions. we need to look beyond heuristic descriptions like the taylor rule to a more complete analysis of optimal monetary policymaking within a dual mandate framework. this topic has been studied extensively in the macroeconomic literature. interestingly, one of the first the committee β s interpretation of its mandate often is expressed as inflation of β 2 percent, or a bit less. β this does not mean keeping inflation in a narrow band capped by 2 %. the β 2 percent, or a bit less β interpretation of our price stability mandate comes from the responses to the survey of economic projections which fomc participants submit four times per year, and in which the majority of participants have said 2 % is their long - run forecast under conditions that include appropriate monetary policy. because inflation is determined in the long run by monetary policy, it follows that these long - run forecasts can be interpreted as participants β views on the level of inflation most consistent with the committee β s mandate. the β or a bit less β is added because a minority of participants submit long - run forecasts that are below 2 %. the exercise is described in taylor, john b. 1993. β discretion versus policy rules in practice, β carnegierochester series on public policy 39, pp. 195 β 214 ; and taylor, john b. 1999. β an historical analysis of monetary policy rules, β in john b. taylor ( ed. ) monetary policy rules, university of chicago press. bis central bankers β speeches modern treatments is due to john taylor in an article published in econometrica in 1979. 3 this framework continues to be a mainstay of optimal policy analysis, as evidenced by a large literature that includes work by michael woodford in recent years. 4 taylor expresses the central bank β s dual - mandate objective as monetary policymakers attempting to minimize the weighted sum of squared deviations of inflation and the level of output from their goal values. that is, a central bank attempts to minimize a simple quadratic loss function like the following : l = ( Ο β Ο * ) 2 + Ξ» * ( y β y * ) 2 here Ο and y are inflation and the ( natural | cutting the fed funds rate to near zero by december 2008. once at the zero lower bound, we then turned to unconventional measures, such as large - scale asset purchases and forward guidance about the federal funds rate, to provide further accommodation. in the fall of 2012, with the unemployment rate hovering stubbornly at around 8 percent and core inflation steadily drifting lower than our 2 percent target, the fed introduced open - ended asset purchases and, later, forward guidance that related federal funds rate actions to thresholds explicitly expressed in terms of our policy goals. these efforts have helped the economy make impressive progress toward our employment mandate and appear to be moving us closer to our 2 percent inflation target as well. given this progress, it is natural to ask if it is time to return to business as usual. are we close enough to our policy goals β and do we have enough confidence in our ability to achieve those goals within the foreseeable future β that policy can return to operating according to more traditional guidelines? bis central bankers β speeches as i will discuss in more detail, i think the answer is no. first, inflation remains stubbornly low. second, i believe that substantial slack persists in labor markets and that some remaining and slowly dissipating headwinds could weigh on our progress toward full employment for some time. chair yellen pointed to a few of these headwinds in her press conference after the september fomc meeting : tight mortgage credit for some borrowers ; depressed household expectations for their income prospects ; and modest productivity growth. 1 and, third, there is my weighing of risk - management considerations. to me, the risks imposed on an economy forced to operate at the zero lower bound on policy rates are paramount. in an economy mired at the zlb, interest rates cannot fall low enough to equate the supply of saving with the demand for investment β a constraint that then significantly impedes consumer spending, capital formation, and employment expansion. accordingly, before the fed raises rates we should have a great deal of confidence that we won β t be forced to backtrack on our moves and face another painful period at the zero lower bound. and once we start, at least initially we should raise rates slowly to make sure the economy can weather less accommodative financial conditions. in sum, we should be exceptionally patient in adjusting the stance of u. s. monetary policy β even to the point of allowing a modest overshooting of our inflation target to appropriately balance | 0.5 |
of these banking organizations have relatively straightforward balance sheets that would benefit less from the basel ii risk - measurement and management requirements. in addition, in this country, our banks are subject to the requirements of prompt corrective action and minimum leverage and to statutory provisions that induce them to hold buffer capital far above the minimum requirements. more than 93 percent of the expected basel i banks hold capital that is in excess of 10 percent of their risk - weighted assets. moreover, in this country, requirements of the sort found in pillar 2 have been in existence for many years and are well ingrained into our supervisory process. the u. s. banking system also has a greater tradition of disclosure, as those of you with u. s. subsidiaries well know. thus, the cost - benefit analysis suggested that it would not be responsible to require most of our banks - entities that do not operate across national borders - to adopt basel ii, especially because thousands of them would probably choose the standardized version that adds only modest credit - risk sensitivity to risk - based capital requirements. smaller banks in many other countries, we believe, would benefit http : / / www. federalreserve. gov / boarddocs / speeches / 2003 / 200306102 / default. htm from adherence to pillars 2 and 3, and we hope they adopt basel ii, but our banks already operate under regimes fairly close to what the simpler versions of basel ii would provide. in light of their capital and supervision, we anticipate that u. s. banks with modest overseas activities operating under basel i rules would be able to continue their overseas operations without having to adopt basel ii. their subsidiaries, of course, would be subject to the rules and requirements of the host country. and, u. s. authorities will make available to host - country supervisors whatever information is required. u. s. branches of foreign banks would be basically unaffected by basel ii rules because they are not subject to direct capital requirements. and u. s. supervisors expect to find any variant of basel ii applied in foreign countries to be acceptable for our evaluations of well - capitalized standards at the consolidated parent level. however, u. s. subsidiaries would be subject to our rules for domestic banks and thus would have to choose either the a - irb and ama approaches or remain under the current basel i rules. we do understand that this could present some complications for foreign banks using approaches for their consolidated organizations that are not offered in the united states, such | october β december quarter of 2013. the purchasing managers β index ( pmi ) for manufacturing activity has recently shown some weakness, but the chinese economy is expected to basically maintain stable growth at around the current pace under state control. among other emerging and commodityexporting economies, economic developments in the nies are picking up, particularly in exports, as the effects of the economic recovery in advanced economies spread to them. in contrast, growth momentum in the asean countries has remained weak because of their relatively limited ability to profit from the recovery in advanced economies. in particular, there are concerns about the impact of unstable political situations in some of these countries on trade with japan, for example. among emerging and commodity - exporting economies, some of them β which have structural vulnerabilities such as current account deficits β saw nervousness in their markets at one point as the federal reserve proceeded to reduce the pace of its asset purchases, but the situation recently regained stability. b. japan β s economic activity and prices 1. current situation a. economic activity now, i will discuss japan β s economic activity. bis central bankers β speeches the bank β s current assessment is that japan β s economy has continued to recover moderately. moreover, a front - loaded increase in demand prior to the consumption tax hike has recently been observed. real gdp for the october β december quarter of 2013, released on february 17, 2014, showed quarter - on - quarter growth of 0. 3 percent, representing the fourth consecutive quarter of positive growth. by component, private demand for the quarter, including private consumption and business fixed investment, recorded a higher growth rate than in the july β september quarter. as for private consumption, consumption of goods such as durable goods increased partly reflecting the front - loaded increase in demand prior to the consumption tax hike amid the improvement in the employment and income situation evidenced by the increase in winter bonus payments. business fixed investment, which had previously been lacking momentum compared to firms β annual fixed investment plans and the improving trend of their profits, rose noticeably at last in the october β december quarter. in contrast, exports have lacked momentum to date despite the recovery trend in overseas economies, mainly advanced economies, and movements in the foreign exchange market. as imports grew substantially, net exports continued to significantly push down the gdp growth rate, as they had in the july β september quarter. although only a handful of economic indicators have been released for the period starting in january 2014, the seasonally adjusted number of new passenger - | 0 |
is the bipolar view correct? β journal of economic perspectives 15 ( 2 ) : 3 - 24. gerlach, stefan and rebecca stuart. 2014. β money, interest and prices in ireland, 1933 β 2012. β central bank of ireland technical paper 07 / rt / 14. honohan, patrick. 1997. β currency board or central bank? lessons from the irish pound β s link with sterling, 1928 β 79 β. banca nazionale del lavoro quarterly review 200 : 39 β 70. honohan, patrick. 2002. β using other people β s money : farewell to the irish pound. β history ireland 10 ( 1 ) : 34 β 37. honohan, patrick and charles conroy. 1994. irish interest rate fluctuations in the european monetary system. ( dublin : economic and social research institute ). honohan, patrick and gavin murphy. 2010. β breaking the sterling link : ireland β s decision to enter the ems. β iiis discussion paper no. 317, trinity college dublin. o grada, cormac. 1994. ireland : a new economic history 1780 β 1939. ( oxford university press ). thom, r. and b. walsh. 2002. β the effect of a currency union on trade : lessons from the irish experience, β european economic review 46, 1111 β 1123. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | agenda on microfinance is the continuous review of existing policies and regulatory guidelines to make them even more attuned to the growing needs of the microfinance sector. we believe that with a well - defined vision and strategy for microfinance, we can easily identify and fully address the capacity development needs of microfinance players. initially, we have defined our policy agenda which is to encourage the establishment of new microfinance - oriented thrift and rural banks and the setting up of microfinance operations in existing banks. through this approach, the banking system can more effectively reach a larger number of e - poor. this would complement other microfinance delivery channels like credit cooperatives and ngos that have their own strengths and weaknesses. three important provisions in the general banking law ( gbl ) of 2000 formally authorized the bsp to fully support microfinance. in carrying out this mandate, we have drawn up a set of banking regulations that take into consideration the peculiarities of microfinance lending : cash flow - based, typically unsecured and short - term, high frequency collections, and often featuring group guarantee and other non - traditional forms of security. specifically, the bsp has issued the following circulars : β’ circular 272 ( january 2001 ) implements the provisions of sections 40, 43 and 44 of the gbl and sets out the regulatory guidelines for engaging in microfinance. β’ circular 273 prescribes additional requirements for licensing of microfinance - oriented banks. this was issued primarily to encourage banks to adhere to best practices and high performance standards. another requirement is for the organizers to have a good track record in microfinancing. as a minimum operational requirement, banks should have a loan tracking system in place that can adequately monitor and manage a microfinance portfolio. the same circular also provided for the partial lifting of the moratorium on the opening of new thrift and rural banks and branches to allow the entry of microfinance - oriented banks. β’ circular 282 ( april 2001 ) specifies the guidelines governing the rediscounting facility for microfinance loans of rural and cooperative banks. β’ circular 324, issued in 2002, expanded the coverage of the rediscounting facility to include thrift banks. in relation to this, we have provided rediscounting for 26, 966 micro - borrowers amounting to p219. 5 million, as of end - july 2004. we have issued several other regulations to provide further incentive | 0 |
michelle w bowman : opening remarks opening remarks ( via pre - recorded video ) by ms michelle w bowman, member of the board of governors of the federal reserve system, at the " advance together : celebrating the achievements of texas community partnerships, " a public event at the federal reserve bank of dallas, dallas, texas, 24 july 2024. * * * i'd like to thank everyone for joining us today to celebrate the achievements of texas community partnerships. i am so excited to be a part of this important milestone, marking the end of the pilot round of advance together and to announce a second round for this initiative. back in 2021, during the depths of covid, i took part in the dallas fed's advance together launch event, welcoming the awardees into the initiative and looking ahead to their success. this is truly a special opportunity to recognize the progress and achievements of the four participating partnerships, each representing their diverse communities and regions in the great state of texas. advance together is an accelerator program for regional public β private β nonprofit partnerships seeking to improve education and employment outcomes for lower - income communities in texas. the dallas fed and the federal reserve system are focused on reducing and removing barriers to education attainment and workforce development to foster a strong, resilient economy. as the nation's central bank, the federal reserve board is focused on our dual mandate of price stability and maximum employment. when we think about maximum employment, we also need to consider how to foster an inclusive economy that provides economic opportunities for everyone regardless of their circumstances. every reserve bank relies on its community development function to understand the economic circumstances of communities through community initiatives and research. in response to local needs in their respective districts, each reserve bank develops initiatives and focus areas to support these efforts. collaboration matters for better community outcomes advance together was designed to address core challenges in education and workforce development. often, a lack of coordination among key organizations, fragmentation across existing resources, or incomplete approaches that don't fully identify or address the root causes of community issues lead to less successful outcomes. research from the boston fed has found that durable economic success throughout economic cycles is less dependent on factors like industry mix, demographics, or even geographic location. instead, it is the ability of local leaders to work together across 1 / 3 bis - central bankers'speeches different sectors that leads to economic resilience. leaders that collaborate with an identified plan and path over a sustained period of time toward a comprehensive vision achieve better outcomes and more inclusive | harvesh seegolam : address - g20 / oecd task force on financial consumer protection address by mr harvesh seegolam, governor of the bank of mauritius, on the occasion of the g20 / oecd task force on financial consumer protection, port louis, 26 april 2023. * * * ms. nisha arora, chair of the g20 / oecd task force on financial consumer protection mr. chris green, chair of finconet members of the oecd the finconet governing council i wish you all a very good morning or good afternoon, depending in which geography you currently are if you are attending this event virtually. at the outset, i would like to thank the g20 / oecd together with finconet for organising this event at such a critical juncture where the advent of technology is revolutionising the delivery of financial services, thereby creating additional challenges for financial consumer protection. unfortunately, due to professional commitments, i could not make it in paris. however, as you can see, technology has made wonders not only in the financial services sector but also to enable us to connect from all corners of the globe. financial consumer protection has been high on my agenda since my appointment as governor in march 2020. i am pleased to share with the audience that from the 22nd to the 24th of november this year, the bank of mauritius will host the annual general meetings of finconet. you are all cordially invited to attend and further details will be provided by finconet as we draw closer to the meeting. i am pleased to share my views on such an important topic as consumer education and consumer protection, particularly in a global financial environment that technology is radically transforming. it would not be proper to underscore the importance of financial education and consumer education if we fail to comprehend the hazards of not educating and protecting consumers of financial products. indeed, failing on these two fronts would inevitably result in citizens making poor financial decisions, thereby affecting their quality of life and, by ripple, undermining the efficiency of our banking and financial systems. it is with these imperatives in mind that i have initiated a number of projects. in january last year, the bank of mauritius rolled out a nation - wide strategy with specific focus on financial literacy in a digital era. the strategy, which benefitted from the oecd infe's endorsement, aims at fostering an appropriate level of financial education to enable customers | 0 |
, like a number of other central banks, uses one of these models for forecasts and simulations. the riksbank β s model is called ramses ( riksbank β s aggregate macromodel for studies of the economy in sweden ). in ramses, goods and labour markets are assumed to be in monopolistic competition and wages and prices are sticky. however, the ramses model analysis is only part of the forecasting process, which is also based on other statistical analyses and of course assessments. in the short term, that is to say the current quarter and one quarter ahead β what is usually called β now - casting β β we use different statistical models and indicators to make an assessment of the current situation. this analysis strives for the best possible accuracy in the forecasts and is often only vaguely anchored in economic theory. however, this type of forecast has a relatively good accuracy in the short term ( up to one year ahead ). 6 the forecast produced by the now - casting is then entered into the large dsge model and forms a basis for the model β s longer - term forecasts. the international forecast for all quarters is then also made outside of ramses and entered as input into the model. as all models are simplifications of reality, however, the final analysis must always contain elements of assessment that correct the results from the model. in addition, some markets, for instance, the financial markets, are not entirely reflected in these models. 7 the latter play an important role in the current stage, which is affected substantially by the financial turbulence. general equilibrium models are an important analysis tool as they provide a consistent picture of the economy. they can therefore also be used for policy analysis and to analyse alternative scenarios. f. e. kydland and e. c. prescott β time to build and aggregate fluctuations β, econometrica 50, 1982, 13451370. o. j. blanchard, β the state of macro β, nber working paper series, august 2008. see m. k. andersson and m. lof. sveriges riksbank economic review 2007 : 1. c. e. tovar. β dsge models and central banks β. bis working papers no 258. 2008. some facts about economic cycles according to economic theory, fluctuations in growth thus arise as a result of various external shocks affecting the economy. the size of the fluctuations is in turn affected by the functioning of the economy. | be placed in a context where many factors could conceivably affect inflation. the slowdown in economic activity has probably had a subduing effect on inflation. however, we have seen that economic cycles are not sufficiently regular to enable us to forecast how profound or prolonged a downturn will be. the relationship between economic activity and inflation is not particularly stable either. in the difficult deliberations we had to make in september we executive board members reached different conclusions, with a majority voting to raise the repo rate while the minority to which i myself belonged voted to hold the interest rate unchanged. on this occasion i shall not go into the various reasons for my stance in depth ; they were clear from the separate minutes of the monetary policy meeting and i discussed them in a speech i held a couple of weeks ago. | 1 |
, whereas in the u. s. the current level of inflation expectations is consistent with the long - term objective of the fed. therefore, the boj, relative to the respective sizes of the two economies, has adopted a purchase program that is more aggressive that the u. s. program. this is true whether measured in terms of the amount of duration being pulled out of the market or purchases as a share of total issuance. lessons learned as i mentioned earlier, there have been at least six major areas where there has been significant learning, which has influenced the evolution of policy. let me turn to them. the importance of managing expectations managing expectations is always central to monetary policy. however, at the zero bound this is even more critical than usual. there are two aspects of this. first, keeping inflation expectations anchored at levels consistent with the central bank β s medium - term inflation objective β 2 percent on the personal consumption expenditures deflator in our case β is vitally important. once deflation expectations become well entrenched, it is very difficult to change them. and, because inflationary expectations are an important driver of actual inflation outcomes, deflationary expectations can be self - fulfilling in driving actual deflation outcomes. also, if inflation expectations were allowed to fall, this would raise the level of expected real interest rates, making monetary policy less accommodative. conversely, a central bank does not want medium - term inflation expectations to climb above levels consistent with its inflation objective. if inflation expectations were to become unanchored to the upside, that could damage credibility and result in higher risk premia for bis central bankers β speeches financial assets and tighter financial market conditions. thus, a policy that maintains medium - term inflation expectations in line with our inflation objective is most consistent with our mandate. 8 second, at the zero bound, the ability to provide credible forward guidance β both in terms of the future path of the policy rate and the future path of the balance sheet β becomes the predominant vehicle by which a central bank β s actions affect financial market conditions. if this expectations channel did not work, then it would be very difficult to provide additional monetary accommodation because short - term rates cannot be reduced materially. in the u. s., in recent months we have communicated that short - term rates are likely to stay very low for a long time ; our balance sheet is likely to increase further in size and then stay large for a long time ; and that we will not be | jack gutt : opening remarks - demographics are not destiny : fostering conditions to advance latino business growth opening remarks by mr jack gutt, executive vice president and head of the communications and outreach group of the federal reserve bank of new york, at " demographics are not destiny : fostering conditions to advance latino business growth ", new york city, 13 november 2018. * * * as prepared for delivery good morning and welcome to the new york fed for this important conversation on β demographics are not destiny : fostering conditions to advance latino business growth. β my name is jack gutt and i am fortunate to head the new york fed β s communications and outreach group. i β d like to thank all of my colleagues and our partners from the stanford latino entrepreneurship initiative ( slei ) and interise for their efforts in developing the report, β latino owned businesses : shining a light on national trends, β issued today, and for organizing this conference. i β d also like to thank all of you for joining us and our panelists for their participation. this is an impressive group and i, and my colleagues, very much look forward to hearing and learning from you. before going any further, i need to point out that what i say here today reflects my own views and not necessarily that of the new york fed or the federal reserve system. as i said at the outset, this is an important conversation. why? because, for the first time since launching the small business credit survey, we are able to identify and discuss the specific experiences of latino small business owners. and that, in turn, matters as latinos are the fastest growing demographic in our nation and latino - owned businesses are growing in number and importance. the total latino population in the united states was around 18 percent in 2017 and that number is expected to rise significantly in the coming decades. amid lagging business start - up rates, immigrant and latino business expansion has bolstered small business growth nationally, outpacing that of other demographic groups. between 2014 and 2016, latino - owned businesses grew by 13 % compared with less than 3 % for non - latino businesses. today, one in four new businesses is latino owned, contributing more than $ 700 billion in annual sales and employing millions of workers. on top of that, the latino population is among the youngest of all demographic groups and its entrepreneurial class is equally young. in fact, nearly half of latino owned businesses were started less than six years ago, all of which points to | 0.5 |
amando m tetangco, jr : mainstreaming financial inclusion as a strategic objective speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the bsp - bis research conference of financial inclusion and central banks, cebu, 3 june 2016. * * * good morning everyone. on behalf of the bangko sentral ng pilipinas, i welcome all of you to cebu. this conference, which the bsp is privileged to co - host with the bis, is actually the result of a discussion in the asian consultative council ( acc ) of the bis. it was early 2014 in sydney, if i am not mistaken, when bsp suggested to the acc governors, that a possible area of research for the bis hongkong office ( under the acc process ) could be the relationship between financial inclusion and financial stability. in particular, we suggested that the bis hongkong office investigate whether increased financial inclusion contributes to or detracts from financial stability. necessarily, dr. remolona and his team would also have to determine the possible transmission mechanism for this linkage. that suggestion came at a time when revisions to the g20 financial inclusion action plan ( fiap ) were being undertaken during the australian g20 presidency. by that time also, the united nations had already underpinned the importance of financial inclusion as an imperative in the attainment of a wide range of targets under the sustainable development goals. the unsgsa, her majesty queen maxima of the netherlands, had also by then already conducted intensive meetings on financial inclusion with the standard setting bodies that included the bcbs, cpmi, fatf, iadi and iais. clearly, the once - peripheral issue was then becoming mainstreamed in the global discourse. the bsp experience at that time, we were also trying to better understand this issue for our own policy work in the bsp. you see, by 2014, the bsp already had over a decade of experience with microfinance as a flagship program for poverty alleviation. our efforts started as an advocacy, with the belief that creating an enabling policy and regulatory environment could catalyze market players to see microfinance as a sound and viable undertaking. we endeavored to create a supervisory and regulatory framework that recognized the peculiarities of microfinance while striving to maintain alignment with international standards. such balance allowed the entry of banks | to regulate the new and diverse set of participants more effectively. once this legislation is passed, we will be embarking on a wholesale review of our retail payments regulation to identify any areas where competition, efficiency and safety could be improved. there is also legislation in the making that will provide a licencing regime for non - bank payment service providers and will implement common access requirements for payment systems. these changes will also help to promote competition in the payments system. 4 / 5 bis - central bankers'speeches banknote distribution another issue that i would like to update the committee on is the work that is underway to address challenges in the cash distribution system. as the use of cash for transactions has declined, the economics of cash distribution has come under pressure. this was one of the main factors behind the merger of the two largest cash - in - transit providers last year, which the accc approved subject to a three - year undertaking regarding pricing and service levels. however, linfox armaguard has since indicated that, despite this, its cash distribution business remains unsustainable. the rba places a high priority on the australian community continuing to have good access to cash withdrawal and deposit services. late last year, i convened several discussions with businesses in the industry to consider what more could be done to support access to cash for those who need or want it, and to promote a sustainable model for cash distribution in australia. these discussions are being conducted in line with an interim authorisation from the accc enabling relevant parties to develop and evaluate industry responses to support the viability of wholesale cash distribution and access to retail cash services. they are likely to continue for some months. developing a model for cash distribution that is sustainable in the long term requires addressing complex issues that will take some time to work through. i have encouraged the major participants in the cash distribution system to approach these issues with the public interest in mind. $ 5 banknote redesign project finally, i would also like to update the committee on the work underway to redesign the $ 5 note. last year, we announced that we would be taking the opportunity to feature a new design on the $ 5 note that honours and celebrates the culture and history of first nations peoples. as a first step in determining the design, we will be asking members of the public, over the course of march and april, to share with us what they think should be on our $ 5 banknote to represent first nations culture and history in australia. in recent weeks, | 0 |
higher as well. member states should also take note of the european commission's fiscal policy guidance for 2024. turning to growth, we moved away from a baseline scenario with a technical recession at the turn of the year, as economic activity proved to be more resilient than expected at the end of 2022. in our march projections, the outlook for growth was revised up, to an average of 1 % in 2023. however, these projections were finalised before the events of the past few weeks, which are now adding uncertainty to our assessments. nevertheless, reduced concerns about energy shortages and price increases, coupled with the continued resilience of the labour market, are expected to support activity over the coming quarters. in short, the growth outlook remains weak, but it has improved somewhat. at the governing council meeting in march, we decided to increase the three key ecb interest rates by 50 basis points, in line with our determination to ensure the timely return of inflation to our 2 % medium - term target. as part of the monetary policy normalisation process, from the beginning of march, our asset purchase programme portfolio has been declining at a pace of β¬15 billion per month, on average, and it will continue to decline at this pace until the end of june 2023, while its subsequent pace 2 / 3 bis - central bankers'speeches will be determined overtime. uncertainty has increased, so we are monitoring current market tensions closely and stand ready to respond as necessary to preserve price stability and financial stability in the euro area. but let me go back to financial stability. just a few weeks ago, before tensions in financial markets emerged on both sides of the atlantic, the overall improvement in the outlook for growth and inflation was supporting overly benign macro - financial expectations on the part of banks and financial market participants. despite rising funding costs, bank profitability has improved, driven by significantly higher net interest income while impairments and provisions have been muted so far. overall, from a system - wide perspective, euro area banks are moderately exposed to interest rate risk. most are actually positioned to initially benefit from increasing interest rates, which boost net interest margins. on average, loan book repricing tends to more than offset higher funding costs and mark - to - market losses on fixed income securities. it is inevitable however that, with the tightening of financing conditions and in line with our policy objective, lending dynamics are weakening and may weigh on bank profitability going forward. of course, certain bank business models | 14 trillion of sovereign paper had negative yields. for the past decade, the yield structure in the us has been lower than at any time previously. let me put in context the current excitement about the 10 - year yield in the us reaching 3 per cent. in the three decades prior to 2007, the low point for the yield was 3. 11 per cent. all this goes to say that we have been living in a period of unusually low nominal bond yields. how long will this period last? one way to think about this question is to ask whether what we are seeing is the realisation of a tail event in the historical distribution of interest rates. 1 while this tail event has now lasted quite a long time, if you thought it was a tail event, then you would expect yields to revert back to their historical mean at some point. you also wouldn β t change your assessment of the distribution of future realisation of interest rates. on the other hand, it might be the case that the yield structure has shifted to a permanently lower level because of ( say ) secular stagnation resulting in structurally lower growth rates for the major economies for the foreseeable future. if this were the case, you would change your assessment of future interest rate outcomes. i don β t know the answer to this question, but it has material implications for asset pricing. 2 / 14 bis central bankers'speeches as i said earlier, the prices of many assets could be broadly validated if you believe the low rate structure is here to stay. 2 this is because the lower rate structure means that the rate with which you discount expected future returns on your asset is lower and hence the asset price is higher for any given flow of future earnings. the current constellation of asset prices seems to be based on the view that the global economy can grow strongly, with associated earnings growth, but that strong growth will not lead to any material increase in inflationary pressure. 3 you might want to question how long such a benign conjuncture could last. current asset pricing suggests that the ( average ) expectation of market participants is that it will last for quite a while yet. it is also worth pointing out that it is possible that a move higher in interest rates occurs alongside higher expected ( nominal ) dividends because of even higher real growth. if this were to occur it would not necessarily imply that asset prices have to adjust. it would depend upon the relative movements in earnings expectations and interest rates ; that is, the numerator | 0 |
cent. a continued rise in prices could have a negative impact so it is important that the government does not encourage this. the dutch situation is mentioned. i refer to the june version of danmarks nationalbank's monetary review, which includes an article on the netherlands. the issue of establishment of a petroleum fund would require further consideration ; after all, the lessons learned from the social pension fund are not exactly uplifting. in respect of business support, it would be useful to have statistics to underpin decision - making. the traffic section includes interesting points of view, as well as a somewhat discouraging outlook. traffic is getting worse, the number of cars is rising, transport of goods is also increasing, the possibilities of switching to rail transport are extremely limited, and a road - pricing system is not currently in the pipeline. at the same time, taxation does not necessarily ensure appropriate behaviour. signs point to more congestion on the roads. | jens thomsen : some risks to the danish economy statement by mr jens thomsen, member of the board of governors of the national bank of denmark, at the meeting of the danish economic council, copenhagen, 1 june 2006. * * * this is an interesting report that pinpoints the problems which the danish economy could be facing if the pace does not slow down. the council has more zest than the ministry of finance : " economic survey, may 2006 ", which is reflected in a pronounced deterioration of the balance of payments. it is, however, evident that if the assumptions β which are described as optimistic β are not met, in terms of productivity and the labour force, the risk of overheating is more imminent. the calculations of structural unemployment in box i. 10 show that the central estimate is just over 150, 000, a substantially higher figure than the current one. it is noted that the estimate is subject to considerable uncertainty. unemployment in 2006 is estimated at 129, 000, indicating a fall by approximately 1, 000 a month throughout the rest of the year. from february to march 2006 the figure fell by 4, 300. as usual, the forecast is self - stabilising. the above tendency is positive. it is, nevertheless, difficult to model overheating, as pages 112 - 113 show. however, the council should not be criticised for having published this calculation. it is hard not to share the report's conclusion that there is a substantial risk of overheating. the tight labour market can to some extent be eased by importing labour, and consequently unnecessary barriers should be avoided. in iceland, 80 per cent of those aged 60 - 64 are in work, in denmark only 40 per cent. that provides food for thought. moreover, the number of danes on the early retirement scheme ( 142, 000 in 2006 ) now exceeds the number of unemployed in denmark. it is also evident that expansionary fiscal policy contributes to strong demand. in the current situation it is therefore extremely important to keep a tight rein on government expenditure. it will be interesting to see when growth in public spending once again falls below 1. 0 per cent. since the millennium this has only been the case in 2003. does the council believe it will be in 2007, when growth of 0. 7 per cent is anticipated? the development in house prices also illustrates our forecast problems. increases of 15 per cent are now expected in 2006. six months ago, the forecast was 7. 0 per | 1 |
$ 26. 4 at end - march 1997. the data that i have just presented will show that our fundamentals are strong, making us less vulnerable to contagion, and this is clear from our performance in 1997 - 98 also, when the crisis struck east asia. during 1997 - 98, real gdp growth has been estimated at 5. 1 per cent, a decline from the previous year β s growth of 7. 5 per cent, mainly attributable to a significant decline in agricultural output. the rate of inflation as measured by the wholesale price index declined in 1997 - 98 to 5. 3 per cent on a point - to - point basis. in 1997 - 98, the current account deficit continued to be low at 1. 7 per cent of gdp and there was accretion to foreign exchange reserves to the tune of us $ 3 billion. the reason as to why we escaped the contagion can be analysed in terms of the policies that we have been pursuing in areas where serious concern has been expressed in the context of the asian crisis. investment as a percentage of gdp has been reasonably steady in the recent past at around 27 per cent on average, and about 95 per cent of this was financed by domestic savings. in managing our external account, we ensure a sustainable current account deficit, strictly control reliance on short - term external debt, limit access to external debt, and emphasise productive use of such debt. we do encourage foreign direct investment and portfolio investments through foreign institutional investors as the main sources of non - debt - creating capital inflows. also, the exchange rate is market determined. the rbi closely monitors it, and when warranted makes purchases and sales of foreign currency to ensure orderly conditions in forex markets. we undertook, early in the reform period, financial sector reforms - especially banking reform, which included strengthening the regulatory framework, imposing prudential norms and reducing non - performing assets. we discourage banks β investments in real estate and stock markets. corporates β exposure to debt, especially external debt, is within reasonable limits. as compared with other central banks, there is widely recognised transparency in operations of the reserve bank of india. there is, therefore, reason to believe that it is not just chance but sound macroeconomic management which saved us from the south - east asian contagion. it is nonetheless necessary for us to learn from the experience of the asian crisis. policy frame the broad approach to reform in the external sector after the gulf crisis | this can in turn leave countries vulnerable to sudden stops once optimism fades due to local or global shocks. indeed financial cycles tend to have a global component, and hence the discussion about financial globalisation has evolved into one about the β global financial cycle β, which is driven by us monetary policy. the assumption is that non - us central banks have lost their ability to influence domestic long - term interest rates, even in the presence of flexible exchange rates, due to the existence of β us - driven β global financial cycles. 6 as a result, the classic trilemma 7 may have morphed into a dilemma between financial openness and monetary policy autonomy. in addition to risks related to unsustainable lending booms, which can be fueled by capital flows, policy makers and academics recently also stressed risks stemming from disruptive capital outflows, which can endanger financial stability, for example if large amounts of bank deposits 1 / 4 bis central bankers'speeches are pulled out of a country. in the context of this debate on financial integration, academic papers on the welfare optimality of taxation of international capital flows have also thrived since the crisis. 8 moreover, the standard international policy consensus on financial globalization has been shattered by the crisis. for example, the imf adopted in 2012 an institutional view that said temporary and targeted capital flow management measures can be useful in certain circumstances, i. e. when the room for manoeuvre for macroeconomic adjustment is limited. 9 the fund is now reviewing this institutional view. it is expected that the effectiveness of capital flow management measures, which have been recently used in emerging and some advanced economies, will be assessed in a balanced way, taking into account all intended and unintended effects, which such measures may generate. in parallel, the oecd is reviewing its code of liberalization of capital movements. with the review, the oecd aims to facilitate collective action by boosting transparency and shared understandings on good practices related to managing and liberalising capital flows. a particular area of interest is the treatment of capital flow measures that are used as macro - prudential measures. for policy makers, this is important since at times there may be tradeoffs between financial integration and financial stability. ii. effective financial risk sharing rests on the soundness of institutions and policy rules as part of this policy discussion, i would like to underline that openness to international capital flows should continue to help diversify country - specific shocks. this would | 0 |
goals and which allow family background to dictate life choices. in eliminating vested interests in a non - competitive system, structural reforms are more than just a tool for growth creation. by encouraging everyone to be involved in the process of production, they ensure that the drive for a more equal income allocation is not the task of state - led redistribution alone. in this way, reforms aim to harness individual potential to the growth of the economy. nevertheless, looking to the not - too - distant future, national virtues β while indispensable for strengthening solidarity among member states along the way β won β t be enough to make europe a goal all its citizens can consider their own. bis central bankers β speeches it will also be necessary to introduce reforms that further reduce the barriers between individual member states, in particular to the development of a single european labour market, and that affirm the principle of solidarity, as proposed recently in the β four presidents β report β. 3 to build, with passion and vigour, a shared future in which the conditions for growth are more favourable, in which all citizens feel that their skills are fully valued, in which individual wellbeing goes hand in hand with collective well - being. we are all working today, each within our own mandate, to achieve that goal. thank you for your attention. herman van rompuy ( in collaboration with jose manuel barroso, jean - claude juncker and mario draghi ), β towards a genuine economic and monetary union β, 5 december 2012, http : / / ec. europa. eu / economy _ finance / focuson / crisis / documents / 131201 _ en. pdf. bis central bankers β speeches | place in may in the bond exchange nevertheless had far - reaching effects for the south african financial situation. the yield on long - term government bonds, for example, rose from a monthly average of 12. 9 per cent in april to over 18 per cent in september, and fluctuated widely on a daily basis to peak at over 21 per cent at one stage. the adverse effects of the net selling of bonds by non - residents quickly spilled over into the market for foreign exchange. pressures in this market led to an eventual devaluation in the nominal effective exchange rate of the rand of 16. 4 per cent from the end of april 1998 to 31 december 1998. the country β s net gold and foreign exchange reserves, which increased by almost r19 billion over the fifteen months that ended in march 1998, then declined again by r12Β½ billion over the last three quarters of last year. at the end of 1998, the total official reserves of the country amounted to about r31. 6 billion, the equivalent of about two months β imports. these changes in the capital account of the balance of payments, which were obviously directly linked to the worldwide dispersion of the east asian crisis, forced the reserve bank to switch to β 2 β a more restrictive monetary policy. the interest rate on the reserve bank β s daily repurchase transactions with banking institutions increased from below 15 per cent in early april 1998 to almost 22 per cent in august. in light of the declining amount of liquidity in the banking sector, and the rising rate for reserve bank accommodation, banking institutions raised their prime lending rate from 18 per cent in april 1998 to over 25 per cent in august. with these adverse developments in the financial markets, the outlook for an early improvement in real economic activity faded. on the contrary, overall economic activity slowed down further. in the third quarter, total real gross domestic product indeed showed an annualised rate of decline of 2Β½ per cent. it is estimated that, on balance, total gross domestic product in 1998 was not much different from that of 1997. the negative developments in the global financial and commodity markets had some adverse effects also on the current account of the balance of payments. the deficit indeed increased from a level of about r7 billion in the first half of the year to a level of about r18 billion in the second half. special imports, however, contributed to this increase in the negative balance, and indications are that the growth in imports is now slowing down in line with the more | 0 |
financial concepts : i ) inflation ; ii ) compound interest rates ; and iii ) risk diversification. the aim is to assess whether the interviewee understands : ( i ) that money loses purchasing power when prices rise ; ( ii ) that the changes in an amount saved in an account over five years depend not only on the annual interest rate applied to the amount saved the first year, but also on the interest accumulated thereafter ; and iii ) that the risk of investing in equities diminishes if a broad range of shares is acquired instead of only one type. the replies, obtained from a broad sample of randomly selected individuals representing spanish territory as a whole and each of its regions, and provided by ine, reveal, inter alia, 3 / 7 the following results : ( i ) 58 % of interviewees understand what inflation is ; ( ii ) 46 % understand the concept of compound interest ; ( iii ) 49 % understand the concept of risk diversification ; and ( iv ) the percentage of correct replies increases with educational level and household income level. given that the survey includes questions from an international project to measure financial competences, it is possible to compare these results with those obtained in other countries, in particular with oecd countries and eu countries that have information available in this connection. the comparison shows that the percentage of correct replies in spain regarding the concepts of inflation and risk diversification is below the average, particularly in the case of risk diversification, in which the averages for the oecd and eu countries stand at 62 % in both groups ( compared with 49 % in spain ). regarding the concept of compound interest, however, the percentage is very close to the average observed in the oecd countries ( 46 % ) and in the eu members ( 44 % ). nonetheless, this should serve as no consolation, since this average means that over half the interviewees do not understand a basic financial concept such as compound interest rates. the need to reinforce the general public β s financial literacy is also patent in some of the results on knowledge, holding, acquisition and use of financial products. firstly, as far as knowledge of financial products is concerned, the survey asks interviewees whether they have heard of the following products : ( i ) savings accounts, pension schemes, investment funds, shares and fixed income ( all savings vehicles ) ; ( ii ) life insurance and medical insurance ; ( iii ) means of payment such as credit cards ; and ( iv ) debt products such as | of those who live in a household with income of over β¬44, 500 acquire savings vehicles while only 8 % do so in households with income of up to β¬14, 500. finally, the survey also enables information to be had on the use of financial products : in particular, on one hand, on whether interviewees have saved over the past 12 months and, if so, using which savings vehicle ; and, on the other, whether the household β s spending has exceeded its income over this period and, if so, how they financed it the last time this happened. this information shows that, as regards saving, 61 % of interviewees have been saving in the past 12 months. the percentage increases in terms of educational level and level of income. one noteworthy feature is that the second most common method of saving, behind the current account, is cash, even in the highest educational and income segments. in particular, 38 % of interviewees who save do so in cash. only 14 % do so via a savings account and 11 % via a pension scheme. as regards expenditure, 28 % of interviewees live in households whose spending has outpaced income over the past 12 months, a percentage that is in line with the average observed in oecd and eu countries. 51 % financed this shortfall resorting to savings, and 35 % through informal credit ( friends, employer, etc. ). as in the foregoing cases, differences were observed in terms of educational level and level of income. as both levels increase, the percentage of instances in which spending has exceeded income diminishes and the percentage of cases where greater spending is financed with savings increases. undoubtedly, financial behaviour does not depend solely on financial literacy, but is also influenced by other circumstances ; but, in light of some of the above - mentioned results, i do believe there is clearly room for improvement in the field of financial education in spain, and that we should continue to strive in this direction. financial education in a context of technological innovation and developments giving priority attention to financial education is, moreover, particularly significant in the current context of financial innovation. technological developments are changing the way in which customers relate to financial institutions and how they take up financial products. and this, though it has attendant advantages, also entails risks. greater financial culture, greater awareness of the new reality and a greater development of the general public β s digital competences can help mitigate these risks. 5 / 7 i would like to refer | 1 |
but the output gap is unlikely to narrow significantly as the pace of recovery in final demand is expected to be moderate. in these circumstances, prices are expected to be stable for some time. 5. in sum, the positive cycle among production, income and expenditure continues steadily and is reflected in the improvement in corporate profits and the rise in employees β income. thus, despite the restraining pressures from fiscal policies, including the consumption tax hike and the decline in public - sector investment, japan β s economy is expected to continue its recovery, supported by the yen β s depreciation until early spring and the expansion of information - related demand. however, the economic recovery is unlikely to gather significant momentum, as a result of fragility in some sectors, as well as the continued balancesheet adjustment pressure. in these circumstances, building an economic environment which increases the confidence of the private sector is vital to strengthening the economic recovery. in this process, effective structural reforms to draw out the dynamism inherent in the economy continue to be essential in addition to appropriate macroeconomic policies. | individuals. thank you for your attention. 3 / 3 bis - central bankers'speeches | 0.5 |
economics, vol. 114 ( 2 ), pp. 389 β 432. diamond, douglas, and philip dybvig ( 1983 ). β bank runs, deposit insurance, and liquidity, β journal of political economy, vol. 91, pp. 401 β 19. feroli, michael, anil k. kashyap, kermit schoenholtz, and hyun song shin ( 2014 ). β market tantrums and monetary policy, β paper presented at the 2014 u. s. monetary policy forum, new york, february 28. gertler, mark, and peter karadi ( 2013 ). β monetary policy surprises, credit costs and economic activity ( pdf ), β working paper, october. gilchrist, simon, david lopez - salido, and egon zakrajsek ( 2013 ). β monetary policy and real borrowing costs at the zero lower bound, β finance and economics discussion series 2014 β 03. washington : board of governors of the federal reserve system, december. hanson, samuel, and jeremy c. stein ( 2012 ). β monetary policy and long - term real rates, β finance and economics discussion series 2012 - 46. washington : board of governors of the federal reserve system, july. morris, stephen, and hyun song shin ( 2003 ). β global games : theory and applications, β in mathias dewatripont, lars peter hansen, and stephen j. turnovsky, eds., advances in economics and econometrics : theory and applications : eighth world congress, vol. 1. new york : cambridge university press, pp. 56 β 114. bis central bankers β speeches | system can be resolved by the home regulators and shariah authorities, the integration of islamic finance with the international financial system brings with it many challenges. there is a need for mutual recognition of financial standards and products across jurisdictions. the progressive harmonisation of shariah, in this respect, needs to be viewed as a driver towards greater international financial integration. such a convergence and harmonisation can only happen with greater engagement among the regulators, practitioners and scholars in islamic finance in the international community. the annual international shariah scholars'dialogue that has been taking place since 2005 is aimed at achieving this objective. this dialogue has served to promote interactions between shariah scholars from around the world contributing towards greater understanding and international convergence. in malaysia, the efforts to enhance the international dimension of our islamic financial system have been intensified in the more recent period to facilitate greater international trade and cross - border investment flows. the new initiatives that have been announced allow the establishment of new international islamic financial institutions that will be permitted to offer the full range of islamic financial services to residents and non - residents in international currencies. these initiatives also aim to serve as a catalyst for the development of the domestic financial markets as well as the development of talent and knowledge in islamic finance. collaboration with other emerging regional centres in islamic finance will be an important part of this process that will contribute towards greater international financial integration. the establishment of the islamic financial services board in 2002 represents a major structural enhancement in building the international financial architecture for islamic finance. the achievements thus far by the islamic financial services board in developing the prudential standards that can be universally applied have been very encouraging. the efforts represent a testimony of the collective capacity for greater international collaboration which has contributed towards strengthening the fabric of islamic finance. while the legal framework and rules are constantly being reviewed to ensure that they remain relevant for the new areas of financial activity, it should not only be undertaken for the domestic islamic financial system but also in the context of the international financial system. conclusion in closing, i would like to take this opportunity to congratulate the islamic financial services board for commissioning the " surveys on legal and shariah issues in the islamic financial services industry ". the survey findings represent an important contribution towards augmenting the literature on the existing legal and shariah framework across different jurisdictions. it serves as a useful source of reference for countries that are interested in establishing a legal and shariah framework for their islamic financial system. deliberation on the survey | 0 |
of 2 percent on the pce measure. because monetary policy works with a time lag, we base policy not just on where the economy is today but where we expect it to be in the future. to do this, we make economic forecasts, based on data and insights from a broad range of economic models. we also take into account the balance of risks around our base case outlook. looking ahead, in the absence of further monetary easing, i concluded that growth would remain too subdued over the next several years to make big inroads into the spare capacity that remains from the great recession. as a result, unemployment would remain unacceptably high, with economic risks skewed to the downside. meanwhile, with substantial slack in labor markets and inflation expectations stable, inflation was likely to remain a bit below our 2 per cent longer - run objective. in this situation, i concluded that our policy framework means that further monetary policy easing was appropriate provided that the benefits of using the tools available outweighed the costs. in my judgment, this standard has been satisfied here. i am confident that the costs are manageable, based in part on the experience we have of using the tools these past four years and that the benefits substantially exceed the costs, recognizing, of course, that our actions are not so powerful that they will instantly transform the economic outlook. so how do our actions support economic activity? buying assets and extending interest rate guidance puts downward pressure on longer - term interest rates, so they are lower than they would otherwise be for any given economic outlook. this supports the price of assets such as equities and homes. buying mortgage - backed securities has the additional effect of bis central bankers β speeches narrowing the interest rate spread between these assets and treasuries, which further reduces mortgage rates. moreover, to the extent that our actions are seen as supporting the recovery and providing some insurance against adverse shocks, confidence in the mediumterm economic outlook should also increase, making businesses and households more willing to invest, hire and spend. if we are successful, long - term treasury yields could actually rise as confidence in a sustainable recovery increases. at the same time, the expected returns on private assets should rise and risk premia decline. this matters because such shifts would provide support to the economic recovery. now it is true that some of the channels through which monetary policy affects the economy may be partially impaired at the moment. for example, because of ongoing restrictions in the supply of mortgage | convert some of its agency mbs holdings to umbs where appropriate. see the statement regarding agency mortgage - backed securities, september 14, 2018. limited impact from the reduction in holdings on treasury yields and mbs spreads thus far. as shown in figure 6, comparing a matched sample of survey respondents in our july 2017 surveys to the september 2018 surveys, the expected impact on 10 - year treasury yields and 30 - year mbs option - adjusted spreads ( oas ) during the two - year period following implementation of the change to the reinvestment policy has declined, likely in part reflecting expectations for the balance sheet to normalize at a larger size. 15 looking forward, the median respondent currently anticipates the cumulative impact over the next two years to be 17 basis points for the 10 - year treasury yield, and 12 basis points for the 30 - year mbs oas. this gradual expected increase contrasts with the experience of the so - called β taper tantrum β in 2013, which showed that markets can have outsized and sharp reactions to changes in balance sheet policy even before they happen. the expected impact of balance sheet reductions on treasury yields and agency mbs oas reflects the fomc β s gradual and predictable approach to balance sheet normalization, but could also reflect additional factors. some argue that robust credit extension by the private sector given the strong economic environment helps to offset the yield impact from a declining balance sheet. furthermore, there are likely some spillover effects across fixed - income markets globally from asset purchase programs abroad that could affect u. s. term premia. the balance sheet in the long run for many years, the fomc has indicated its intention that the federal reserve will, in the longer run, hold no more securities than necessary to implement monetary policy efficiently and effectively, and that it will hold primarily treasury securities. 16 also, in the june 2017 addendum to the policy normalization principles and plans, the fomc noted that reducing the fed β s securities holdings will result in a declining supply of reserve balances, and that it in advance of each fomc meeting, the desk surveys primary dealers and active investment decision makers about economic and financial market topics to gain insight into their expectations. see survey of primary dealers and survey of market participants. see the fomc β s policy normalization principles and plans, september 16, 2014. anticipates reducing the quantity of reserve balances to a level β appreciably | 0.5 |
##atility of growth and the volatility of inflation, and we are prepared to accept some degree of inflation volatility to avoid throwing the real economy around too violently. of course, we have been immeasurably helped in doing this by the fact that inflation expectations have become more firmly anchored on the target. were inflation expectations to become dislodged, we would be obliged to return to a stricter and more vigorous pursuit of the inflation target, even at the expense of some short - term output volatility. single decision - maker or committee? in the new zealand central bank, all important decisions are vested in the governor, not in the monetary policy committee or in the board, even though we have both. we are by no means unique in this structure - laws in both canada and israel vest similar powers in the governor. but the pattern is unusual internationally. there are clearly advantages and disadvantages in all decision - making structures. when lars svensson conducted a review of the new zealand monetary policy framework for the new zealand government last year, he recommended moving from the present structure to one where monetary policy decisions are made by an internal committee of five, chaired by the governor. interestingly, the i was sufficiently new in the central bank, and sufficiently naive, to assume that it could be achieved, and did not hesitate to sign the policy targets agreement. underlying inflation peaked at 2. 4 per cent in the year to december 1996. lars svensson, independent review of the operation of monetary policy in new zealand : report to the minister of finance, february 2001. new zealand treasury, the non - executive directors of the reserve bank, and most of my colleagues argued against changing the structure in this regard. and the government also decided not to change the decision - making structure, after consultation with other political parties in parliament. the arguments in favour of having a single decision - maker related essentially to accountability and communications. the legislation under which the bank currently operates was passed into law during the late eighties, when there was a heavy emphasis on improving the quality of public sector administration. devolving more authority to public sector chief executives, and holding them responsible for their outputs, was central to that approach. so when i expressed surprise to the minister who was responsible for the reserve bank legislation that the bill envisaged the policy targets agreement being between the minister and the governor, not between the minister and the bank, he explained nonchalantly that " we can't fire the | ueda kazuo : the bank's semiannual report on currency and monetary control statement by mr ueda kazuo, governor of the bank of japan, before the committee on financial affairs, house of councillors, tokyo, 17 november 2023. * * * introduction the bank of japan submits to the diet its semiannual report on currency and monetary control every june and december. i am pleased to have this opportunity today to talk about recent economic and financial developments and about the bank's conduct of monetary policy. i. economic and financial developments i will first explain recent economic and financial developments. japan's economy has recovered moderately. exports and industrial production have been more or less flat, supported by a waning of the effects of supply - side constraints. corporate profits have been at high levels on the whole, and business sentiment has improved moderately. in this situation, business fixed investment has increased moderately. the employment and income situation has improved moderately. private consumption has increased steadily at a moderate pace, despite being affected by price rises. with regard to the outlook, japan's economy is likely to continue recovering moderately, supported by the materialization of pent - up demand, as well as by factors such as accommodative financial conditions and the government's economic measures, although it is expected to be under downward pressure stemming from a slowdown in the pace of recovery in overseas economies. the year - on - year rate of increase in the consumer price index ( cpi ) for all items excluding fresh food is slower than a while ago, mainly due to the effects of pushing down energy prices from the government's economic measures, but it has been in the range of 2. 5 - 3. 0 percent recently owing to the effects of a pass - through to consumer prices of cost increases led by the past rise in import prices. regarding the outlook, it is likely to be above 2 percent through fiscal 2024 and then decelerate in fiscal 2025. meanwhile, through fiscal 2025, the bank expects that underlying cpi inflation will increase gradually toward achieving the price stability target of 2 percent. concerning risks to the outlook, there are extremely high uncertainties surrounding japan's economic activity and prices, including developments in overseas economic activity and prices, developments in commodity prices, and domestic firms'wage - and price - setting behavior. under these circumstances, it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on japan ' | 0 |
am glad to inform you that the present administration has moved consistently and decisively to up - scale general economic and financial data quality by strengthening data information flows both in bosl and mof and at the central office of statistics. these efforts have also included working closely with waifem and its technical partners to streamlining the back office functions of the mof ; and enhancing institutional capacity building efforts. government will continue to keep these measures under constant review, because the process of achieving effective debt management is not like a sprint race, but rather, could be likened to a marathon involving medium to long - term policy thrusts and interventions. ladies and gentlemen, over the past couple of minutes, i have attempted to sensitize you on some of the issues that would be dealt with in detail during this course. even so, i make no pretensions to any exhaustive analysis. i am aware that the expert faculty assembled by the organizers will do just that. all that is left for me to do is to invite you to take maximum advantage of the opportunity presented by this course to strengthen your competencies in debt data compilation in line with best practices. 4. 0 conclusion ladies and gentlemen, i would be remiss in my duty if i ended this address without expressing the profound appreciation of the board of governors of waifem to comsec, imf, and world bank for their support to waifem in strengthening capacity of countries of its member central banks in the area of debt management capacity building. before i take leave of you to commence the technical sessions, let me enjoin you to take some time off your crowded schedule to visit some of the tourist attractions in freetown, and its environs. the governors look forward toward greater collaboration between waifem and these institutions in the years ahead. on this note i have the honour to declare the course open. i thank you for your attention. | work closely with the private sector to inform policy development and ensure that governmental activities flexibly accommodate the needs of the emerging market - place. from a central bank perspective, one of the most fundamental questions raised by electronic payments is its impact on monetary policy, especially if its development is as widespread as some have predicted. in the near term, it appears that internet payments systems will not significantly impact monetary policy. for the most part, the internet and other communication networks are currently being used to facilitate existing banking transactions using traditional banking settlement channels. most payments over the internet simply result in the movement of funds from a bank account in one institution to one in the same or another bank. this should have few, if any, implications on the conduct of united states monetary policy or the measurement of the united states money supply. β money β as defined by m1, m2, or m3, would still be held in accounts at banks and would be reported to the federal reserve through existing reporting mechanisms. if, however, internet payments evolve to the point where digital β coins β or other private electronic money begin to be widely used and circulated like federal reserve bank notes, the potential implications for monetary policy could be much greater. the effect that stored value, whether smart card or computer based, has on monetary policy will in large part turn on the extent to which it shifts the money supply out of the banking sector. when stored value is issued by banks, this is not a real risk. as governor edward kelly noted in a 1996 speech before a cyber - payments conference, bank liabilities incurred through issuing stored - value cards should be included in the statistical reports that banks must currently submit to the federal reserve board. in addition to monetary policy concerns, other factors could trigger the need for the government to resolve the issue of bank versus nonbank issuance of electronic value. for example, as i noted earlier, banks are subject to extensive regulation and supervision at least in part to ensure the safety and soundness of the payments systems. if nonbanks begin to take significant market share away from - 4banks because of an inherently lower cost structure, that raises serious questions about a level playing field and whether banks can ever fairly compete. if nonbanks begin offering through the internet many of the payment services, or alternatives to the payment services, now offered exclusively by banks, it raises a real question about the ultimate value of a bank charter, and what it really means to be a bank. it could be argued, for example, | 0 |
senior management by 2020 ( from our current 44 % ). but achieving these goals isn β t just going to happen. it requires : β’ focussed recruiting β’ active mentoring β’ consistent and comprehensive performance management, and β’ a flexible work environment that values diversity of thought today, each division of the bank knows where it stands and has plans in place to improve, where necessary. so in this sense, the bank has implemented two of the report β s recommendations. the bank has also recognised the importance of executive accountability for diversity, another key recommendation of jayne - anne gadhia β s report. charlotte hogg, our coo, oversees the bank - wide diversity initiatives under our senior managers β responsibilities. the bank β s commitment to diversity cascades through the organisation. our diversity goals now form an explicit part of the objectives of each executive and the management of individual directorates. our recruitment process is open and transparent to all, including for senior appointments. the bank has also been focussing heavily on how to create the right environment to achieve these targets. we are looking closely at what drives performance, differentiates talent, motivates the right behaviours, and creates barriers to success. we have made a strong commitment to flexible working at all levels of the organisation. over 11 % of our staff are employed on a formalised flexible working arrangement. in a recent survey, almost two thirds felt that they had a good balance between their work and personal life. encouragingly three quarters believe that the bank takes diversity seriously. our women in the bank network set up a mentoring programme, which is now in its second year. this is complimented by the work of some of our other thriving staff networks β our bank of england ethnic minority ( beem ) network for example has established a β building bridges β, reciprocal mentoring programme β designed to foster relationships, networks and understanding between senior management and more junior bame colleagues. we also have an lgbt network working hard to promote understanding, increase awareness and break down barriers. our broader leadership training programme emphasises unconscious bias training to ensure diversity can flourish and progress. this training is part of our broader focus on values. values count heavily when assessing performance and reward. all managers β including myself β are assessed by colleagues on their values and behaviours β with direct and explicit feedback. bis central bankers β speeches we are monitoring the effect of all of these changes, including through regular staff surveys. we are aiming for further significant improvement in how our staff perceive the bank β s support | - out from last year β s financial disturbances, against the background of the longer - standing financial and economic fragility in japan - which is of course the largest economy in the asian region. the concern relates in part to the implications for global economic activity ; but it relates importantly, too, to the prospective external payments imbalances within the global economy which will need to be handled very carefully if they are not to lead to trade frictions and / or exchange rate volatility. but attention has also turned to an intensive reappraisal, in all sorts of international fora, of more effective means of preventing, and managing, such situations in the future. it would have been understandable in the light of the asian experience if there had been some turning back from the path towards greater freedom of international capital movements, and there has been some suggestion of this. but on the whole the international debate - in which central banks as well as governments are actively involved - continues to recognise the long - term benefits of free capital movements and the contribution that they can make to global economic prosperity. the mood is to continue cautiously down that path, but to emphasise the need, not only for sound macro - economic policies, which everyone accepts as a sine qua non, but also for steps to accompany capital account liberalisation designed to reduce the risks of volatility. these relate in part to the process of capital account liberalisation, where there is now a good deal more stress on β sequencing β - that is on liberalising potentially more stable, longer - term, capital inflows initially, rather than short - term borrowing denominated in foreign currency. but they relate particularly to three key conditions for living with free capital movements. the first is β transparency β. in a broad sense a need for greater transparency is recognised in relation to public policy, to the relationship between the public and private sectors, to corporate governance, accounting standards, and so on. in a narrower sense there is seen to be a need for more reliable, and greater and more timely disclosure of, financial information generally, at the level of individual borrowing entities, but especially also in relation to countries β true foreign exchange short - term asset and liability positions. this is especially important in relation to the foreign currency liquidity position of the monetary authorities and of the banking system. the general point is that we cannot reasonably expect markets to make a proper assessment of the risks of their investments, including particularly their short - term | 0.5 |
will suggest, the unmet demand for some kinds of services may be quite large. chart 13 makes the point that a very high proportion of household financial assets are held in cash, which suggest that the ability of many households to access the financial system is low. this is, understandably, even higher in rural areas than in the urban ones. bank deposits are clearly providing an alternative to cash, which is a positive development, but the room for improvement is clearly visible in the picture. the reserve bank has been emphasising on expanding the access to the banking system. the broad objective is to ensure access to all households in villages with a population over 2000 ( as per the 2001 census ) by 2012. the extensive use of technology facilitates this by allowing banks to operate virtual branches in the form of an it - enabled business correspondent ( bc ). this model shows some promise as it rolls out across the country, and also some limitations. it is reasonably clear that the bc model is not infinitely scalable. banks have to innovate in terms of their own organizational structures and support systems to increase the viability and sustainability of the model. but, even with all these concerns, it is a good beginning and the generic model, with appropriate adaptations to local conditions, is the most likely way to achieve at least minimal access to the financial system through a basic or no - frills bank account. this is visualized as the beginning of the process ; once the customer is in the system, it can begin to address his or her other needs by adapting existing products or designing new ones. bis central bankers β speeches what other products may interest this new pool of financial service customers? one way to gauge this is to identify the reasons for people to use financial services. chart 14, reporting results from a recent survey of households, provides some important insights on this. ceremonies or social obligations, old - age security, children β s education and meeting emergency needs are four of the most important motivations for accessing financial services. clearly, there is a role for insurance, pension and other long - term savings instruments in advancing the cause of financial inclusion. it is in these segments that penetration is extremely low. chart 15 provides a cross - country comparison of insurance services. it speaks for itself. what is needed here is to develop last - mile delivery mechanisms that can take these products from the large providers in the formal sector to this vast pool of new customers. though volumes are potentially large, individual transactions will be small | and geographically scattered, which can play havoc with costs. organizational structures, whether within the existing providers or independent, have to be developed to accommodate these specific market conditions. from a regulatory perspective, the massive expansion of services brings with it risks and these have to be identified and provided for. i will now turn to the issue of the corporate bond market. to provide a backdrop, chart 16 shows the estimated financial requirements for infrastructure over the 12th plan period, 2012 β 17. over the next five years, over rs. 40 lakh crores or $ 1 trillion are desired to be invested. as i indicated earlier, infrastructure supply is a serious bottleneck and large, efficiently implemented and well managed projects across sectors are imperative. even as these are getting under way, there is an obvious lack of financial channels for them to mobilize resources. so far, the responsibility for financing new investments has fallen predominantly on banks. for reasons relating to asset - liability management and sector exposure limits, the capacity of banks to continue to finance this sector is limited. therefore, alternative channels have to be quickly put into place. the corporate bond market is perhaps the most important of these. for several years, one committee after another has been making recommendations for actions to develop this market. these cut across regulatory domains and this is perhaps one reason why, despite the several steps taken, a critical threshold that would make the market viable was not reached. however, in recent months this is on high priority with both the regulators and the government addressing the remaining binding constraints. the 2011 β 12 union budget took a crucial step in exempting bonds issued by infrastructure development funds from withholding tax. it would be reasonable to extend this facility to bonds issued directly by infrastructure companies. another issue that has been flagged, inter - state differentials in stamp duties, is being addressed by attempting a harmonization of rates across states. to make a large number of bonds attractive to a potentially large domestic investor base in the form of insurance and pension funds, credit enhancement mechanisms which will allow bonds to meet minimum rating requirements for a price are being explored. the more efficiently and reliably this service is delivered, the larger will be the potential pool of investment for these huge institutions. of course, aspirations notwithstanding, the question is whether bond markets can realistically emerge as an alternative channel of financing, for infrastructure certainly, but also for investment in other sectors. chart 17 provides a cross - country comparison. it would appear that even in the context of emerging | 1 |
lisa d cook : moving toward better balance and implications for monetary policy speech by ms lisa d cook, member of the board of governors of the federal reserve system, at the economic club of new york, new york city, 25 june 2024. * * * thank you, barbara. it is a fitting time to be speaking again to the economic club of new york, because this month marks two years since my first federal open market committee ( fomc ) meeting. 1 at that meeting, we kicked off a series of large interestrate increases, all of which i supported, because i am fully committed to bringing inflation sustainably back to our 2 percent target. as i said when i joined the board, i care about both sides of the dual mandate congress gives us, maximum employment and price stability. when inflation was well above target and the unemployment rate was historically low, we prioritized restoring price stability. over the past year, inflation has slowed, and labor market tightness has eased, such that the risks to achieving our inflation and employment goals have moved toward better balance. i think now is a good time to assess how the economy has evolved after rates have held steady at a restrictive level for nearly a year. today, i will provide a progress report on disinflation, give you my outlook on the economy, and share my views on how to ensure that monetary policy brings inflation fully back to 2 percent over time while being attentive to the risk of a slowing labor market. i will conclude my remarks with a few words about my role as chair of the board's financial stability committee. inflation as the u. s. and global economy recovered from the pandemic, rebounding demand came up against still - constrained supply, and inflation rose to the highest level in many years. in the past two years, 12 - month inflation in the pce price index has fallen from a peak above 7 percent to 2. 7 percent in april, and it likely moved a bit lower in may based on consumer and producer price data. however, after rapid disinflation in the second half of last year, progress has slowed this year. my focus remains on making sure inflation is on a path to return sustainably to 2 percent. how do i think about making that determination? to respond, i think it is helpful to look at the underlying data. some price components have clearly improved. food and energy price increases moderated significantly over the past two years as global commodity | the high swiss franc value are not only negative. for example, imported preliminary products for companies and consumer goods for households have become cheaper. finally, swiss firms and their employees have made huge efforts to deal with this difficult situation. overall, the snb expects moderate economic growth of close to 1 % for the year 2012. this modest economic momentum is likely to be reflected in a moderate increase in unemployment over the course of the next few quarters. the expected economic activity is lower than would be the case for normal capacity utilisation. this means there will be no inflationary pressure from this source. our conditional inflation forecast of mid - march 2012 shows that there is no risk of inflation in switzerland in the foreseeable future. the forecast also makes it clear that the threat of a deflationary trend has been kept in check. inflation rates are only temporarily negative. nevertheless, the monetary policy challenges for the snb remain very considerable. i would now like to go into a little more detail on our reflections on monetary policy, particularly with respect to the minimum exchange rate. reflections on swiss monetary policy after being announced on 6 september 2011, the minimum exchange rate was rapidly attained. when our press release was issued, at exactly 10 am, the euro was trading at a little over chf 1. 12. within minutes, the exchange rate exceeded the chf 1. 20 mark. seen from the outside, this may have created the impression that a minimum exchange rate can simply be generated by pressing a button and that such an exchange rate is a normal monetary policy measure which is straightforward to implement. that is far from being the case. a minimum exchange rate is an extreme measure, only to be introduced in a situation of massive overvaluation, with the aim of averting the worst developments. it is neither a panacea capable of solving all the problems facing the swiss economy, nor can it simply be implemented for any desired level, free of any risk. on the contrary. a minimum exchange rate can only be successfully implemented if there is a clear economic justification for its introduction, such as a massive overvaluation resulting from adverse developments on the foreign exchange market. within the framework of a system of flexible exchange rates, it is also important that it be internationally accepted, and that it is not seen as a competitive depreciation. finally, a vital element in the successful implementation of such an exchange rate is the central bank β s credibility, in other words, the belief that the central bank | 0 |
scope of monetary policy. the three i would highlight are the sharp slowdown in labor productivity growth, the increase in income inequality and the low rate of income mobility. i draw attention to the slowdown in productivity growth for two reasons. first, productivity ultimately drives living standards and how people assess their economic well - being. second, beyond ensuring a stable macroeconomic and financial environment, monetary policy can do little to improve productivity growth. 4 / 6 bis central bankers'speeches annual productivity growth has averaged only 0. 7 percent during the past five years, near the lowest 5 - year pace since the early 1980s. there are a number of competing explanations for the slowdown. these include weak capital investment, a flattening out of educational attainment by new labor market entrants, less new business formation, understatement of quality improvements and, hence, output, and fewer ground - breaking innovations. i suspect that all of these factors play a role. what public policy can do to address this issue is to ensure that the economy operates closer to the frontier of what is achievable. for example, more efforts to improve job skills would prove beneficial β through retraining and apprentice programs, and better alignment of education and training with business needs. also, encouraging small business start - ups would help β by removing barriers for entrepreneurs to establish new businesses, and by creating more start - up incubator programs. i also suspect that well - targeted infrastructure spending would be advantageous if it addresses logistical bottlenecks and enables people to commute to areas with good job opportunities. for example, in the new york city metropolitan region, mass transit is old, slow and crowded. as a new jersey resident, i β m still waiting for that second set of rail tunnels into new york city that should have been built years ago. while higher productivity growth could support better living standards, the benefits for low - and middle - income households depend, in part, on how those gains are distributed between business and labor, and on how labor income is distributed across the workforce. moreover, income distribution shouldn β t be viewed as a static concept. it is important that people are able to move upward in income through their careers, regardless of their starting point. over the past several decades, three developments have been discouraging. first, the share of labor income relative to business income has fallen. since 1970, the labor share of gdp in the united states has declined about 5 percentage points. similar | and i are closely watching as we determine the appropriate stance of monetary policy going forward. while lending conditions imposed by banks have tightened since march, the changes so far are in line with what banks have been doing since the fed began raising interest rates more than a year ago. that is, it is still not clear that recent strains in the banking sector materially intensified the tightening of lending conditions. let me end by noting that some have argued that the fed's tightening of monetary policy was significantly responsible for the failures and stress in the banking system. they argue we should have taken this into account when setting policy. let me state unequivocally : the fed's job is to use monetary policy to achieve its dual mandate, and right now that means raising rates to fight inflation. it is the job of bank leaders to deal with interest rate risk, and nearly all bank leaders have done exactly that. i do not support altering the stance of monetary policy over worries of ineffectual management at a few banks. we will continue to pursue our monetary policy goals, which ultimately support a healthy financial system. at the same time, we will continue to use our financial stability tools to prevent the buildup of risks in the financial system and, when needed, to address strains that may emerge. 2 / 3 bis - central bankers'speeches 1 the views expressed here are my own and are not necessarily those of my colleagues on the federal open market committee. 2 see christopher j. waller ( 2023 ), " hike, skip, or pause? " speech delivered at the 2023 santa barbara county economic summit, university of california, santa barbara economic forecast project, santa barbara, calif. ( via webcast ), may 24. 3 / 3 bis - central bankers'speeches | 0 |
is of paramount importance. however, there is still no consensus on operationalizing the edis, on debt mutualization, on setting the minimum requirement for own funds and eligible liabilities, on the features of the fiscal union, and the list could go on. i think that the union should also clarify the fine balance between the consolidated microprudential supervision of banks and national accountability in terms of resolution. the home - host issue has not been dealt with yet. moreover, the european financial architecture is populated with unfinished, incomplete, or untested mechanisms created after the crisis. even so, my message on the reform of the european financial sector is twofold. first, the reform is fundamental for the success of the european project. romania welcomes all the european commission β s initiatives aimed at enhancing supervision, consolidation, and accountability in this area, and we will do our best to help reach a consensus on these proposals during our incoming eu presidency. second, it is also fundamental for the integrity of the european project that euro - area should not be ring - fenced ; the reform should still make it possible for non - euro countries to join euro, when they will be ready, on a level playfield. price stability and financial stability are two sides of the same coin. you can β t have one without the other β this is a lesson that history has recently taught us. and none of them is possible without credible public policies. 1. lipton, david ( 2018 ), β trust and the future of multilateralism β, introductory remarks for the eurofi high level seminar, sofia, bulgaria, april 30, 2018. 2. powell, jerome h. ( 2017 ), " prospects for emerging market economies in a normalizing global economy, " speech delivered at the 2017 annual membership meeting of the institute of international finance, washington, october 12. 3. weidmann, jens ( 2017 ), β monetary policy and the architecture of the euro area β, speech at the deutsche bundesbank's capital city reception, berlin, 29 may 2017 4 / 5 bis central bankers'speeches 4. voinea, l. ( 2018 ), β explaining the post - crisis philips curve : wage gap matters for inflation β, manuscript 5 / 5 bis central bankers'speeches | time was one of the greatest lessons in public finance of the great depression in the united states : when public expenditures were finally in high gear, the four - year great depression was about to end. in hindsight, the deep and painful dislocations of the great depression could have been mitigated if the government had responded more quickly. thus, other countries familiar with this lesson from the great depression are moving alongside the us government to shore up their respective economies, because delayed responses could prove very costly. this includes the philippines. in particular, our government has defined a p330 billion economic stimulus program to sustain market confidence and get the economy moving more robustly. but government alone cannot achieve this. let us therefore work together to support government β s initiatives to keep our economy growing, to continue to grow your business, to protect jobs and to create new employment opportunities for our people. let us be mindful of the possible effects of a downturn to millions of filipinos, especially to those who continue to live in poverty. and even as we come to terms with the reality of a global economic crisis, let us not forget the positive chinese point of view that sees opportunities in every crisis. sure, the challenges are big, but there are equally big opportunities in riding them out. at the end of the day, if we remain united, we shall be able to reap the dividends from our concerted, cooperative efforts together. and so, ladies and gentlemen, today let us renew our commitment to sustain the growth of our economy through better access to credit. once again, on behalf of the members of the monetary board β monetary board juanita amatong, monetary board member raul boncan, monetary board member nellie favisvillafuerte, monetary board member alfredo antonio, monetary board member ignacio bunye and monetary board member peter favila, we thank all of you for accepting our invitation to this forum. mabuhay ang pilipinas! mabuhay tayong lahat! maraming salamat po! | 0 |
cement the importance at the bank of england of low and stable inflation β stressed repeatedly that low inflation β is not an end in itself.... [ it is ] a necessary means to the end of sustainable growth of output and higher living standards β. 4 it β s important that we don β t lose sight of this overriding aim. eddie was equally clear that, in the long run, the best contribution that monetary policy could make to achieving a prosperous and vibrant economy was to deliver enduring price stability. he had seen at first hand the pernicious costs of the high and variable inflation of the 70s and 80s : companies and households unable to budget and plan efficiently ; resources misallocated ; long - term contracts avoided for fear that large swings in inflation would end up biting one party or the other. the value of hard - earned savings eroded. out of that pain and misery emerged a consensus β a hard won consensus β that low and stable inflation was a prerequisite for economic prosperity. more recently, though, there have been some worrying signs that cracks may be appearing in that consensus. a sense that inflation is somehow yesterday β s war. that central banks should focus more on growth. that a period of higher inflation may even aid the recovery. this is dangerous talk. it sometimes feels like we β ve been here before. one of the mistakes made by policymakers in the late 1960s was to allow inflation to get out of control after nearly two decades of price king ( 1997 ), β inflation targeting 5 years on β, speech given at the london school of economics. king ( 1997 ), β changes in uk monetary policy : rules and discretion in practice β, journal of monetary economics. george ( 1999 ), annual cornwall lecture. bis central bankers β speeches stability. as sir alec cairncross, who worked in a host of senior economic roles in the heart of the civil service during this period, put it β... governments in the last years of the 1960s β¦ allowed inflation expectations to develop that proved increasingly difficult to extinguish β ( cairncross 1992 ). there is little doubt that policymakers of that time had a strong aversion to inflation, but they were complacent about the risks posed by further stimulus. it would be irresponsible to repeat the same mistakes again. how do we ensure that the lessons of yesteryear are not forgotten? that a period of relative price stability does not breed complacency? | . importantly, this exit strategy is clear, transparent and open to public scrutiny. openness and transparency have been the cornerstones of uk monetary policy since the monetary policy committee was established in 1997. that has never been more important than now. the inflation target is symmetric. that requires the mpc to set policy in a symmetric way. the committee adjusted monetary policy boldly and decisively on the way down in order to meet the inflation target. and, let me assure you that, when the time comes, we will be prepared to respond with equal vigour on the way back up. | 0.5 |
β speeches normal rate of unemployment is between 5. 2 and 6. 0 percent. the statement noted that these statutory objectives are generally complementary, but when they are not, the committee will take a balanced approach in its efforts to return both inflation and employment to their desired levels. fiscal policy challenges in the remainder of my remarks, i would like to briefly discuss the fiscal challenges facing your committee and the country. the federal budget deficit widened appreciably with the onset of the recent recession, and it has averaged around 9 percent of gross domestic product ( gdp ) over the past three fiscal years. this exceptional increase in the deficit has mostly reflected the automatic cyclical response of revenues and spending to a weak economy as well as the fiscal actions taken to ease the recession and aid the recovery. as the economy continues to expand and stimulus policies are phased out, the budget deficit should narrow over the next few years. unfortunately, even after economic conditions have returned to normal, the nation will still face a sizable structural budget gap if current budget policies continue. using information from the recent budget outlook by the congressional budget office, one can construct a projection for the federal deficit assuming that most expiring tax provisions are extended and that medicare β s physician payment rates are held at their current level. under these assumptions, the budget deficit would be more than 4 percent of gdp in fiscal year 2017, assuming that the economy is then close to full employment. 2 of even greater concern is that longer - run projections, based on plausible assumptions about the evolution of the economy and budget under current policies, show the structural budget gap increasing significantly further over time and the ratio of outstanding federal debt to gdp rising rapidly. this dynamic is clearly unsustainable. these structural fiscal imbalances did not emerge overnight. to a significant extent, they are the result of an aging population and, especially, fast - rising health - care costs, both of which have been predicted for decades. notably, the congressional budget office projects that net federal outlays for health - care entitlements β which were about 5 percent of gdp in fiscal 2011 β could rise to more than 9 percent of gdp by 2035. 3 although we have been warned about such developments for many years, the time when projections become reality is coming closer. having a large and increasing level of government debt relative to national income runs the risk of serious economic consequences. over the longer term, the current trajectory of federal debt threatens to crowd out private capital formation and thus | reduce productivity growth. to the extent that increasing debt is financed by borrowing from abroad, a growing share of our future income would be devoted to interest payments on foreign - held federal debt. high levels of debt also impair the ability of policymakers to respond effectively to future economic shocks and other adverse events. the congressional budget office ( cbo ) reported an β alternative fiscal scenario β ( table 1 β 7, p. 22 ) that assumed that most expiring tax cuts and the medicare β doc fix β would be extended and also that the automatic spending reductions required by the budget control act ( bca ) would not take effect ; under this scenario the deficit would be about 5 percent of gdp in fiscal 2017. if the automatic spending cuts from the bca, however, are assumed to be put in place ( the effects of which are shown in table 1 β 6, p. 18 ) then the deficit would be more than 4 percent in fiscal 2017. see congressional budget office ( 2012 ), the budget and economic outlook : fiscal years 2012 to 2022. washington : congressional budget office, january. this projection is under the alternative fiscal scenario developed by the congressional budget office, which assumes most current policies are extended. see congressional budget office ( 2011 ). the long - term budget outlook. washington : congressional budget office. bis central bankers β speeches even the prospect of unsustainable deficits has costs, including an increased possibility of a sudden fiscal crisis. as we have seen in a number of countries recently, interest rates can soar quickly if investors lose confidence in the ability of a government to manage its fiscal policy. although historical experience and economic theory do not indicate the exact threshold at which the perceived risks associated with the u. s. public debt would increase markedly, we can be sure that, without corrective action, our fiscal trajectory will move the nation ever closer to that point. to achieve economic and financial stability, u. s. fiscal policy must be placed on a sustainable path that ensures that debt relative to national income is at least stable or, preferably, declining over time. attaining this goal should be a top priority. even as fiscal policymakers address the urgent issue of fiscal sustainability, they should take care not to unnecessarily impede the current economic recovery. fortunately, the two goals of achieving long - term fiscal sustainability and avoiding additional fiscal headwinds for the current recovery are fully compatible β indeed, they are mutually reinforcing. on the one | 1 |
such cost efficiencies, t2s will create new opportunities for β value creation β. bis central bankers β speeches t2s will standardise and commoditise settlement. private sector companies will now be in a position to innovate products that add more value for their clients. it will lead to the creation of new products that have not even been thought of today. ultimately, this stimulation to innovation and a higher quality of service could be the real benefits of t2s. the overall theme of the conference is what we envisage for β securities settlement in 2020 : t2s and beyond β. as you well know, the europe 2020 strategy launched by the commission in march 2010 aims at delivering a european economy with high - levels of employment, research and innovation, education, environmental and energy standards, with much less poverty and social exclusion. a much stronger economic governance framework should also ensure closer fiscal integration and sound public finances as a pillar of emu. accordingly, i very much hope that your reflections in this conference will help developing the key features of the securities market infrastructure that we need in 2020 to support our economy, as well as safeguarding financial stability. i hope you enjoy the rest of the conference. thank you for your attention. bis central bankers β speeches | ##ify their investments. second, t2s will be an indispensable tool for banks to optimise their collateral management. it will eliminate the need to hold multiple buffers of collateral across various csds. it will eliminate the need to shift securities across borders in order to use them. the savings in collateral will be very significant. this is, of course, a huge benefit for market participants at a time when demand for collateral is ever increasing. third, t2s will foster harmonisation in the post - trade world. the t2s platform is, of course, not sufficient in itself. but it is a necessary condition. and it will play a crucial catalyst role going forward. the governing council made an initial proposal for t2s back in 2006. after receiving positive feedback from the market, it decided to go ahead with developing the platform in 2008. i want to emphasise that the governing council remains as committed as ever to delivering t2s as a key component of the european market infrastructure, particularly for the purpose of the adequate implementation of the single monetary policy. accordingly, let me reassure you that the governing council will do all it can to make sure that t2s will be a resounding success. i am happy to say that, during the crisis, the current market infrastructures in europe proved their resilience. in the future, t2s will be a core part of europe β s financial market infrastructure. it must, therefore, also be extremely robust and resilient. as a central bank, we have all the incentives to make this so. because t2s is a single platform settling in central bank money, it will further promote the financial stability of market infrastructures. it will provide additional resilience to cross - border settlement, which is still somewhat lacking today. and settlement in central bank money is the safest form of cash settlement. t2s will only settle in central bank money. to be a success, the economics underlying the business case for the project must also be favourable. t2s must deliver the cost efficiencies that we have promised. i am very confident that, in the longer term, t2s will produce significant reductions in post - trading costs. not least because of the new element of competition that t2s will create in the market and its dynamic effects. over time i expect settlement costs to decrease to levels comparable to those in the united states. but even more important than delivering | 1 |
a reaction function that is sufficiently forceful and equally effective in reacting to deviations in both directions. a price stability target defined in such a symmetric manner would help us recover much of the needed policy space and re - empower conventional monetary policy. let me conclude by saying that while a symmetric inflation target and an effective reaction function would help us in achieving our price stability mandate, it would of course be no panacea β it would be no stairway to heaven, but certainly more than only smoke on the water. in other words, it would be one key building block in a broader construct of the strategy review, in order to enable the ecb β s monetary policy to better support sustainable growth and job creation, and also help reach its inflation target in the coming years. i will end here and look forward to your questions. 1 on the pandemics β generally dampening effect on inflation see especially jorda, oscar β sanjay r. singh β alan m. taylor ( 2020 ) : longer - run economic consequences of pandemics, federal reserve bank of san francisco working paper 2020 β 09 : doi. org / 10. 24148 / wp2020 β 09. 2 maritta paloviita β markus haavio β pirkka jalasjoki β juha kilponen β ilona vanni : reading between the lines β using text analysis to estimate the loss function of the ecb. research discussion paper 12 / 2020, 6 july 2020, bank of finland : helda. helsinki. fi / bof / bitstream / handle / 123456789 / 17503 / bof _ dp _ 2012. pdf? sequence = 3 & isallowed = y. 3 christine lagarde, the monetary policy strategy review : some preliminary considerations. speech at the β ecb and its watchers xxi β conference, frankfurt am main, 30 september 2020. 2 / 2 bis central bankers'speeches | olli rehn : eurozone - monetary policy and strategy review speech by mr olli rehn, governor of the bank of finland, at the citi virtual macro forum, 14 october 2020. * * * ladies and gentlemen, it is a great pleasure to speak at the citi 2020 virtual macro forum today. in my opening remarks, let me focus on two topics. first, i will give you a snapshot of the ecb β s monetary policy at the current juncture and, second, i will focus on the ecb β s strategy review that is now underway. according to the ecb β s recent forecast, the eurozone economy will contract by 8 % this year. next year it will rebound to 5 % growth, which will level off to 3 % in 2022. as a consequence, economic activity is foreseen to return to pre - pandemic levels only towards the end of 2022. the covid - 19 crisis has dampened inflationary pressures worldwide. hicp inflation in the eurozone dropped into negative territory in august, with consumer prices declining by 0. 2 % yearon - year. this is mainly due to temporary factors, but the elevated level of economic slack, weak energy inflation and the recent appreciation of the euro will continue to act as headwinds. thus, our baseline projections forecast headline inflation to rise only gradually, i. e. to 1. 0 % in 2021 and to 1. 3 % in 2022. the ecb β s monetary policy is now very accommodative, and so is fiscal policy in the euro area. importantly, monetary policy and fiscal policy now work hand - in - hand and reinforce each other. europe β s recovery fund β next generation eu β will support the recovery, investment and reforms towards the necessary green and digital transformation. the ecb has used a number of instruments to ease financial conditions, thus securing access to finance for households and businesses. these include the pandemic securities purchase programme ( pepp ), targeted longer - term refinancing operations ( tltros ), and securing dollar liquidity for european banks through swap lines with the us federal reserve. through its forward guidance, the governing council has stated that it is ready to do whatever it takes, within its mandate, to maintain price stability and support economic activity across europe in these tough times. ecb president christine lagarde has called it, for good reason, a safety net that will be | 1 |
the crisis reinforced the adverse effects of financial exclusion, resulting in increased burden for those segments of the population that are already vulnerable. thus, influential bodies such as the group of 20 major economies more popularly known as g20 have incorporated financial inclusion in their agendas. in fact, the recent g20 leaders meeting resulted in the creation of a financial inclusion experts group to work on broadening access to a full range of financial services as a strategy to provide the foundation for sustainable growth worldwide. here in our country, we have been putting policies and programs in place to provide both financial inclusion and social protection. in fact, you will be pleased to know that the bangko sentral ng pilipinas is one of the first central banks in the world to have an office dedicated to the pursuit of financial inclusion. as a result, we now have policies that empower strong and capable banks to have a wider scope and scale of operations to make them effective and meaningful providers of financial services to more filipinos. in 2006, for instance, the bangko sentral issued circular 522 authorizing rural banks to offer fcdus or foreign currency deposit unit accounts so that you can take a strategic and active role in the growing remittance business that has since grown into a 17 billion - dollar industry. in 2007, the bangko sentral authorized rural banks to make equity investments in atm networks through circular 563 and engage in limited trust activities under circular 583. in 2008, qualified rural banks were even allowed to participate in select derivatives activities under circular 594. in 2009, the bangko sentral issued circular 649 or the electronic money circular which provides the regulatory framework for the fast - growing electronic money business, where rural banks play a central role. with a wider network of cash in / out agents, you will be able to leverage your existing offices and deliver your financial services to an even broader market with potentially greater efficiency and lower costs. so far this year, we have issued new regulations that significantly broaden business opportunities for rural and cooperative banks. in the first two months, we approved circulars 678 and 680 covering housing microfinance and the micro - agri loan product under which banks are able to manage their microfinance operations better, with a more diversified portfolio and lower risk of business loans applied to agriculture or housing. to further expedite the provision of these services, just two weeks ago, the monetary board approved the rbap - mabs housing microfinance program. through | monetary and financial history, spanish and international alike, under the name β economic history studies β ( more familiarly known as the β red series β ). to date, this collection had solely included papers prepared or financed by the banco de espana. currently, however, with a view to extending and maintaining its continuity, we are assessing opening it up to other research not necessarily financed by the bank. to be added to the foregoing is all the sponsorship and funding activity of associations, universities and royal academies in the field of economic history. actions of a differing nature and scope are involved, giving continuity to our long - standing and intense promotion work. i am particularly gratified to be able to share with you today my satisfaction at the recognition recently granted by the spanish economic history association to the supportive work by the banco de espana. in short, we have been designated as an honorary member of this entity. my thanks to the association but, above all, to those who have made this work possible over the years, and to those continuing it and adding to its prestige today. lastly, allow me to stress another of the grounds for a publication such as that we are presenting today. it is a question of transparency, understood as the possibility of sharing information with society as a whole. as i pointed out in one of my early public appearances as governor of the banco de espana, i consider making high - quality statistical information 4 / 5 available to researchers as absolutely crucial for sound analyses and research enabling better - founded economic policy decision - making. 1 in this respect, we intend in the coming years to pursue various projects that allow these researchers to have access to our statistical information, thereby enabling different avenues of analysis and research of benefit to society as a whole. in conclusion, i would like to reiterate my satisfaction at these initiatives and to thank the efforts and contributions, from both the public and private spheres, of those who have participated in this publication. in some ways, this substantiates the fact that these avenues for sharing information and making it available to society are enormously beneficial for all. thank you. see my β welcome address β for the second annual research conference of banco de espana, 2018, at : https : / / www. bde. es / f / webbde / gap / secciones / salaprensa / intervencionespublicas / gobernador / arc / hdc030918en. pdf. 5 / 5 | 0 |
likely to rise. moreover, the bank stressed the need to send a clear message to the markets that greece is determined to implement a multi - year plan of far - reaching fiscal consolidation and bold structural reforms. * * * the developments that followed confirmed these dire warnings. the economy has entered a vicious circle and there is unprecedented uncertainty, which led to a series of downgradings in greece β s creditworthiness. these downgradings led to a large widening in spreads, resulting in an increase in the cost of government borrowing and debt servicing. this situation, to the extent that it persists, worsens greece β s fiscal position, makes fiscal consolidation even more difficult to achieve, seriously hurts the real economy and the banking system, and refuels the climate of uncertainty, thus exerting a general debilitating effect. the only way out is to restore confidence, by drastically reducing the deficit and the debt and by recovering the competitiveness that has been lost. * * * the crisis of the greek economy is unfolding in a global environment characterised by high uncertainty, in spite of the existing signs of recovery. the recovery of the world economy, proceeding so far at an unsteady step, on the one hand has been supported by accommodating monetary policies and on the other by expansionary fiscal policies ; the latter, however, now increase the risks concerning the sustainability of public finances. these risks in the advanced economies are compounded by : ( a ) the large increases in the fiscal deficits and the public debt ; ( b ) the adverse demographic prospects due to population ageing ; and ( c ) the assessment that a return of potential growth and employment to their pre - crisis levels should not be expected soon. additional risks stem from the fact that public finances are exposed to shocks originating in the markets. the uncertainty about the timing and the intensity of β exit policies β from the fiscal stimulus measures leads to a widening in spreads of government bond yields. therefore, the cost of financing the public debt is expected to rise, while growth rates will be lower than prior to the crisis. the wider the gap between the interest rate on the public debt and the growth rate, the larger the fiscal adjustment needed to halt the upward trend in the public debt - to - gdp ratio. this is why structural reforms are needed in order to boost potential growth. it goes without saying that these remarks apply a fortiori to greece. * * * the crisis that the greek economy is currently experiencing | ##able requirements ; β’ set aside adequate provisions for credit risk ; β’ rationalise their operating costs ; β’ manage available sources of funding flexibly and prudently ; β’ and, more importantly, adopt realistic and prudent medium - term strategies that will allow for consolidation. capital buffers, above the regulatory minimum capital a sound financial condition, effective risk management and the establishment of bigger and more robust formations will be key conditions for enhancing banks β shock absorbing capacity and for unfettered access to sources of funding. in my opinion, in the medium term changes in the banking sector are inevitable. the bank of greece, on its part, will continue to keep a close eye on developments and intervene as necessary to ensure that the next difficult steps can be made in the most effective manner. economic policy in order to address the major challenges, economic policy has been steered toward decisions which, if effectively implemented and enriched with bold structural reforms, will lay sound foundations for the serious and far - reaching effort required. so far, the decisions have mainly aimed to reduce the fiscal deficit and restore market confidence in the future of the economy. as far as the first objective is concerned, the supplementary measures announced in early march are in the right direction and were favourably received by the eu institutions. even after the announcement of these additional measures, uncertainty remained strong. the markets continued to maintain a wait - and - see attitude, as suggested by the subsequent ongoing widening of bond yield spreads. this attitude of the markets is basically due to the serious confidence and credibility deficit that the greek economy still faces. to this, however, one must add the concerns about the competitiveness and the growth outlook of the greek economy, i. e. the parameters which will determine the smooth servicing of the public debt in the future. in other words, the markets still have their attention focused on public debt dynamics. against this background, it is particularly positive that the greek government requested the activation of the support mechanism. it is assessed that the use of this mechanism will play an important positive role in overcoming the crisis, for the following reasons : 1. in the short term, it secures borrowing funds at relatively low cost, alleviates market pressures and contributes to the normalisation of liquidity conditions for the banking system as well. 2. in the medium term, the operation of the mechanism, with the involvement of the european commission, the ecb and the imf, imposes a tighter discipline in respecting time schedules, provides a valuable source of | 1 |
perspectives on these issues. the relevance of transparency and good governance also applies at the corporate level, not least because financial difficulties in large corporations could undermine the well - being of individual financial institutions and markets. this is especially the case in small jurisdictions. now it is a fact that corporations will always know a lot more about their financial position than any outside entity charged with monitoring them, and financial intermediaries are no exception in this regard. this is particularly true at a time when the complexity of financial products and the intensity of cross - market risks are stretching the capacity of central bankers and supervisors to remain fully in control. several recent episodes in the financial world indeed confirm that the innate human predisposition to maximise selfinterest can induce behaviour that is not in harmony with the public interest. the implications of this are two - fold. while rules and regulations continue to play an important role in preventing systemic shocks, they will increasingly have to incorporate incentives and credible deterrents to discourage excessive risk - taking and moral hazard. second, the efforts of central bankers and supervisors need to be supplemented with direct oversight by the stakeholders of financial institutions themselves, be they shareholders, creditors or customers. stated otherwise, good governance and market discipline are becoming at least as important as prudential controls for the well - being of the financial system. that, in turn, calls for a host of other measures ranging from the regular disclosure by the institutions of detailed information about their performance and the adoption of international accounting standards to the enforcement of shareholder rights, the creation of deposit insurance and investor protection schemes and the simplification of judicial procedures. in this regard, i believe that dr summer will be explaining how accession countries score in terms of some of these criteria. eu financial market integration presents new opportunities but also some risks while it is recognised that the well - being of the financial system has come to depend on a host of factors, the regulatory and institutional framework in place continues to play an important role both in crisis prevention and management. the prospect of eu membership has already contributed significantly in this regard, spurring accession countries to evaluate the adequacy of the framework governing the financial sector. perhaps more important is the fact that the on - going harmonisation of rules and practices with eu standards in the area of financial stability will provide market players with an added assurance that this framework will continue to evolve in line with international best practice. this assurance should also facilitate the further development of the financial sector in these countries, as foreign | on the national implementation of the payment services directive. malta stands to gain from sepa. along with the benefits of financial market integration, increased competition and scope for innovation, there is also a strong potential to attract e - commerce payment business and payment factory operations for trans - national corporations. investing in sepa should not, therefore, be viewed as an expense, but rather as a business opportunity that will help banks pre - empt competition law problems, reduce costs and expand in new markets. in time, it may also come to offer new and profitable services, such as e - invoicing and reconciliation. for this to happen, the banks must see to it that their customers understand the advantages offered by sepa and make use of it. the financial crisis has also highlighted the importance of stress tests, which assess an institution β s ability to withstand both institution - specific credit and liquidity risks as well as systemic risks, including adverse macroeconomic conditions. as stated in the bank β s financial stability report, the latest stress test results show that the banks generally have adequate capital buffers and sufficient liquidity to withstand extreme, yet plausible shocks. the tests carried out by the bank should, however, be complemented by parallel tests conducted by individual institutions. in particular, banks should make an in - depth, bottom - up assessment of the potential implications of critical events to identify potential weaknesses at an early stage so as to be in a position to take early corrective measures. this would also serve to reduce the pro - cyclicality of such measures. in recognition of the need for a strong risk management framework, the central bank of malta, in cooperation with the mfsa, has been working with a number of banks on their contingency funding plans and stress testing capacity. a new supervisory regime the lessons that are emerging from the financial crisis will almost certainly change the shape of financial regulation and supervision as we know it. the globalisation of financial institutions and markets, and the associated interdependencies, imply that a regime that has only a narrow institutional and geographic focus will prove inadequate. there is now a heightened recognition of the importance of the macro - prudential dimension of supervision and of the need to have mechanisms in place to address systemic risks, within and across national borders. in this regard, the recommendations contained in the de larosiere report constitute an excellent basis for action. the report distinguishes between micro - prudential supervision ( the supervision of individual institutions ) and macro - | 0.5 |
irma rosenberg : the objective of monetary policy speech by ms irma rosenberg, deputy governor of the sveriges riksbank, at a meeting arranged by a β hman fondkommission, stockholm, 14 february 2006. * * * a discussion has recently taken place in the media on the objective of monetary policy. some have argued that we should have more objectives while others considered that we already work with too many objectives and that this has created a lack of clarity. in my opinion this discussion is a bit misleading. we have one objective : keeping inflation low and stable. however, in our efforts to achieve this objective, we have, like many other central banks, opted to be flexible to avoid exposing the economy to strain. our statutory objective is to maintain price stability. it has been left to the riksbank to decide on the detailed interpretation of this objective. we have defined it as meaning that inflation should be 2 per cent. however, monetary policy affects the economy with a time lag and is simply not precise enough to maintain inflation at a constant 2 per cent. the inflation target includes a tolerance interval of + / one percentage point to underline that temporary deviations are permitted, provided that these are not too large. for further clarity, we apply the principle that in the event of any deviation, inflation should normally be brought back to the target within a two - year period. when we set the interest rate, we must accordingly base our decision on an inflation forecast. in most cases, this two - year horizon provides us with the scope to return gradually to the target without having to apply monetary policy with such force as to create unnecessary fluctuations in the real economy. occasionally in the wake of a major disturbance, there may even be grounds to allow a period of more than two years to return to the target. in such cases, however, we should communicate this clearly. like most central banks with inflation targets, we apply what is usually referred to as a flexible inflation target policy. when we decided at the most recent monetary policy meeting to increase the repo rate, we once again had to take into account the continuing rapid increase in house prices and household debt. this was not because we have a target for household debt or house prices. however, it is important for us to monitor the trend in the housing market, bearing in mind both financial stability and price stability. as far as financial stability is concerned, there are no indications that house prices or household debt constitute a threat | mr. george weighs up the pros and cons of european monetary union speech given by the governor of the bank of england, mr. e. a. j. george, at the bankers club annual banquet held in london on 3 / 2 / 97. i β ve been a follower of jim wolfensohn for the past 20 years, and it is a great pleasure to follow him again this evening. i first came across him when he was an extraordinary investment banker reputedly flying the world with his cello strapped securely in the adjacent seat. his eventual appointment to the presidency of the world bank was inspired. he brings to it an outstanding professionalism. but - as you have heard this evening - he brings to it also a broad humanitarian vision and total commitment to the world bank β s task of improving the lives of people in those parts of the world that still need outside official help with their reconstruction and development. president wolfensohn β s canvas tonight has been global. my own focus will be on europe, and in particular on european monetary union - though it β s fair to say that emu could well have significant consequences for the global economy. this country is widely regarded elsewhere in europe as being bloody - minded and even obstructive about monetary union, largely because there is indeed an intense, and often impassioned, debate going on here about the pros and cons. and so there should be. it β s a momentous enterprise, with potentially enormous implications for europe β s political and economic future. the simple fact is that there are real risks as well as real potential benefits in monetary union ; and it would be foolhardy just to assume that the enterprise, if it is embarked upon, will inevitably bring about the political harmony and economic prosperity across europe that anyone in their right mind wants to see. it is hugely important to all of us that europe β s political leaders stand back and weigh the risks as well as the potential benefits, dispassionately, before any irrevocable step is taken. if the debate in this country encourages open debate elsewhere then we will be doing a service to europe as a whole. it is something of a fashion these days to describe economic conditions in terms of fairy stories. i have heard the steady expansion in the united states, and more recently in this country, described as the β goldilocks β condition - with the economic temperature not too hot, not too cold, but just right. in the | 0 |
##tagion effects from asia, the influence of developments in u. s. financial markets, or home - grown causes. whatever the answer, and the answer may be all of the above, this phenomenon illustrates the interdependencies in today β s world economy and financial system. perhaps it was inevitable that the impressive and rapid growth experienced by the economies in the asian region would run into a temporary slowdown or pause. but there is no reason that above - average growth in countries that are still in a position to gain from catching up with the prevailing technology cannot persist for a very long time. nevertheless, rapidly developing, free - market economies periodically can be expected to run into difficulties because investment mistakes are inevitable in any dynamic economy. private capital flows may temporarily turn adverse. in these circumstances, companies should be allowed to default, private investors should take their losses, and government policies should be directed toward laying the macroeconomic and structural foundations for renewed expansion ; new growth opportunities must be allowed to emerge. similarly, in providing any international financial assistance, we need to be mindful of the desirability of minimizing the impression that international authorities stand ready to guarantee the liabilities of failed domestic businesses. to do otherwise could lead to distorted investments and could ultimately unbalance the world financial system. the recent experience in asia underscores the importance of financially sound domestic banking and other associated financial institutions. while the current turmoil has significant interaction with the international financial system, the recent crises would arguably have been better contained if long - maturity property loans had not accentuated the usual mismatch between maturities of assets and liabilities of domestic financial systems that were far from robust to begin with. our unlamented savings and loan crises come to mind. these are trying days for economic policymakers in asia. they must fend off domestic pressures that seek disengagement from the world trading and financial system. the authorities in these countries are working hard, in some cases with substantial assistance from the imf, and the world bank, and the asian development bank, to stabilize their financial systems and economies. the financial disturbances that have afflicted a number of currencies in asia do not at this point, as i indicated earlier, threaten prosperity in this country, but we need to work closely with their leaders and the international financial community to assure that their situations stabilize. it is in the - 4interest of the united states and other nations around the world to encourage appropriate policy adjustments, | the preparation of consolidated financial statements β while the sharing of information between jurisdictions will be essential to understanding their overall organisation as well as interdependencies between entities. the second deficiency concerns the ecosystem of what is often erroneously referred to as " decentralised " finance ( defi ) β what we prefer to call " disintermediated β finance. the acpr is pioneering thinking in this area with the publication in april of a document that outlines possible regulatory frameworks for defi. the very successful public consultation process ended at the beginning of june. it was widely reported upon and generated almost 40 responses of high technical quality from both french and international players, including " established " players and new entrants. we will be publishing a summary of these responses in the autumn. overall, these contributions confirm our understanding of this topic and the regulatory avenues taking shape on each of the three defi'floors': ( 1 ) ensuring the resilience of the blockchain infrastructure β albeit a public one β through security standards ( 2 ) certifying smart contracts, even if this raises a number of operational issues, and ( 3 ) regulating defi entry points to protect users. so yes to the innovation brought by digital assets and defi - which is, let me repeat, very welcome in paris - but not at the cost of less regulation, which would - as we have seen elsewhere - work against the interests of the players themselves. ii. digitalisation of currency and payments : illustration of innovation partnership approach this brings me to the more forward - looking recipe, which provides a second insight into the dynamic interdependence between regulation and innovation, and between the public and private sector. private innovation is both crucial and irreplaceable but central banks also have creative dna, and many innovations page 4 of 6 are deployed within a partnership framework. money is a perfect illustration. for centuries, the coexistence of central bank and commercial bank money has structured the retail payment landscape. we can all physically pay with central bank money, using cash, or with commercial bank money, using non - cash payment instruments such as cards. however, the rapid digitalisation of payments is leading to a rethink : as we become fully digital societies, should central bank currency be the only thing to remain in paper format? i imagine that two centuries ago, certain people had major doubts about issuing banknotes - a major innovation at the time - alongside gold and silver coins. essentially | 0 |
, tailoring regulations based on bank size and business model and local conditions, and minimizing burden. for example, the anpr proposes using a federal financial institutions examination council online census data system 2018 and u. s. census bureau american community survey 2014 - 2018. a tract is designated as distressed if it is a nonmetropolitan middle - income tract that meets one or more of the following triggers : ( 1 ) an unemployment rate of at least 1. 5 times the national average ; ( 2 ) a poverty rate of 20 percent or more ; or ( 3 ) a population loss of 10 percent or more between the previous and most recent decennial census or a net migration loss of 5 percent or more over the five - year period preceding the most recent census. a tract is designated as underserved if it is a nonmetropolitan middle - income tract that meets criteria for population size, density, and dispersion that indicate the area's population is sufficiently small, thin, and distant from a population center that the tract is likely to have difficulty financing the fixed costs of meeting essential community needs. a nonmetropolitan middle - income tract is defined as a tract with median family income of more than 80 percent or less than or equal to 120 percent compared to a statewide nonmetropolitan area median family income. - 7complementary set of metrics to separately evaluate retail - lending activity ( like mortgage lending ) and community development financing activity ( like investing in affordable rental housing ). looking at these activities separately helps to ensure that we are comprehensively evaluating bank activity and that we are taking both retail and community development activity into consideration. third, we also hope the anpr will provide a foundation for a consistent approach that has broad support among stakeholders. stakeholders have expressed strong support for the agencies to work together to modernize cra. by reflecting stakeholders β views and providing a long public comment period, we believe the anpr provides the basis for the agencies to establish a consistent approach that has broad support. as we embark on cra reform to strengthen the law β s core purpose, we have a unique opportunity to design a regulation that better addresses the needs of individuals and communities in indian country. there are several proposals in the anpr that i would like to highlight that advance that goal. first, we have specific proposals in the anpr that would allow banks to receive credit for eligible cra activities in indian country, even when those activities are | is important to give a detailed report of when such factors are taken into account. this is a strategy the riksbank follows. so far, the riksbank has not found reason to take account of what happens beyond the normal forecast horizon when formulating its monetary policy, although it does normally produce surveys of the economy for longer periods. however, i have argued on several occasions in 1999 and 2000 that there was reason to raise the instrumental rate, taking into account the effects in a longer term perspective. nevertheless, asset prices should not be included in the formulation of monetary policy targets. there is otherwise a risk that the central bank would counteract adjustments that were fundamentally motivated. this would reduce the efficiency of the resource allocation and probably subdue growth. other measures in addition to price stability, most central banks have a responsibility for financial stability. according to a narrow definition, financial stability is equal to a lack of crises in systemically - important banks. the banks have important functions with regard to the payment system and the supply of capital. it is easy to see that without an efficient payment system and capital supply the economy would be unable to function. monetary policy would have no effect in this situation. large shocks to the functioning of the financial system would also reduce the effectiveness of monetary policy, as the transmission mechanism is affected by the efficiency of the capital supply and the mediation of payments. the fact that there are close links between the central banks'two tasks becomes particularly evident when the effects of financial bubbles are discussed. an important part of the process leading up to large imbalances is credit granting by the banks. the fact that households and companies demand loans for increased consumption and investment when asset prices are rising is one thing, but it also requires that the banks increase their supply of loans. if the banks have well - developed risk systems, and rules and supervision are designed to motivate the banks to utilise them, the risk of exaggerated lending will be reduced. the way that capital adequacy rules are designed and applied is of great significance. the new capital adequacy rules, basel 2, are aimed at reflecting to a greater extent than now the risks the banks actually take. however, valuating credit risks over a whole economic cycle is very difficult. the indications are that both internal credit risk models and credit rating agencies tend to underestimate credit risks during an upturn in economic activity and to overestimate them during a downturn. there is thus a risk that | 0 |
about 6. 5 % to about us $ 10. 5 trillion by 2010. all these represent substantial financial sector opportunities for deutsche bank in asia, including trade & infrastructure financing and wealth management. singapore, being at the heart of asia, provides global financial institutions a unique location to harness the growth opportunities from this region. singapore offers a stable and trusted environment for investments and businesses in the region. companies in singapore are supported by a robust network of infrastructure as well as an educated workforce, and coupled with open and consistent government policies. we strive to keep our markets pro - business and to keep operating costs competitive. being cost - competitive is not sufficient by itself. we need to make sure that singapore continues to stay at the confluence of business opportunities. to facilitate business reach into major markets, singapore has signed a series of free trade agreements with many of our trading partners include the us, india, japan, korea, vietnam as well as beginning free trade discussions with china and the gulf countries. i am certain these strong ties that singapore has built can only facilitate deutsche bank's business expansions in this part of the world. conclusion on that note, let me again extend my heartiest congratulations to deutsche bank on its 35th anniversary in singapore. we appreciate your commitment to singapore and hope that singapore will continue to play an important role in your growth in asia and the world. thank you. | from year to year, and to explore even quite unlikely scenarios. if the stress tests do not evolve, they risk becoming a compliance exercise, breeding complacency from both supervisors and banks. we might also, inadvertently, encourage the development of a banking system where, over time, all banks would look much alike rather than the banking system we want and need, one with diverse institutions with different business models. we simply can β t let these things happen. the purpose of today β s gathering is to help us think about how to ensure the tests continue to foster a dynamic banking system, financial stability, and a healthy and growing economy. we have invited a wide range participants β fellow regulators, bankers, analysts, academics, and community groups β with diverse perspectives. because we do not claim a monopoly on knowledge or wisdom, we have invited many who have disagreed with us in the past. i strongly believe that diverse perspectives and healthy debate will sharpen our thinking and lead us to better answers. 1 / 2 bis central bankers'speeches i β m sorry i β m not able to be with you today. and i want to particularly thank all of the speakers, discussants, and other participants for helping us grapple with the challenges of ensuring that tomorrow β s stress tests remain as effective and vigorous as they are today. thank you. 1 1 the stress tests were announced in february 2009, and the results were released in may 2009. see, respectively, board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2009 ), β agencies to begin forward - looking economic assessments, β joint press release, february 25 ; and board of governors ( 2009 ), β federal reserve, occ, and fdic release results of the supervisory capital assessment program, β press release, may 7. 2 / 2 bis central bankers'speeches | 0 |
various entities beyond geographical limitations. the digital world, although not something that is peculiar to metaverse, has the potential to create new combinations of businesses and consumers. as consumers will be able to access a variety of businesses without being limited by where they live, they will find it easier to receive the services that best meet their needs. such an environment will incentivize businesses to design and launch brand - new, superior services. as businesses whose activities were once limited by geographical conditions are now able to access a broader market, they are also more likely to be able to commercialize services which meet the niche demands of consumers, thereby providing consumers with more choices. such a possibility is also the case for financial services β a greater variety of financial services will be provided to more people through digital channels. for example, some firms have already 1 / 3 bis central bankers'speeches launched internet - based multilingual remittance services for foreigners working or studying in japan. as a decline in japan β s population is anticipated going forward, especially in nonmetropolitan areas, there will be a growing need for digital technology as a means of providing financial services in underpopulated areas. one thing to keep in mind is that it is difficult, nor is it right, for all financial businesses to provide homogeneous digital services to consumers. there is no homogeneity in the ability of businesses to offer digital services, nor in the degree to which consumers accept digital services. in addition, consumers are not homogeneous in what they look for in services. we can expect to see more and more new combinations of consumers that actively use digital services and businesses that cater to their diverse needs. that being said, it is also important there are businesses that offer services tailored to the needs of consumers that prefer non - digital services. by strengthening the combination of consumers and businesses through digital channels, our society as a whole should not overlook various potential needs. this in turn is likely to lead to an increase in the japanese economy β s growth potential. it is essential to have global perspectives in advancing digital services. it is a good thing that businesses provide finely - tuned services for the specific needs of domestic customers. however, potential business areas may not be expandable if services are optimized to be competitive only in the japanese market without taking into account global technical and societal trends β this is the so - called galapagos syndrome. this would make it difficult for businesses to improve services by incorporating global trends or to evolve services | . for example the bank lent Β£61. 5bn to rbs and hbos in 2008 - 9, and its market - wide special liquidity scheme peaked at Β£185bn in 2009. more recently, the balance sheet expansion has primarily reflected outright asset purchases and long - term lending schemes of unprecedented scale and duration, designed to deliver monetary stability when interest rates are close to zero. other major countries have seen increases of similar scale : chart 3 for example compares the expansion in the bank β s balance sheet with that of the us federal reserve. these expansions, though primarily focused on maintaining monetary rather than financial stability, are arguably further examples of the central bank as firefighter : injecting liquidity when other market - based channels are blocked. chart 4 shows how closely the increase in the size of the bank β s balance sheet mirrors the decrease in the scale of sterling lending to households and firms by uk banks in recent years : a strikingly similar picture to the stylised relationship in chart 1. for a discussion, see for instance ian plenderleith β s review of the bank of england β s provision of emergency liquidity assistance in 2008 β 09 ( http : / / www. bankofengland. co. uk / publications / documents / news / 2012 / cr1plenderleith. pdf ). see john, s, roberts, m and weeken, o, β the bank of england β s special liquidity scheme β ( http : / / www. bankofengland. co. uk / publications / documents / quarterlybulletin / qb120105. pdf ). all speeches are available online at www. bankofengland. co. uk / speeches chart 4 : uk central and commercial bank chart 5 : permanent shift in the bank β s firefighter role? balance sheets risk tolerance private financial system percentage of annual nominal gdp financial institutions - lending to private non - financial sector ( a ) bank of england ( b ) open for business unconventional central banks mp normal conditions liquidity crisis degree of systemic stress sources : bank of england, ons ( a ) data as at february. sterling net lending to non - financial corporations and household sector. ( b ) data as at february. final data point shows the latest published balance sheet data, at 29 february 2016, plus the increase in the loan to the asset purchase facility since this time. the financial instruments underpinning these expansions tend not to be particularly complex when | 0 |
##s are invariably entered in passbooks / statements of account and they adhere to the prescribed monthly periodicity while sending statement of accounts. β’ it has been clarified to banks that payment to the survivor / nominee of a deceased depositor where there is a valid nomination or where the account has been opened with a survivorship clause is a valid discharge of liability provided inter alia it has been made clear to the survivor ( s ) / nominee that he would be receiving the payment from the bank as a trustee of the legal heirs of the deceased depositor, i. e., such payment to him shall not affect the right or claim which any person may have against the survivor ( s ) / nominee to whom the payment is made. in such cases insistence on production of legal representation is unwarranted and would, invite serious supervisory disapproval. in such case, therefore, while making payment to the survivor ( s ) / nominee of the deceased depositor, the banks have to desist from insisting on production of succession certificate, letter of administration or probate, etc., or obtain any bond of indemnity or surety from the survivor ( s ) / nominee, irrespective of the amount standing to the credit of the deceased account holder. β’ in case where the deceased depositor had not made any nomination or for the accounts other than those styled as " either or survivor " ( such as single or jointly operated accounts ), banks have been told to adopt a simplified procedure for repayment to legal heir ( s ) of the depositor keeping in view the imperative need to avoid inconvenience and undue hardship to the common person. in this context, banks may, keeping in view their risk management systems, fix a minimum threshold limit, for the balance in the account of the deceased depositors, up to which claims in respect of the deceased depositors could be settled without insisting on production of any documentation other than a letter of indemnity. β’ in the case of term deposits, banks are advised to incorporate a clause in the account opening form itself to the effect that in the event of the death of the depositor, premature termination of term deposits would be allowed. the conditions subject to which such premature withdrawal would be permitted may also be specified in the account opening form. such premature withdrawal would not attract any penal charge. β’ in order to avoid hardship to the survivor ( s ) / nominee of a deposit account, banks are advised to obtain appropriate agreement / authorization from the | 2 percent. our ability to deliver on that goal depends importantly on being able to separate the short - term effects of temporary events from longer - term structural shifts in the economy. the pandemic experience abruptly changed the lives of most americans and their families, and it has altered many long - standing economic patterns that policymakers have relied on to interpret economic developments. one example of this change is the major shift in the composition of spending by american consumers that we've seen in the past few years. in the decades before the 1 / 2 bis - central bankers'speeches pandemic, we observed a slow but steady decline in the share of aggregate consumer spending that was composed of goods and a corresponding increase in the share of services in total spending. in the first two years after the onset of the pandemic, the balance of spending moved back substantially toward goods and away from services, though this movement wasn't particularly surprising given the lockdowns and the fact that so many businesses in the services sector were shut down. what has been somewhat surprising, however, is that the relative strength in goods spending has persisted, rather than reverting to its pre - pandemic trends. this pattern we see in the u. s. is also unusual relative to other advanced economies, where the composition of goods versus services spending appears to have returned to historical norms. there are a number of potential explanations for these newly emerging spending patterns - some that would likely be temporary, and others more lasting. for example, the strong sales of computers, televisions, and video game consoles this year might reflect some ongoing pent - up demand following earlier supply shortages, or they might reflect a more permanent change in preferences for these goods due to the greater amount of time many of us are spending at home. given their varied experiences and leadership roles in sectors including retail, hospitality, and health care, i am sure that our panelists - and, indeed, all of you in the audience as well - have observed these and other changes in your own lives, your businesses, and your communities since the pandemic. sharing those observations during today's discussions will help us do our best as policymakers to promote a strong and vibrant economy. so with that, i would like to say thank you again, tom, for hosting this fed listens event and for the opportunity to be part of this discussion. 1 the views expressed here are my own and are not necessarily those of my colleagues on the federal reserve | 0 |
necessarily reflect those of the federal open market committee ( fomc ) or others in the federal reserve system. economic outlook let me begin by saying that despite the challenges and uncertainties we β ve faced since the pandemic took hold, the economy is now positioned to grow quickly. in fact, with accommodative financial conditions, strong fiscal support, and widespread vaccinations, i expect that the rate of economic growth this year will be the fastest that we β ve experienced since the early 1980s. and that β s not only a forecast β we are already seeing signs of this pivot to strong growth in the economic statistics, as i β ll discuss in a minute. if this sounds like good news, that β s because it is. but robust economic growth this year by itself isn β t enough to achieve the truly strong and full economic recovery that we are aiming for. we are still far from our goals of maximum employment and price stability, known as the fed β s β dual mandate. " 1 / 3 bis central bankers'speeches to inform our decision - making, we consider a broad range of factors that help us understand developments affecting economic growth, labor markets, and inflation. i β ll start with the most common measure of the overall economy : gross domestic product, or gdp. i mentioned that i expect gdp growth this year to be the fastest in decades. specifically, i see inflation - adjusted, or real, gdp increasing around seven percent this year. this is welcome progress after the toughest period for the economy in living memory and a winter when the pandemic was particularly severe, and the economy suffered as a result. despite the truly devastating effects of the pandemic on employment, recent job growth is the strongest it β s been since last summer. over 900, 000 jobs were added in march, and i am hopeful that we will see very strong job gains over coming months as the economy continues to reopen. it is very encouraging to see people getting back to work and to see these gains starting to be more widespread, including in the sectors and regions that were hit hardest by the pandemic. but, even with the gains that have occurred, let β s not forget that there are about eight and a half million fewer jobs today than before the pandemic. to put that number in context, this is a shortfall similar to what we saw at the worst point of the aftermath of the great recession. this means we will need big | central bankers'speeches | 1 |
. concerted efforts by banks will be needed if the benefits of transparent and competitive pricing are to reach every user of the foreign exchange markets. 20. as derivative markets are liberalized, market conduct needs to be strengthened through robust assessment of product suitability and user appropriateness. regulatory requirements in this regard are being reviewed in consonance with the overall changes to the regulatory approach. ensuring resilience and safety 21. financial market infrastructure in india has remained resilient even during various financial crises. learning from international episodes of market failure, several further initiatives have been taken to ensure continued resilience. 22. fair market conduct is critical to ensure efficient functioning and preserving trust in the financial ecosystem. hitherto, conduct codes prescribed by market bodies like fimmda and fedai guided participants in the financial markets. to supplement and strengthen these, a regulatory framework for market abuse has been put in place. 23. the reserve bank has been taking measures to implement the g20 over - the - counter ( otc ) derivatives market reforms. in line with global trends, electronic trading platforms ( etps ) have been brought under regulatory purview to ensure efficiency of operations and address systemic risks. a draft framework for variation margin for otc derivatives aimed at reducing counterparty risks from non - centrally cleared derivatives, has been recently issued. 24. global efforts are underway to put in place a legal entity identifier ( lei ) which uniquely identifies financial market participants and enables aggregation of risks. reserve bank has also mandated the use of the lei for participants in the markets it regulates. in fact, we are one of the few countries that has implemented lei beyond derivative markets to cover transactions in government securities and money markets as well as the credit market ( large loans ). 25. a key issue which has been engaging global attention is the transition from the libor to alternate reference rates. in india, several measures have been taken to make financial benchmark processes more transparent and robust. most recently, the administrators of significant financial benchmarks were brought under regulation to ensure robust governance frameworks and process controls. these reforms will stand us in good stead as we prepare ourselves for the libor transition. the indian banks β association has been working closely with market participants to facilitate the transition to alternate benchmarks and create customer awareness. achieving a smooth transition from a benchmark entrenched in the financial system will require significant efforts from all stakeholders. 4 / 5 bis central bankers'speeches iv. conclusion 26. | direction, we have reduced the periodicity of the nbfc supervision to 12 months from 18 months earlier. we expect the board of directors of companies themselves to act diligently and take necessary action based on reserve bank β s supervision reports. 26. further, our objective is to harmonise the liquidity norms between banks and nbfcs, taking into account the unique business model of the nbfcs vis - a - vis banks. in this context, the final guidelines on the liquidity risk management framework which we have proposed recently will be issued shortly. 27. let me also make a reference to urban co - operative banks ( ucbs ). our experience suggests that the board of directors of ucbs require greater expertise and skill to conduct banking business professionally. the reserve bank is in the process of issuing guidelines on this issue. a need is also felt for establishment of an umbrella organisation for ucbs which may extend loans and refinance facilities, setup it infrastructure and provide support for capital and liquidity. the structure, functions and the regulatory guidelines of this organisation are being examined by the reserve bank. mergers and consolidation in the sector will also help in reducing operating costs, encouraging greater risk diversification and economising capital. we propose to put in place a mechanism for encouraging voluntary mergers in the sector through appropriate incentives. we also propose to create a centralised fraud registry for ucbs. 28. i have highlighted several issues in the banking and non - banking sectors. a sound and resilient financial system is a prerequisite for a modern economy that involves all sections of its society in sharing equitably the benefits of economic and social progress. as you would know, reforms are an ongoing process. the reserve bank will endeavour to be proactive in its approach. in the fast - changing financial landscape, we will continue to be watchful to the emerging challenges and respond to them appropriately to ensure a resilient and robust financial system. 1 to be implemented from april 1, 2020 5 / 6 bis central bankers'speeches 6 / 6 bis central bankers'speeches | 0.5 |
value payment system launched on 30 june 2005 and introduced nationwide has significantly improved the payment methods of rural credit cooperatives and contributed to providing a level playground for the rural credit cooperatives. this pilot project of bank card services tailored for migrant workers is another important measure by the pbc to speed up rural financial infrastructure building and increase competitiveness of rural credit cooperatives. in recent years, thanks to the efforts of many parties, bank cards have seen rapid development in china. with issuance increasing significantly, card acceptance environment and payment function improving continuously, band card has become the most frequently used means of non - cash payment. but the development has not been evenly distributed among regions ; therefore we have always attached importance to introducing this modern payment instrument to rural areas and enabling farmers to benefit from it. this pilot project in guizhou represents a business innovation that offers migrant workers the convenience of withdrawing their deposit from a different location. it also helps broaden the business scope of bank card operating institutions such as card issuing banks, rural credit cooperatives and china union - pay co. ltd, brings a win - win situation for all and promotes a rapid development of the industry. this tailored service effectively offers another way for migrant workers to send money to their home town. according to statistics, there are more than a hundred million migrant workers in mainland china that produce fund flow totaling several hundred billion yuan between urban and rural areas each year. the flow is expected to increase by dozens of billion annually in the future. at the moment, the fund remittance system is not fully developed for migrant workers as the fund transfer mode is not diversified and takes a long time. the need of these workers for a convenient, safe and rapid way of transferring fund is yet to be satisfied and many of them have to personally carry large amount of cash home. with the opening of tailored bank card service, rural migrant workers can transfer the fund deposited at their place of work to the rural credit cooperatives at their hometown and withdraw cash at the rural credit cooperatives with a swipe of card, in a matter of several seconds. this not only offers a new way of fund transfer, but also helps migrant workers use card more than cash and build a socialist new countryside. comrades, the pilot project of bank card services tailored for migrant workers is of far - reaching significance. we should look at this project from the strategic point of serving the people and the economy in the rural areas and explore, through the project, effective ways and experiences of rural bank | a lack of stability orientation in other policy areas. our task today is therefore to build on our strengths, to take what has worked and to reinforce it. this does not require that we map out an entirely new vision for europe. it requires that we complete our original vision β to fulfil the economic and monetary union ( emu ) based on price stability that we set in motion in 1999. where europe works so what has worked well in europe? first and foremost, the single market supported by the single currency. bis central bankers β speeches the benefits of having a single market and a single currency have been proven, especially in this country. germany β s trade with the rest of the euro area increased from around 25 % of gdp in 1999 to almost 40 % of gdp in 2012. and contrary to a popular perception outside of germany, its trade with its euro area partners is now broadly balanced. similarly, almost 65 % of foreign direct investment in germany now comes from the euro area, and half of german foreign direct investment goes to other euro area countries. over this period, value chains have also extended across europe. on average, around 40 % of foreign value added in euro area exports comes from other euro area countries. this means that increasingly we can talk about goods being β made in europe β β with the german mittelstand standing at the centre of those supply chains. this economic deepening means that it makes less and less sense to think of competitiveness in terms of countries β or of countries being better off alone. each eu country, even germany, is too small to get along in a globalised world. it is connections between firms across europe that will create our industrial strength and competitiveness in the future. and by the same token, the success of german firms is an asset to the rest of europe. our single currency, the euro, has been vital in reaping the gains of the single market. and it has put an end to competitive devaluations and trade wars between our countries. a key condition supporting this process of economic integration has been price stability. the ecb has delivered price stability continuously since 1999. and we will do so in the future. we have been successful in delivering price stability because we have a clear alignment of objectives and instruments β what is called by economists the β tinbergen principle β after the dutch economist jan tinbergen. we have a primary objective of euro area price stability that is established in the eu treaty. and we have | 0 |
be on everybody β s mind. in my speech today, i will talk mostly about these fears as they present themselves in europe, focusing on some of the economic factors behind the current surge in populism. my main message is that protectionism and confrontational politics pose a threat to our security and our welfare. they would divide our villages and weaken them. but our security and our welfare would be threatened just as much by sticking to the established regime of international trade and cooperation. that would mean overlooking the fact that economic change creates winners and losers in the village, thereby frustrating those who have lost the most. we need to find a middle way. 1 / 6 bis central bankers'speeches 2. election times : the euro area economy and rising populism so let β s start with europe β s current economic condition. since the financial crisis, the pace of recovery in the euro area has been slower than it has been in the united states, not to mention the emerging economies. lately, however, there have been signs of a broad economic recovery. for the euro area, recent figures held a positive surprise β with sound gdp growth of 0. 5 % for the first quarter of 2017. unemployment stood at 9. 5 % in march, down from its peak of 12 % in 2013. but a recent study has shown that the labour market in the euro area is in worse shape than the official job figures suggest, with workers unlikely to see real increases in pay because of the level of underemployment. 1 a measure of β slack β in the labour market indicates that about 15 % to 18 % of the euro area workforce are without jobs or would like to work more β which is nearly double the official unemployment rate. underemployment is even growing in weaker labour markets, such as those in france and italy. the still weak labour market in many regions of the euro area is one of the gravest ongoing consequences of the recent financial crisis and an indication that the recovery is still weak. this is particularly true with respect to the high level of underemployment in peripheral regions and among young people. thus, while the recent growth figures make the euro area economy look increasingly healthy, it becomes clear on closer inspection that a lot still remains to be done in order to move onto a sustainable, integrative path of prosperity. and that may already give you some indication as to why protectionism has been on the increase. ever since the uk vote for brexit | mimics previous fomc actions ; and fifth, a first - difference rule that is based on academic work of athanasios orphanides and is designed to take into account the imprecision and uncertainties of our measurements of the level of the output gap or slack and the underlying or steady state real rate of interest. 4 i have plotted the outcome of this exercise in figure 1. so what can we take away from this picture? first, all the rules suggest that liftoff of the funds rate from the zero bound should occur next quarter. this is considerably sooner than many seem to be expecting. see the appendix for the precise mathematical formulations of each of these rules and the relevant references. bis central bankers β speeches second, we can also see that although the rules point to policy being tighter, they do present somewhat different profiles of the future path of interest rates. the taylor 93 and taylor 99 rules have a steeper path over the next several quarters than the other rules. the primary reason for this is that both of these rules are playing catchup as they would have had liftoff occur earlier. after catchup, they increase more slowly. this dispersion in the pace of tightening also reflects model uncertainty. but ignoring or dismissing the rules does not avoid the problem such uncertainty poses. robust rules, such as the first - difference rule, tend to have better outcomes on average across models. third, we see that three of the policy paths are not that different from each other. taylor 93, taylor 99, and the performance based rules tend to converge to between 2. 5 and 3. 0 percent by mid - 2015 and remain close thereafter. my own assessment of appropriate policy is similar to that described by the first - difference rule. however, my point is not to decide which path is correct, but to illustrate how such benchmarks can be useful for communications. for example, the exercise might suggest that policy choices that fall outside the bounds of these rules should be viewed with some caution. that does not mean they would be wrong but they would require careful and substantial discussion and justification. even for policy choices that might fall within the bounds, the exercise can provide meaning, quantitative and qualitative, to phrases such as rates are expected to be β lower than normal β. another way of highlighting the uncertainty surrounding the future path of policy is to consider different paths for the economy. consider figure 2. here i employ the first difference rule but consider the implications of a stronger and a | 0 |
5, 4 per cent in the fourth quarter of 2005, real value added by the mining and quarrying industry decreased at an annualised rate of 2, 9 per cent during the first quarter of 2006 due mainly to declining gold production. however, growth in the real value added in manufacturing recovered significantly in the first quarter as other sectors such as construction, trade and other services remained extremely buoyant in the first quarter of 2006. the real value added by the nonagricultural industries ( excluding the impact of the volatile agriculture industry ) for the first quarter of 2006 increased by 4, 7 per cent compared with the fourth quarter of 2005. importantly for our members, the manufacturing sector is in an expansionary phase. the seasonally adjusted pmi for may, released this past week, showed the manufacturing sector expanded for the third consecutive month from a level of 54, 3 in april to 57, 6 in may. some of the components that strengthened include the business activity component, new sales orders and suppliers β performance. however, the pmi indicates that inventories fell from april β s level. and indications are that inventory investments in the manufacturing sector slowed in the fourth quarter of last year partly because of low crude oil imports and problems with the change to unleaded petrol. many of these areas affect the members of your association but i am sure you are generally satisfied with the economy β s performance, thus far. growth in real gross domestic product in south africa is expected to remain above the 4 - per - cent level for this year as a whole, driven primarily by the robust trend in domestic expenditure. according to the april 2006 reuters consensus forecasts, the south african economy is expected to grow at 4, 5 per cent in 2006 and 2007, and by 5, 0 per cent in 2008. in its budget review, the national treasury expects economic growth of 4, 9 and 4, 7 per cent for 2006 and 2007, respectively. the strong growth momentum in household consumption expenditure and gross fixed capital formation is expected to continue to be the prime driver of growth over the medium term. despite the recent increases in the fuel price which may somewhat dampen household spending on other items, growth in consumption expenditure is expected to remain robust as a result of sustained real disposable income growth due to expected continued generation of employment and real salary and wage increases. this, together with the favourable wealth effects of higher asset prices, the lower interest rate environment and the up to now contained inflationary pressures, | t t mboweni : the economic and financial context for supply chain management address by mr t t mboweni, governor of the south african reserve bank, at the professional society for supply chain management ( sapics ) conference, sun city, 5 june 2006. * 1. * * introduction ladies and gentlemen, thank you for inviting me to address this conference. i am certain that the efforts of your members in ensuring successful supply chain logistics in many sectors have played a very important supportive role in south africa β s impressive economic achievements in recent years. your successes are also evidenced by the moon rock you have secured so successfully for this event! no doubt you will continue to contribute meaningfully to making 2006 yet another year of significant positive growth in our economy. customers worldwide are demanding ever higher levels of service and efficiency. and your society is to be commended for its sterling work in ensuring that south africa β s growth potential is enhanced as companies adopt improved supply chain logistics in order to compete more effectively in a global environment that is characterised by increasing competitiveness and just - in - time processing and delivery. of course, the economic context within which you operate is crucial to your success, too. 2. recent domestic economic developments the south african economy has been in an upswing since september 1999, making the current business cycle expansion phase the longest on record. the upswing continues apace, with strong growth in the south african economy during the first quarter of 2006 as global growth provided a solid tailwind, inflation pressures were relatively calm and interest rates were steady. this is quite a remarkable achievement, given the domestic, regional and international challenges that have confronted south africa during the course of this upswing. real gross domestic product recorded an average annual growth rate of almost 5 per cent for the year 2005, which constitutes the highest annual growth rate since 1984. although there was a deceleration from 4, 1 per cent in the third quarter to 3, 2 per cent in the fourth quarter of 2005, growth accelerated once again in the first quarter of 2006 to 4, 2 per cent. despite negative growth being recorded in the primary sector, the acceleration in growth was achieved due to the recovery in manufacturing output and continued buoyancy in other secondary and tertiary sectors. the seasonally adjusted real value added by the agriculture, forestry and fishing industry decreased by an annualised rate of 6, 9 per cent during the first quarter of 2006 mainly due to the poor performance in the production of field crops. following the decrease of | 1 |
christine lagarde : interview in le parisien interview with ms christine lagarde, president of the european central bank, and le parisien, conducted by mr matthieu pelloli and published on 9 april 2020. * * * from emmanuel macron β s repeated references to β war β to queen elizabeth ii invoking the spirit of the blitz, memories of the darkest hours in our history are resurfacing. are we in effect facing a war? there are probably points of comparison. what is certain is that an invisible enemy is severely testing our healthcare systems and our extraordinary healthcare workers. and that same enemy is putting the global economy under strain. our way of life has been altered, and for some it has been turned completely upside down. you were minister of the economy in 2008, at the time of the last global economic crisis. how does the current crisis differ from the previous one? the origins of the 2008 crisis were financial. the current crisis is, in the first instance, a healthcare crisis. if you think about it, it can also be traced back to the ecological and biological chaos of the world. in some ways, it β s the revenge of the living! the economic consequences are difficult to quantify, but they will certainly be severe. today, it β s not a question of stimulating the economy, as we did in 2008, but of putting it on hold for the time needed to contain the virus in order to pave the way for a fast and functional recovery. in 2008 multilateralism played a decisive role. is that conceivable now, with heads of state like boris johnson, donald trump and jair bolsonaro? the spread of the virus, and its ruthless and indiscriminate nature, will hopefully serve as a reminder to commentators who believe multilateralism belongs to the 1950s that it in fact has many virtues. we need it now to help us manage the response, and we will need it later to organise our exit from the crisis. just imagine that china, the european union and the united states were back on their feet, but that the entire southern hemisphere, from south america to africa, had then been hit by the virus. we wouldn β t be that much better off, facing the risk of a second wave. you have said that you fear a β considerable β recession in the euro area. of what magnitude? in 2009 growth contracted by 4. 5 % in the euro area and by 2. | dealing with the situation of developing countries. our compatriots are concerned about the solidity of european banks in general and that of french banks in particular. many readers are wondering if their savings are safe? are they safe? european banks are much stronger than they were in 2008. their capital ratios have practically doubled. their regulatory framework has been strengthened and their supervisors are far more vigilant and scrupulous than they were back then. the banking sector is as strong as one could wish for. savers can rest assured. 3 / 3 bis central bankers'speeches | 1 |
##making process help inform and influence proposals that are under consideration. if there is a desire to influence change, stakeholders must engage and provide input during this process. second, the large number of finalized, proposed, and potential changes suggest a lack of prioritization - whether we have effectively identified actual risks to the banking system and devoted resources to the most pressing of these issues. prioritization is something i have spoken about at length in the past, and it remains just as critical today. 2 the banking stress last spring revealed the presence of flaws and shortcomings in our bank regulatory and supervisory framework. a lack of prioritization in our approach risks losing focus on making substantively responsive adjustments and reforms. opportunities for engagement reviewing and commenting on regulatory proposals should never be a distraction from a banker's core responsibility to ensure the bank continues serving its customers in a safe and sound manner, and in compliance with applicable laws. so, i do not want any of you to take my remarks today as a call to drop everything you are doing and open up the federal register and start reading. the banking system is a highly regulated environment, and as you see in your work every day, requires banks to devote significant resources to compliance. a strong culture of compliance can help keep your bank safe, and in the aggregate promotes a safe and sound banking system. within a bank, virtually everyone has a role to play in promoting that culture of compliance with applicable law, all while serving your customers. 3 / 9 bis - central bankers'speeches but stakeholders, including bankers, have an important role in the stewardship of the banking system that goes beyond compliance - namely, participating in the administrative rulemaking process. it is critical that you share your views with policymakers on regulatory reform proposals. all the comments, data, and analysis from commenters enable policymakers to make informed decisions throughout the rulemaking process, from the initial brainstorming stage, through the creation of a proposal, and in crafting a final rule. this feedback is equally critical in understanding how the supervisory process is working as it evolves over time and incorporates new standards and expectations. information about the intended and unintended impacts of reform initiatives is especially informative. often, private - sector stakeholders are best positioned to understand and explain these impacts, and to identify gaps in the context, data, and analysis underpinning these initiatives. i recognize that in some instances, multiple, interrelated proposals out for comment at the same time compl | do not represent core banking risks will only serve to further distract bank management and supervisors. in addition to issuing interagency supervisory guidance to banks on managing climaterelated financial risks, the board recently issued the results of a pilot climate scenario analysis, which was designed to learn about large banks'climate risk - management practices. 7 this report goes into significant detail on the technical aspects of the scenario analysis and underlying results. while exploring even remote risks can help build resiliency for the future, i think the report itself included some acknowledgment that these exercises may have limited utility in the short - term for managing risk. for example, the report acknowledges that participants " suggested that climate - related risks are highly uncertain and challenging to measure, " and that " [ t ] he uncertainty around the timing and magnitude of climaterelated risks made it difficult... to determine how best to incorporate these risks into [ banks'] risk - management frameworks on a business - as - usual basis. " 8 participants also noted that scenario design choices, assumptions, data challenges, and modelling challenges all played a material role in the analysis. 7 / 9 bis - central bankers'speeches banks already have ongoing obligations to manage all material risks, and while scenario analysis generally is not intended to be predictive, i think the uncertainty and unreliability of the results from this exercise suggest that resources may be better devoted to dealing with more tangible and immediate financial risks. we should rightly be concerned about regulatory pressure on a single issue that could lead to the misallocation of risk - management resources away from risks that may be more material, such as interest rate, liquidity, and cyber risks. closing thoughts we continue to be at an inflection point in the bank regulatory reform agenda. the pending proposals, including the basel iii capital proposal, the g - sib surcharge, new long - term debt requirements, amended resolution plan guidance, contemplated changes to the regulatory approval of merger and acquisition activity, and revisions to the interchange fee cap will have a lasting impact on banks of all sizes and their current and future customers. my hope is that you and other interested stakeholders play an active role in this process by sharing your views and concerns with regulators. this input provides valuable insights into the specific impacts - intended and unintended - of changes to the bank regulatory framework. voicing your concerns enables us to identify, and where needed, address, the real - world consequences of regulatory and | 1 |
climbed up to the point that, if left to their own accords, firms will soon need to make new investments in order to meet demand. facilitating the pickup of private investment growth will be bank β s improved ability and willingness to lend as the banking sector β s npls are expected to decline to a low single digit this year. this further strengthening of banks β balance sheets will allow banks to lend at lower carrying costs. furthermore, the ongoing preparation for the sector - wide adoption of basel ii at the end of 2008 will help ensure the quality of the new private credits. an additional economic stimulus will come from the fiscal side. with a strong fiscal position, the thai government this fiscal year has opted for the use of a budget deficit to support economic growth. key infrastructure investment projects include the expansion of mass transit network in bangkok, water resource management, and an integrated logistic system. these public investments will partially take up the slack in the first half of the year as well as speed up private investment through a crowding - in effect. of course, there remains the issue of political incidents which can still make things less rosy. this would not be under policymakers β control ; the government, however, is doing its best to take necessary safeguard measures in order to assure people of the state of security. ladies and gentlemen, being confident of the medium - term outlook does not mean that we will be complacent. after all, we are in an environment of an ever - increasingly competitive global arena, more integrated financial markets, volatile capital flows, more inter - linkages between economies, and increasing trends toward liberalization. for policymakers, this means that the conduct of policy will become more demanding in the periods ahead. this leads to my third and final point. that is, to ensure that growth and stability are sustained in the long run, we need policy tools and persistent reforms going forward. from a long - term perspective, the critical challenge for the thai economy is how to continuously improve its flexibility, efficiency, and competitiveness. in this respect, a crucial policy effort is a combination of financial and real sector reforms and policies that promote a sound and stable macroeconomic environment. to mention a few, infrastructure building will continue to be strengthened particularly through amendments and introduction of a number of legislation. the financial sector master plan ( fsmp ) will move onto its second phase, with the review of the plan and emphasis on increased competition and consideration on potential entry of new players to further enhance | the many challenges we have faced over this period, the volume of economic activity in albania has grown to eur 24 billion from eur 10 billion, the unemployment rate has shrunk to 10. 7 % from 17. 5 % and the average income per capita has increased to eur 9200 from eur 3500. at the same time, the main parameters of economic and financial equilibriums in albania have been improving. during this period, inflation has averaged 2. 5 %, current account deficit has decreased to 2 % of gdp from almost 11 %, and external debt has been reduced to 44 % of gdp from 70 % of gdp, while public debt has declined to 56 % of gdp from 72 %. in parallel, the banking sector has exhibited stability and improving financial indicators. thus, the non - performing loans ratio has dropped to 4. 6 % from almost 23 %, the capital adequacy ratio has reached an average of 18 %, while the banking sector has continued lending to the economy and displays high liquidity and profitability levels. this substantial progress has not been the product of chance. on the contrary, it reflects the ever increasing maturity and sophistication of albanian business, a framework of consistent macroeconomic policies, which are coordinated and oriented towards stability, the fruits of the structural reforms undertaken during this period, as well as the positive contribution of the banking sector. i will briefly address some of the supportive factors i mentioned above, focusing on the role of both the bank of albania and the banking system. from the perspective of economic management policies, albania has made progress in adopting the best practices in the field, both at the individual level, through their anchoring in the rules, as well as in terms of increasing their consistency and coordination mechanisms. the bank of albania has adopted a modern monetary policy framework, in the form of a flexible regime of targeted inflation, oriented towards price stability, accompanied by a free exchange rate regime. in parallel with the monetary policy, the bank of albania has worked on development of the macroprudential intervention policy and instruments, for improving the regulatory framework of the banking system, as well as advancing our supervision process, aimed at harmonizing them with the european union standards. in addition, the fiscal policy framework, equally important in this regard, has progressed towards the adoption of fiscal rules, which guarantee the long - term sustainability of public finances and increase its effectiveness and predictability. in terms of structural reforms, the bank of albania has | 0 |
benjamin e diokno : sustainable solutions for southeast asia β s recovery opening remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for adb β s southeast asia development symposium ( seads ) 2022 β sustainable solutions for southeast asia β s recovery β, manila, 15 march 2022. * * * good day to all. i am honored to join you today for the southeast asia development symposium 2022. before the pandemic, the philippine economy grew at an average of 6. 4 percent annually. poverty incidence dropped from 23. 5 percent in 2015 to 16. 7 percent in 2018. while the pandemic may have set us back on some of our goals, i am confident that we are on our way to regaining our pre - pandemic growth trajectory. there are two things fueling my optimism : first is the continued confidence in the philippine economy. the country continues to have a favorable medium - term growth prospects based on the stable outlook affirmed by majority of major credit rating agencies. second, we didn β t sit idly by during the pandemic but pursued game - changing structural reforms, from amendments to the retail trade liberalization act, public service act, and foreign investments act. we are also pushing for amendments to the implementing rules and regulations ( irr ) of republic act no. 10000 or the agri - agra credit act of 2009, which allows banks to lend to more types of farming communities and classify more loans as compliant with the law β s quotas. we are positive that the senate and house will reach a consensus and ratify the bill once session resumes on may 2022. i am confident that, with these game - changing reforms, we can achieve real change in the lives of ordinary filipinos through more and better jobs and more competitive economy. also, our financial digitalization initiatives, under the digital payments transformation roadmap, are enabling better payments processes and financial inclusion. moreover, the philippine central bank β s policies on sustainable finance are harnessing the ability of banks to drive a more sustainable future. aided in part by the bsp β s measures, the economy is showing signs of solid recovery, as shown by the 5. 6 - percent gdp growth last year. this year, we expect the economy to grow by 7. 0 - 9. 0 percent. looking ahead, the philippine central bank is laying the foundation for | average of 11 - 12 per cent over the past few years to 8 per cent in 2009. it is widely felt that what we are witnessing now is not so much a crisis in the financial system but a crisis of confidence on the part of household and businesses, and it is global in nature. the data coming out for the developed countries are shocking indeed. the u. s., for example reported job losses of over half a million in december, pushing the unemployment rate to 7. 2 per cent, the highest in 16 years. it is projected that unemployment in the us could soon reach double - digits. in germany, the unemployment rate now stands at close to 9 per cent : in the u. k., unemployment has reached ( 6. 0 per cent ) and in the e. u. it is 8. 4 per cent. to address the deepening recession and mounting job losses, most of the advanced economies are adopting enormous stimulus programs. β’ president - elect barack obama β s economic recovery and investment plan includes a fiscal stimulus of around us $ 775 billion, in addition to bank support programmes of another us $ 1. 5 - 2 billion. β’ germany has unveiled a major fiscal stimulus package which includes cuts in taxes and a programme of public investment infrastructure. β’ japan also unveiled a massive economic recovery package. β’ even china recently announced a new fiscal stimulus plan, of around us $ 586 billion aimed at boosting the rapidly slowing economy. our caribbean neighbours have also been seriously impacted by the financial crisis and the global recession. in jamaica emigrants β remittances ( the second largest foreign exchange earner ) fell by an estimated 17 per cent last year. an even larger fall is expected in 2009, along with a sharp reduction in tourist arrivals. there have been hotel closures and the postponement of hotel investment projects in the bahamas, the oecs, barbados and elsewhere in the region. late last year, the barbadian government unveiled an economic stimulus package aimed at protecting jobs and supporting the tourism industry. jamaica has also announced a stimulus package involving tax cuts, loan facilities for vulnerable sectors and infrastructural spending. here in trinidad and tobago, we have seen an interesting change in our circumstances over the past few months. our once thriving energy sector is facing sharply reduced external demand and anemic prices. oil prices have plummeted from over us $ 140 per barrel in june 2008 to around us $ 40 per barrel currently, while gas | 0 |
and a declining working - age population. to deal with the present and forthcoming challenges for japan, we may need to rely more on the perspective offered by keynes who tried to elaborate on the size of population itself and changes in its composition. it is fairly certain that not only advanced economies, but also a number of emerging economies are, sooner or later, expected to face the similar challenge as we proceed down the road ( slide 8 ). 8 demography and aggregate demand demographic changes affect economic growth through a variety of channels. to start with, in a country facing a diminishing population, like japan, a declining working - age population would rein in growth momentum on the supply - side. admittedly, because we need to take demographic factors as given for the time being, we should pursue higher labor force participation rates of female workers and the aged people. on top of this, attempts to enhance the quality of the labor force by improving education and vocational training systems are warranted as well. we may need to recognize the complex fallout of a demographic vortex on aggregate demand. a shrinking working - age population could be an outright factor that reduces aggregate consumption. on the other hand, the life - cycle model of consumption predicts that the ageing of society would spur the consumption of the elderly as they reduce their savings. in fact, a common observation across economies is that, as a general pattern, the elderly tend to cut their spending on durable goods while they increase demand for services to maintain their quality of life, such as medical and nursing services. we may need to bear in mind, however, that provision of these services tends to be subject to intensive government regulations. if the supply that can meet the demand of aged people would be hampered by misaligned regulations which do not reflect the changes in society and technology progress, potential consumption demand would not materialize. see bernanke ( 1983 ). see keynes ( 1937 ). see shirakawa ( 2011 ). bis central bankers β speeches the foregoing argument reaffirms the importance of the flexibility of the social and economic systems that can ensure their own sustainability in the face of a demographic vortex. we could also bear in mind how the ageing of voters affects the social choices reflecting their preferences ( slide 9 ). demography and business cycles as i mentioned at the outset, the third lens suggests that boom - bust cycles and demographic changes could interact with each other. for example, the spending wave hypothesis suggests a possible linkage between the | ##s as the extra compensation for the uncertainty around anticipated economic and financial outcomes. this compensation is determined by both perception of risks and investor preferences, or risk aversion. among the risk premiums that we monitor regularly at the federal reserve are those on equity returns, equity volatility, corporate bonds, and treasury securities. each contains information about a different risk around a different expected outcome. clearly, the separation of market prices into distinct pieces reflecting expected values and risk is a difficult task that relies heavily on modeling assumptions about underlying processes and investor behavior. indeed, think of all the constituents of, say, a long - term corporate bond yield. such a yield encompasses compensation for expected real rates, for expected inflation, for expected default, and for the expected liquidity in the instrument, and it contains conceptually separate risk premiums for uncertainty about each of these underlying factors. in principle, an ideal model would account for each of those components separately. in practice, however, we have yet to achieve such a fine breakdown, and the estimate of any one or group of those components is likely to be highly dependent on the estimates of the others. although some promising research on modeling these components - - jointly or individually - - is under way, we need to be especially aware of our theoretical and empirical limitations when interpreting market price movements. but these qualifications do not diminish the point that risk premiums are certainly relevant for monetary policy deliberations, and we do pay attention to our best estimates of them. we, as policymakers, form our own independent view of the expected path of a number of macroeconomic and financial variables, but we are also obviously interested in gauging investors'roberto perli and paul harrison, of the board's staff, made important contributions to this talk. expectations about the future paths of those same variables. investor expectations shape the market reaction to new economic data and to our policy actions, and when those expectations differ from our own, they could embed information that we might wish to factor into our own analysis. investors'expectations are reflected in asset prices, but so are risk premiums, and inferences about future economic conditions obtained from market prices are conditional on estimates of those premiums. neglecting or grossly misestimating risk premiums will lead to misperceptions of the market's outlook and thus potentially to market moves that we did not anticipate. nothing better illustrates the need to properly account for risk premiums than the current | 0 |
christian noyer : global stability, the future of capital markets and islamic finance in france speech by mr christian noyer, governor of the bank of france, at the euromoney seminars, islamic paris conference, paris, 29 september 2009. * * * ladies and gentlemen, it β s a great pleasure for me to address such a distinguished audience today. while conventional economies are still suffering from a deep crisis and some of our traditional economic thought is being challenged, this meeting is a great opportunity to discuss how alternative finance, and especially islamic finance, can contribute to the economic recovery. in the past two years, the french authorities, in active cooperation with the industry, in particular via paris - europlace, have introduced substantial reforms to make it possible to allow shariah β compliant finance into france. as governor of the banque de france, which is in charge of the licensing of french banks, i would like to specifically highlight ongoing work aimed at licensing islamic banks in a secure framework. i will come back to this point later β¦ to focus on the matter i was invited to speak about, i would like to address several issues : β’ first, the links between the current overhaul of financial regulation and islamic finance ; β’ second, the role islamic finance could play in france ; β’ the third, the relationship between islamic finance and financial stability ; β’ finally, i would like to mention the conditions islamic banks need to meet to ensure that their establishment in france is consistent with the smooth functioning of the banking system. β¦β¦β¦ the current crisis has illustrated the rapid contagion effect fostered by financial globalisation. however, it is important to emphasise that financial globalisation is not in itself the cause of the crisis, which has rather revealed failures in financial regulation. indeed, the crisis has highlighted the need to better assess and prevent risks in the financial system as a whole, in addition to simply monitoring the risks of each individual institution. it has also shown that some features of the regulatory regime have had an amplifying effect on the economic cycle instead of mitigating it. that is why the g20 has launched an ambitious agenda to reform financial regulation, covering four main areas : the strengthening of prudential standards, the redefinition of the scope of regulation, the revision of accounting standards and the strengthening of risk management. we will see later that these areas find a strong echo in islamic finance, which has also to deal with issues linked to lack of transparency, of a level | small commercial banks, - ( ii ) large commercial banks tend to be financially stronger than large islamic banks, - ( iii ) small islamic banks tend to be financially stronger than large islamic banks. β islamic banks and financial stability : an empirical analysis β prepared by martin cihak and heiko hesse ( january 2008 ). the analysis is based on evidence covering 77 islamic and 397 comparable commercial banks in 18 banking systems with a substantial presence of islamic banking, over the 1993 - 2004 period. one of the plausible explanations given by the paper is that it is significantly more complex for islamic banks to adjust their credit risk monitoring system as they become bigger. given their limitations in standardisation in credit risk management, monitoring the various profitloss - arrangements rapidly becomes much more complex as the scale of the banking operation grows. these findings are based on evidence drawn from banking systems with a substantial presence of islamic banking. therefore, they are not strictly transposable to france. nevertheless, precisely because france is a conventional environment, i would like now to conclude my speech with some remarks on conditions islamic banks need to meet to ensure that their establishment in france offers sufficient safety for their customers and is compatible with the smooth functioning of the french banking system. this is primarily in islamic banks β own interest and is also in the interest of the banking system! regarding licensing, the credit institutions and investment firms committee ( comite des etablissements de credit et des entreprises d β investissement β cecei ) will assess the same criteria as for any conventional bank : financial resources and suitability of the shareholders ; integrity, qualifications and suitable experience of managers ; level of own funds ; business plan ; capacity of the bank to achieve its development objectives and so on. indeed, there is no specific criteria or requirement for islamic banks in the french licensing framework. but beyond these standard licensing criteria, banking authorities need to ensure that islamic banks will interact with their conventional environment in france as soundly as possible. therefore, some key issues need to be tackled before licensing an islamic bank, regarding especially : - their governance, with for example the role of the shariah β board, - the legal classification of profit - sharing investment accounts and its consequences in terms of coverage by the french deposit guarantee scheme, - and liquidity management and access to the eurosystem funding, especially the issue of assets eligible as collateral. let me stop here. i would like to thank you very much, ladies and gentlemen, for your | 1 |
, mentioned how we can assess effects in the longer term. since we cannot make meaningful forecasts for an unlimited period of time, we must restrict the forecast horizon. but this is not set in stone in the sense that it should prevent us from considering problems that may arise in a few years β time. moreover, there are risk scenarios that are difficult to capture in terms of forecasts. even if your ambition is to base the monetary policy decision on what are termed unbiased forecasts, in which upside and downside risks are balanced, you should be aware of the for a description of how decision - making data for monetary policy decisions are prepared, see the speech β the monetary policy decision - making process β by irma rosenberg held on 13 june 2008. bis central bankers β speeches difficulties involved. in practice, however, such forecasts have difficulties in capturing everything perfectly. in practice, you may wish to guard against some outcomes that you consider to be particularly harmful and that should therefore be avoided at all costs. for example, an unfavourable scenario in which a burst asset bubble leads to a deflationary situation that is hard to overcome will be assigned greater importance than a high - inflation scenario. experience from japan in the 1990s illustrates this. assessments of this type must be taken into account in the monetary policy decision. the moral of the story is that monetary policy cannot be reduced to a mechanical reading exercise. however well - prepared the material on which monetary policy decisions are based, there will always be complex and important aspects that policymakers must take a stance on. it is important that these aspects are discussed from several different perspectives. this is one reason why we have an executive board made up of economists with different backgrounds and expertise. it is beneficial and important for us to conduct a wide - ranging debate on monetary policy at the riksbank and not just externally. i believe that it leads to better monetary policy decisions. bis central bankers β speeches | it really that characterises a well - balanced monetary policy? it is normally a question of finding an appropriate balance between stabilising inflation around the inflation target and stabilising the real economy. it is difficult to translate what can be considered a well - balanced monetary policy in any given situation into precise and practical monetary policy. the intention behind stabilising inflation is relatively easy to understand, but the significance of stabilising the real economy is not so clear. in practice it is often interpreted as stabilising resource utilisation around its normal level. i think that is a fairly reasonable interpretation and it is not easy to argue for anything entirely different. at the riksbank we approach the concept of a well - balanced monetary policy by forecasting such things as inflation and resource utilisation for different monetary policy actions. after this we try to select the course of action associated with the best possible forecast outcome ; in other words the forecasts where inflation is best stabilised around the inflation target and resource utilisation around a normal level. this may sound simple and obvious but in practice is not that easy. in the first place, the best measure of resource utilisation is far from obvious and we executive board members may have slightly different opinions on this. 9 we are constantly working to improve the measures of resource utilisation and this is important. but as i see it implications, wiley 2003. lars nyberg discusses the balance sheet channel in more detail in the speech β after the crisis β new thoughts on monetary policy β published on 6 december 2010. for a more detailed discussion of how resource utilisation can be measured, see the speech β potential gdp, resource utilisation and monetary policy β by svante oberg held on 7 october 2010, and the article β the driving force behind trends in the economy can be analysed using a production function β in the monetary policy report of october 2010. bis central bankers β speeches we cannot give any single measure prime position as representing the one and only truth. it is wisest to continue using several different measurements as a guide. in the second place, situations sometimes arise where there is a conflict between stabilising inflation and normalising resource utilisation and different decision - makers may make different assessments. however, this has not been a problem recently as both underlying inflationary pressures and resource utilisation have been low. in the third place, in my opinion economic trends beyond forecast horizons should be taken into account, though | 1 |
of the cma β s report. the pra has been given by parliament a so - called secondary objective which i think is best described as requiring us to act in respect of the competitive implications of our own actions and inactions but only to the extent that we are not undermining our primary objective for banks of safety and soundness. we have been working to embed the secondary objective in the pra, and to date our most publicised actions have been in the area of new bank authorisations. the pra has authorised ten banks in the last two years, and currently we have a substantial pipeline of interested parties. we are thinking about competition in our domestic work, but also about how we approach international policy issues. for instance, this week our response to the european commission β s consultation on the impact of the new capital regime has been published. it is quite often said that aspects of the capital regime discriminate against smaller banks and building societies that use the so - called standardised capital approach versus larger banks that use their own models. the consequence of this is that smaller banks and building societies cannot compete effectively in lower risk asset markets such as prime mortgages because the capital requirements are too far apart and in favour of large banks. this forces them into riskier assets and undermines their position. this is an area where the leverage ratio acts to counterbalance the difference, a point that is not well enough understood. but in our response to the european commission we said that while the financial stability benefits from regulation of large, internationally - active banks mean these firms should meet global standards, a differentiated approach for smaller firms would recognise the high costs and smaller benefits of applying global standards to them, and should enable us to find ways to create a regime which is more simple and which reduces their reporting burden. this would help to foster competition and would be good for the european single market. this is an important issue, and one that matters if we are to have growing challenger banks. we want to put such a regime into effect, and thus demonstrate that at the pra we are very serious about our competition objective. i hope the european authorities will likewise pursue this important change. we will also be arguing in basel and in the eu to narrow the gap between standardised and internally modelled capital requirements for prime mortgages including by having more risk sensitivity in the standardised approach. and, we have also tightened the standard for models. i also want to be clear that we welcome internal model | i mentioned earlier. but, crucially, it would be for the senior manager to satisfy the regulator on the question of reasonableness β thus the presumption is created until it is rebutted. the change that the government has announced to create β the duty of responsibility β will, if parliament approves it, replace the presumption with a statutory duty on senior managers to take reasonable steps to prevent breaches of regulatory requirements by their firms from occurring. thus it will be for the regulator to show that the senior manager did not take such steps as it was reasonable for a person in that position to take to prevent the breach of regulatory requirements. in my view this does not represent a watering down of the requirement. why? well the β duty of responsibility β creates a positive duty on senior managers to take reasonable steps to prevent regulatory breaches occurring. this will be on a statutory footing, which hardwires the concept in the very fabric of the regulatory regime, rightly reflecting the importance which society places on this issue. let me be very clear, substituting β duty β for β presumption β changes the mechanism of enforcement not the substance of the requirement on senior managers, and i would not support changing the latter. there has been a lot of noise around the new regime in recent months, and i have asked people involved whether their problem was with the β presumption β, or with the regime more broadly. the universal answer has been that the difficulty was with the β presumption β not the regime which appears to have broad support. so, if parliament is in agreement, and i do not presume to take that for granted, i expect that the new regime will be put into effect in the spirit with which it is intended, and that the focus bis central bankers β speeches will shift to that spirit and away from finding ways to circumvent the β presumption β. to be blunt, i hope that those within firms and their advisors will respect the will of parliament on this crucial point. the new regime matters hugely for getting the right incentives for people running firms. the important word is not β presumption β or β duty but rather β responsibility β, it β s about holding people more personally to account. if there are people who wish to argue that they should not take on the responsibilities of the job they do, then i believe they have no place in the industry, it β s that simple. we all want well - run firms | 1 |
yes, but only in a rare circumstance. bad decisions relating to monetary or financial institutions operations can be damaging with wide impact. to prevent this from happening, a mechanism should be installed such as a monetary policy committee or a financial institutions policy committee comprising of qualified external directors so that important policy measures are made through group decisions. the second issue is how independence should a central bank be? i believe that a central bank should be independent within the government because it is the minister of finance who has to be accountable to the parliament on issues relating to macro economic, fiscal, monetary and financial system matters. i agree absolutely with governor paul acquah that monetary and fiscal policies must be harmonized in order to achieve macro stability, meaning that a minister of finance and a governor of a central bank must work hand in hand to achieve a proper policy mix of fiscal and monetary policies so that sustainable growth can be achieved. ladies and gentlemen, i feel that i have taken enough of your time already. therefore, i would like to conclude that a central bank can be considered as having its independence when it can perform its duty of achieving and maintaining price stability without any political or governmental interference, and with honesty and integrity while working hand in hand with the ministry of finance to achieve a balanced fiscal and monetary policies mix that lead to macro stability and sustainable growth. inflation targeting approach is an effective mean to achieve central bank independence because it encompasses 4 very important ingredients : operational independence, responsibility, transparency and accountability. other means can be just as effective if they have these 4 required ingredients. i hope that what i have just shared with you on the topic of central bank independence and our experiences in adopting inflation targeting as a nominal anchor will be of some uses as food for thoughts. finally, i truly wish to congratulate the bank of ghana for the successful launching of monetary policy committee. thank you. | achieved anchoring of inflation expectations over the last eight years. 7 this in turn has contributed to low macroeconomic volatility in the euro area. 8 when inflation expectations are well anchored, temporary deviations of inflation from levels consistent with the central bank β s inflation objective are not expected to be long - lasting. as a consequence, macroeconomic shocks will have a smaller impact on inflation expectations and the evolution of inflation over time will be less persistent, with the result that inflation and economic activity will be more stable. it is certainly true that other central banks which put less emphasis on monetary analysis have also achieved low and stable inflation expectations and low macroeconomic volatility. however, it is important to bear in mind that the uncertainty faced by the ecb has been much higher than that faced by other more established central banks. our success in maintaining low and stable inflation expectations in a rather adverse macroeconomic environment is also due to the commitment to be continuously alert upon monetary trends built into our strategy by the money pillar. this brings me to the second question, on the criticism that our policy actions have not corresponded to the announced role of money in our strategy. i know that this objection is sometimes put forward by critical observers who argue that there is no direct correlation between our policy rate decisions and monetary developments. this kind of criticism does not discomfort me, because the relevance of the monetary pillar can anyway not be judged based on the simple bivariate correlation of policy rates with the growth rate of headline m3 ( or any other single monetary indicator ). first, such a simplistic approach cannot reflect the crucial role of cross - checking the information derived from the economic and the monetary analyses that is a key feature of our monetary policy strategy. second, it overlooks the broad - based and by no means mechanical character of the ecb β s approach to monetary analysis, which jurgen has also stressed yesterday. allow me to elaborate on the second point. monetary data are contaminated by noise at higher frequencies blurring the signal from their low - frequency movements which provide information about medium to longer - run inflation trends. the ecb β s monetary analysis aims to extract this low - frequency signal by assessing a large range of monetary indicators based on statistical tools and judgement in real time. since the signal extracted from the monetary analysis refers to the low frequency it will not change much from month to month. as a consequence, it will, by its very nature, normally not be closely correlated with individual policy moves, but will rather | 0 |
of us doing our bit. it is up to us, as the central bank, to contribute by achieving price stability. this helps to reduce an additional source of uncertainty and thus provides better conditions for everyone's capabilities to flourish. on stability and growth we can build and address the major challenges ahead. thank you. figure 1 inflation ( 1 ) core inflation ( 1 ) ( annual change, percent ) ( annual change, percent ) headline cpi core cpi volatiles cpi goods services - 2 ( 1 ) dotted vertical lines show statistical close of march 2022 report. ( 2 ) for details on the different groupings and their share in headline cpi basket, see box iv. 1 in december 2019 mp report, carlomagno and sansone ( 2019 ), and economic glossary. sources : central bank of chile and national statistics institute ( ine ). figure 2 cumulative inflationary surprises in mpr reports ( percentage points ) core goods excl. foods other volatiles total foods ( * ) core services volatile energy total surprise 1, 6 1, 2 0, 8 0, 4 - 0, 4 jun. 21 sep. 21 dec. 21 mar. 22 ( * ) sum of volatile and non - volatile foods. sources : central bank of chile and national statistics institute. jun. 22 figure 3 inflation expectations ( annual change, percent ) surveys to analysts ( 1 ) surveys to firms fts two years out ees two years out fts one year out ees one year out pdes two years out pdes one year out imce one year out ( 1 ) response medians are shown. ( 2 ) fts considers the survey for the first two weeks of each month through january 2018. from february 2018 onwards, it considers the last survey published in the month, including the one prior to the june 2022 meeting. in months in which the survey is not published, the latest available survey is considered. ( 3 ) average of trade and manufacturing medians. ( 4 ) price determinants and expectations survey carried out on companies by the central bank of chile. sources : uai / icare and central bank of chile. figure 4 activity and demand indicators ( index, third quarter 2019 = 100 ; seasonally - adjusted series ) domestic demand gdp non - mining gdp private consumption durable goods non - durable goods services gfcf construction & works m & e 15 16 17 18 19 20 21 22 15 16 17 18 19 20 21 22 source : central bank of chile. 15 | with our commitment with ngfs. these tools will be used mainly to assess the implications of environmental degradation and the green transition on long - run potential growth. another challenge is safeguarding the long - term stability and resilience of the financial system through two main lines of action : 1 ) incorporating climate risks into financial stability assessments to identify and address vulnerabilities in the financial system ; 2 ) enhancing risk management and supervision practices to take into account climate 2 / 5 bis - central bankers'speeches risks. the impact of climate change on the economy exacerbates traditional financial risks. plus, our functions include the production of key macroeconomic statistics. a comprehensive analysis of the impact of climate change and ecosystem degradation requires consistent, comparable and quality statistics to close data gaps and include nature in the decision - making process of the different actors. we plan to contribute by producing information and analysis for climate risk assessments that complement the efforts of, and are an input to, the financial regulator and can serve as a guide to other financial institutions and businesses. a first step in this line was the exposure analysis to physical and transition risks of climate change published in the financial stability report during the first half of 2022. we also are working on developing methodologies for measuring chile's natural capital, in line with the framework derived from the united nations'system of economic and environmental accounting. natural capital can be systematically measured and monitored based on its contribution to production and societal well - being. additionally, we are working on other climate - related topics, such as the estimation of the carbon footprint of economic activity by using the input - output model, and we are studying the factors influencing its evolution. besides these initiatives, we have related activities. internationally, as an active member of the ngfs, we are co - chairing the macro modeling group within the workstream of monetary policy, and part of the taskforce for nature - related risks and the research network. we are also chairing a research network including many countries in the americas on the macroeconomic consequences of environmental change with the support of the bis. at home, we are supporting some governmental instances to work on these issues as external advisors. for example, since 2019 we have been part as an advisor to the green finance roundtable and the preliminary - committee in green taxonomy, created by the ministry of finance. additionally, we are also a member as an external advisor to the natural capital committee formed by the ministry of environment, the ministry of finance, the | 0.5 |
to investments. mdbs have actively supported countries on this front, in efforts to formalise project selection and approval processes, revenue models and concessions, and to encourage harmonisation of ppp standards in the region. at our inaugural summit in 2009, we announced that the world bank - singapore urban hub partnership has been established to leverage singapore β s experiences to help developing bis central bankers β speeches countries structure commercially viable infrastructure projects. this was followed by the setup of the infrastructure finance centre of excellence ( ifcoe ), which carries out capacity building and technical assistance to increase the success of ppp in the region. last month, ie singapore and the asian development bank jointly launched a ppp initiative that will work with regional governments to structure infrastructure projects, and also explore using capital markets to finance these projects. enhancing project development expertise besides improving ppp processes and public sector expertise, we also need to enhance the human capital in the private sector. there is already a growing base of professional services in singapore with practices in infrastructure development, financing and public - private partnerships in asia. singapore could explore whether there is a need to help companies develop their project development talent pool, so they can harness opportunities in the regional infrastructure space. this could be done by supporting on - the - job training to accelerate talent development through more project experience, and creating specialised programmes to train talent to be equipped with knowledge across the project development process β from business development, to ppp structuring, to financing. conclusion ladies and gentlemen, let me conclude by outlining again three key priorities in increasing and broadening private sector participation in infrastructure development β first, to catalyse private sector involvement in project financing ; second, to enhance delivery of projects for better financial viability ; third, to build up capabilities in both public and private sectors. these are necessary to help countries achieve their economic growth targets in an equitable manner, resulting in job creation and other positive social outcomes. the real economy, financial sector and public sector players all have complementary roles to play. conferences such as this are an excellent opportunity to bring together stakeholders in order to foster the exchange of ideas. on that note, i wish you all fruitful discussions today. thank you very much. bis central bankers β speeches | patrick njoroge : agile regulation for digital transformation remarks by dr patrick njoroge, governor of the central bank of kenya, at the β agile regulation for digital transformation ( a. reg4dt ) β webinar, 22 september 2021. * * * excellencies, ladies and gentlemen : good morning, good afternoon! i am pleased to join you at the agile regulation for digital transformation ( a. reg4dt ) webinar. let me at the outset, express my gratitude to the world bank and its partners in this initiative for the invite. while on the one hand, the coronavirus ( covid - 19 ) pandemic has upended lives and livelihoods, on the other hand, it has fostered digital transformation at an unprecedented scale. as digitalization has transformed delivery of services for businesses, governments and changed our way of life, regulators have been assessing the resultant opportunities and risks. the a. reg4dt initiative is opportune to develop the capacity of regulators in africa as digitalization transforms every facet of our lives. indeed the world has changed dramatically from 2007, when mobile phone money transfer services were introduced in kenya to meet basic financial needs of transferring money from urban workers to their rural families. subsequently, mobile phones laid the digital rails, that have seen the transformation of financial inclusion not just in kenya but across africa. shortly thereafter, was the global financial crisis from 2007, in the advanced economies, predicated on excessive risk taking and the trend at that time of deregulation. africa was largely spared the direct effects of this crisis given its relatively limited linkages to global financial markets at that time. the focus immediately after the crisis was the strengthening of the global banking sector through enhancing capital and liquidity buffers, risk management and an overhaul of corporate governance practices. one of the spillover effects of the global financial crisis was the emergence of decentralized finance ( de - fi ). the promoters of de - fi sought to leverage on the loss of trust in governments and financial institutions particularly in advanced economies. this saw the emergence of cryptocurrencies, headlined by bitcoin, positioned as alternative payment instruments. this later morphed to stablecoins and more recently, there has been the growing discussion on central bank digital currencies ( cbdcs ). recently, cryptocurrencies have morphed into more of wealth management instruments and less of payment instruments. amidst these developments in the global financial arena | 0 |
and market risks have diminished with their progressive transfer away from banks β balance sheets, but other types of risks have emerged. the reputation of a bank is inevitably and increasingly affected by the quality of the products it supplies to its customers. there has also been an increase in both legal and operational risks. the banks β increasing role in the distribution of third parties β products makes it crucial to monitor for conflicts of interest. it is extremely important that conduct should be ethical. the integrity and completeness of the information provided to the public must be guaranteed and internal controls must be reinforced. staff incentives must be designed to prevent the risk of improper conduct. 3. supervision international cooperation between banking, insurance and financial market supervisory authorities is strengthening. in view of the close links between the systems of the major areas - in the first place those of central and western europe and the united states, but also to an increasing extent those of eastern europe and asia - supervisory cooperation has spread to the global level. in europe, the nationally based organization of banking supervision is in conformity with the cardinal principle of the single european market, founded on minimum harmonization and mutual recognition. supervision on a national basis permits the authorities to operate near the entities subject to control. it favours a constant exchange of information and direct contact with intermediaries. this is particularly effective if it is also realized by means of a widespread presence in the territory and through on - site inspections. banking supervision is rooted in the legal and administrative systems of each country, not least owing to the possible involvement of public money in crises. europe has equipped itself with a well - structured system of multilateral cooperation and bilateral agreements between the national authorities responsible for supervising the banking and financial markets. spurred by the guidelines set by the ecofin council meeting of oviedo in 2002, in 2004 the application of the lamfalussy reform was completed, extending to the banking and insurance sectors bodies and legislative procedures that had already been introduced in the securities field. the reform process sees national authorities and european institutions engaged in speeding up the approval of harmonized european regulation, ensuring its uniform application in national law and further strengthening cooperation among the supervisory authorities. 4. derivatives in the last four years the cyclical slowdown of the global economy, stock market turbulence, the failure of large companies operating at international level and the default of sovereign states have subjected financial systems to strong pressures in both advanced and emerging economies. banks have demonstrated a great capacity to absorb the destabilizing impulses. | levels and resorted to unconventional expansionary measures ; governments used their budgets to support the financial system and sustain demand and employment. these measures will have to be gradually phased out. as we emphasized at the last meeting of the governing council of the european central bank, the current level of official interest rates in the area is appropriate ; no medium - term risk of inflation has emerged. the eurosystem β s operations to support liquidity and banks β lending capacity are continuing. nevertheless, the unconventional measures that are no longer necessary thanks to improved financial market conditions are being gradually discontinued. in december, we announced that the main refinancing operations with twelve and six - month maturities would not be repeated beyond december and march, respectively. the exit from the current set of unconventional monetary policy measures should not be premature so as not to hinder recovery, but neither should it be tardy so as not to put price stability at risk and so as to avoid fuelling market distortions and speculative bubbles that would constitute the premises for new crises. at the beginning of march, we will take further decisions on the phasing out of the extraordinary operations, considering the prospects for price stability. the demand on the part of banks which may have difficulties raising funds can be satisfied without affecting monetary policy. as of now, it would appear necessary to normalize budget policies, at least by drawing up clear exit paths. the international monetary fund estimates that since 2007 in the leading advanced economies there has been a five - fold increase in the deficit, from 2 to 10 per cent of gdp. it also forecasts that budget deficits in the euro area will still be more than 3 per cent of gdp in 2014. in recent weeks, the state of the public finances in greece has alarmed the international financial markets. if the greek government adjusts its budget with determination, with careful monitoring by the european commission and the ecb, the markets will subscribe new securities as old issues fall due, as happened in italy at the beginning of the 1990s. it is nevertheless important that the euro - area countries have expressed their intention, should it prove necessary, to take decisive and coordinated action to ensure financial stability within the area. the public finances in many countries will be increasingly burdened in the coming years by costs associated with population ageing and climate change. a prompt and credible indication of the ways to correct the trend of the public debt is needed, among other things to reduce volatility in the financial markets and the issue | 0.5 |
##tedness. nor are significant changes in the ongoing adjustment of residential investment foreseeable. on the demand side, no improvement can be expected in affordability conditions given the outlook for private sector income and wealth and, on the supply side, the overhang of unsold housing will continue to hold back the launching of new construction projects. the need to reduce the levels of indebtedness of all sectors and the prevailing conditions of access to external financing will continue to curb the possibilities for any expansion in domestic spending. exports might be the only component of output to increase in 2012. admittedly, the international situation is subject to a high degree of uncertainty and, in particular, the activity of the euro area as a whole is expected to flatline or fall slightly. but it is also true that the behaviour of exports has been very favourable over the last two years and spanish firms have been increasingly diversifying their exports towards third markets with more dynamic demand. unfortunately, the stimulus provided by external demand will not suffice to offset the effect of the other contractionary forces on employment, which can be expected to fall further. if the labour reform were to begin to produce its effects soon, wages might grow somewhat slower than in 2011. and along with productivity gains, that would lead to further declines in unit labour costs, thus enabling competitiveness gains to be made. prices will continue on the moderating path on which they embarked in the second half of last year, although the risk of rising energy prices has not disappeared. to sum up : the scenario described indicates that domestic demand will continue to adjust in step with the ongoing financial deleveraging and fiscal consolidation. in these circumstances, it is vital that the gain in the share of our sales, both abroad and at home, should be the main driver of activity in spain. and, accordingly, achieving sustained competitiveness gains, which must come from the implementation of ambitious supply - side reforms and measures, is crucial. if these reforms and measures should restore confidence in the spanish economy, reduce financing costs and improve the foundations for future growth, 2013 may witness a recovery. in this situation, the 2012 budget forms part of a more general medium - term consolidation strategy, requiring the collaboration of all levels of government. details will be available in a few weeks, when the government presents the stability and growth programme to the european authorities. the stability programme should contain precise and explicit details of all the elements on which this consolidation process will be based. the targets set by | the global economy through trade and commodity prices and via indirect contagion effects owing to higher risk aversion in international financial markets. the main issue regarding the chinese economy is not whether it slows by a fraction of a percentage point more than projected, but rather the external consequences of such a development. for example, a slowdown in growth to around 6 % of gdp, compared with 7. 3 % in 2014, is no grave cause for concern. in principle, these figures, which largely reflect the change in china β s production model to an economy more geared towards consumption, can be managed by the authorities. the uncertainty lies in the difficulty of evaluating the external effects of such changes, and the fact that the differing forecasts of private and public agents are reflected in greater volatility in financial markets. asian and latin american emerging economies are particularly sensitive to changes in the international arena. in latin america, gdp data for the second quarter show a significant slowdown. the brazilian economy, in particular, is worrying given its high budget deficit and significant current account shortfall ( although the latter has begun to be corrected ), along with inflation that needs to be contained and corrected as soon as possible. the imf projects brazilian gdp will fall by 3 % this year and will fall further, albeit moderately, in 2016. i would like to indicate that the impact of the downturn in the emerging economies on spanish banks, even for those with significant exposure to some of these economies, has been moderate. the geographical diversification of their businesses and the adjustments made to their management have contributed to the stability of their balance sheets. developments in the euro area as for economic developments in the euro area, growth in the second quarter was external demand - led, although internal demand continues clearly to support disposable income arising from lax monetary policy, the neutral fiscal policy stance, low energy prices and the improvement in the labour market. bis central bankers β speeches in september, the ecb revised downwards its growth projections for the euro area to 1. 4 % in 2015, 1. 7 % in 2016 and 1. 8 % in 2017. it should also be noted that the approval and start - up of the third bailout programme for greece has mitigated the risks in the area, a source of uncertainty for the spanish and other european economies. a characteristic of the current situation in the euro area is the trend towards disinflation. the ecb expects to end this year, 2015, with | 0.5 |
security standards are being implemented in the banking system. ladies and gentlemen! the world is now more inter - connected ; this offers not only benefits but also poses risks for our banking and payment systems. due to rapid technological innovations, consumers are now especially demanding instant funds transfer facilities, both at domestic and cross border levels. we need to understand these changing consumer preferences and find ways to address them. this is vital, not only for the growth of domestic and regional trade and commerce, but for facilitating home remittance transfers by overseas nationals as well. at the same time, we cannot afford to ignore the risks related to anti money laundering and counter financing of terrorism ( aml / cft ) that are increasingly being faced by financial institutions in today β s world. you are all aware that correspondent banking is the contractual relationship between banks that provide payment services for each other. however, as identified by international stakeholders like bis and the world bank, correspondent banking relationships are weakening due to various factors, such as higher costs and increased kyc requirements, especially for firms operating in risky jurisdictions. as a result, smaller banks in weak jurisdictions have suffered the most. bis central bankers β speeches to address these weaknesses, central banks of the saarc region must work together and support banks in their respective countries in addressing these challenges. this can be done through policy development that supports mutual coordination and communication with regards to sharing of customer due diligence information and effective compliance with aml / cft regulations, as recommended by international bodies. the regulators can, therefore, focus on the following broader areas : first, a risk - based approach needs to be adopted to identify, assess and understand money laundering and terrorist financing risks in the area of correspondent banking, and the corresponding aml / cft measures that are largely implemented but still needs more reinforcement. banks also need to be more proactive in their customer due diligence by gathering and sharing sufficient information among themselves, in a timely manner. second, as highlighted by the financial stability board ( fsb ), the reduction of correspondent banking relationships or what is now commonly called derisking has implications for financial inclusion in general and for the remittance transfer business in particular. this is important because financial inclusion has lately emerged as a priority policy objective for many central banks in developing countries across the world. therefore, regulators need to take steps to address this issue. and finally, the importance of modern and robust domestic payment systems in strengthening and complimenting correspondent banking in a particular | jurisdiction cannot be overemphasized. some recent events related to security breaches in banking sector underscore the importance of enhanced safety and security measures, especially in the domain of international payments. ladies and gentlemen, now, there is no denying that a direct implication of these measures will be an increase in the cost of correspondent banking services and consequently cost of transactions to tackle this, innovative solutions need to be explored. for example, in the saarc region, we can create a correspondent banking model that will facilitate smaller banks and provide services at lower cost, while also adequately managing risks. one way of doing this can be to designate one bank in each of our countries that will provide correspondent services to all the respondents in their respective jurisdictions. these designated correspondent banks can then interact with each other to facilitate payments and settlements within the saarc region sounds primitive but can be good starting point. this, i am sure, will reduce transaction costs, while at the same time mitigate risks, especially those related to anti money laundering and counter financing of terrorism. finally, i will request all of you to take full advantage of this seminar to discuss the challenges facing the correspondent banking business and then suggest regulatory measures that can be adopted to strengthen the regional correspondent banking framework. a modern, intra - regional payment and trade facilitation system is paramount for our collective economic growth and prosperity. i wish you a pleasant stay in the beautiful city of islamabad and hope you find time to explore the surroundings. thank you. bis central bankers β speeches | 1 |
guy quaden : the national bank of belgium - a century and a half of belgian and european history introductory statement by mr guy quaden, governor of the national bank of belgium, at a symposium on the history of the national bank of belgium, brussels, 22 november 2005. * * * ladies and gentlemen, when belgium celebrated its 175th anniversary, the national bank naturally joined in. thus, we sponsored an exhibition on β la belgique visionnaire β, and today we are publishing a book on the history of the bank, together with a set of detailed articles on the period 1940 β 1971. the history of the bank is closely intertwined with that of the belgian state. however, while the kingdom of belgium is celebrating its 175th anniversary this year, the bank is only β might i say β celebrating its 155th birthday. during the first twenty years of belgium β s existence, banknotes were issued by several private banks, mainly the societe generale, founded in 1822 under the orangist regime, and its principal rival, the banque de belgique, established in 1835. the financial crisis of 1848 led to the imposition of the β compulsory rate β β i. e. the suspension of the right to exchange banknotes for precious metals β and paralysis of the discount credit system. at this time, a young, dynamic politician, walthere frere - orban, was appointed as minister of finance. drawing radical conclusions from the situation, he took action against the two big mixed banks which were monopolising financial power in the country. he forced them to amend their statutes, renouncing their right of issue together with certain discount activities in favour of a new institution, the national bank. by way of consolation, when the national bank was launched, the two big banks became the sole shareholders in the new company, established in the form of a private limited liability company. all the same, at the time of its establishment the national bank was not the mere puppet of the big private banks. thus, the governor, the linchpin of the system, was appointed by the king and the government also nominated a commissioner, making the institution different from its counterparts in neighbouring countries. in return for the right of issue, the state also received a substantial part of the bank β s revenue. the national bank has never been quite like other financial institutions or limited companies. minister frere - orban, addressing parliament in 1850, made the following statement which i have | sometimes had occasion to repeat in recent years : β que voulons - nous en instituant une banque? nous voulons, non pas donner des benefices a des particuliers, non pas enrichir des actionnaires, mais nous instituons une banque dans l'interet public, dans l'interet general β. ( what is our intention in setting up a bank? we do not want to give profits to individuals, nor do we want to enrich shareholders ; we are establishing a bank in the public interest, in the general interest ). like the other central banks of the day, however, the bank did combine functions in the public interest with commercial activities. the book being published today describes the long and sometimes bumpy road, leading from the issuing and discount institution created in the mid 19th century to the modern central bank which the national bank of belgium gradually became in the course of the 20th century. over the years, the bank underwent a metamorphosis, shaped by developments in the monetary and financial system, changing attitudes towards the role of government in economic life, and changes in the international context. it gradually phased out its commercial activities, becoming increasingly public in character, especially just before and just after world war ii. and the bank β s activities became international in scope. nowadays, the national bank of belgium performs its functions as a modern central bank within a european context : issuing banknotes, defining and implementing monetary policy, managing the official foreign exchange reserves, overseeing the payment systems and contributing to the stability of the financial sector. the bank has been a member of the eurosystem ever since it was launched in 1999. the national bank of belgium has always been pro - european. in accordance with our country β s motto, we believe that in union there is strength. at the national bank of belgium we are not at all nostalgic for a monetary sovereignty which has in any case become illusory in highly integrated small and medium - sized economies. the switch to a single monetary policy, decided on by the governing council of the european central bank, has not meant any loss of monetary power for belgium. quite the reverse. in reality, since the day when the government and the bank decided, fifteen years ago, to peg the belgian franc to the most stable european currency, belgium was in reality already importing its monetary policy from frankfurt. the difference is that, while our | 1 |
indebted governments. in addition to that, purchases are restricted to a maximum of 33 % per country and bond series. this limit was set so that the eurosystem does not have to get into the awkward situation of having to prevent any restructuring of sovereign debt that may be deemed necessary. if the eurosystem were to acquire too many bonds, it would have a blocking minority in any vote on a haircut. and it would have to make use of its blocking minority in order not to violate the prohibition of monetary financing. but even below that threshold, the purchases have made the eurosystem the member states β largest creditor. what is more, in the context of asset purchases, changes in monetary policy impact much more directly on governments β funding costs than interest rate moves do. this has additionally blurred the line between monetary policy and fiscal policy. ultimately, if a return to monetary policy normality were called for, this could lead to the central bank coming under greater political pressure to keep funding costs at a low level β even if this were to the detriment of the objective of price stability. since, moreover, governments pay largely the same rate of interest on that part of their debt held by the central banks, for that part the disciplining effect of the capital markets is undermined, too. given the large number of problems, i regard government bond purchases purely as an instrument of last resort, say, when it comes to staving off a dangerous deflationary downward spiral of declining prices and wages. but i β ve said in the past that the fears of deflation are exaggerated. now they have very largely disappeared. indeed, the economic recovery in the euro area is gaining further momentum and is broadly based. that is also evidenced by the upward revision of the ecb staff β s growth projection. the projection has also shown, however, that inflationary pressure remains rather subdued. the domestic price pressures identified in the projection are, however, quite consistent with a path towards our definition of price stability. that fact that it β s taking a little longer to achieve our monetary policy objectives also has to do with enterprises and households in many euro - area countries still being occupied with reducing their high levels of debt in some cases. and a number of crisis - affected countries have succeeded in strengthening their competitiveness and transforming current account deficits into surpluses. but improving price competitiveness through wage moderation is, naturally enough, also dampening domestic price pressures. given subdued | . small and medium - sized institutions prove largely resilient to a simultaneous rise in the three types of risk. 2 / 4 bis central bankers'speeches thus the stress test scenario presents a mixed picture overall. on the whole, german banks and savings banks are robust and in good shape. but this should not blind us to the major challenges and the associated need for adjustments that banks face. elevated interest rate risk and the low level of risk provisioning increase vulnerability to shocks. i would therefore call on banks to focus their risk management operations primarily on the issues of maturity transformation and interest rate risk. 5. brexit will represent a challenge let me round out my remarks by discussing a challenge faced by all of us and which is having a particular impact on institutions. in all likelihood, the united kingdom will be leaving the european union on 29 march 2019. in that respect, no press conference on financial stability can avoid the topic of brexit. i will therefore address this topic in the remainder of my remarks. the negotiations β progress has tended to be on the sluggish side, creating considerable uncertainty for everyone : citizens, companies and not least the financial sector. in the 16 months that remain, the brexit - related restructuring has to be completed in order to ensure the uninterrupted continuation of customer relationships between economic areas. in this connection, i urgently advise all financial market participants to begin reorganising their operations as soon as possible, and to implement this process rigorously. this means, in particular, that all those banks seeking to continue to do business in germany or in other eu countries once the uk leaves the eu should, if they have not yet done so, file applications for licences as fast as possible. solutions also need to be found with regard to how existing contractual relationships will be continued seamlessly after brexit. for those institutions which change their contracts proactively hoping for their customers β tacit approval, legal risks could ensue, at least concerning retail customers. time will ultimately be the decisive factor. for the uk to achieve the smoothest possible exit from the eu, meticulous preparation by the banking industry is not the only thing that will be necessary. the preparations β or rather, the lack thereof β in the real sector give me cause for concern. companies should put their own access to financial services on a solid footing, and vulnerabilities that the uk leaving the eu will create for their own business models need to | 0.5 |
in the global circumstances surrounding prices and the effects on the global economy through financial markets, for example, a rise in long - term interest rates. in china, strong economic growth is continuing supported by firm domestic and external demand. however, it is pointed out that fixed asset investment continues relatively high growth and there is the risk of an infrastructural bottleneck arising, for example from the shortage of electricity. china has structural problems, including the large income gap between metropolitan and rural areas. the chinese economy should be watched carefully from the viewpoint of whether it can continue to achieve sustainable growth. iii. characteristics of corporate behavior and future prospects one of the characteristics of japan's current economic recovery is that the economy is growing at a moderate pace. as i have already mentioned, this is against the background of cautious corporate behavior. in other words, if corporate behavior becomes more active, it could cause the outlook for economic activity and prices, which i have just explained, to deviate upward. one might wonder why firms continue to be cautious even in a situation of continued economic recovery with improved profitability. i will present some possible explanations for their cautious behavior. first, it is rational of firms to want to repay interest - bearing liabilities and increase capital as appropriate, because they have become more conscious of business risk and financial risk after experiencing the severe downturn in the business cycle after the bursting of the bubble and instability in the financial system. firms have been strongly aware of the necessity of strengthening their resilience to unexpected shocks by squeezing inventories and fixed costs. they have also been making efforts to reduce their debt - to - capital ratios in light of the heightened awareness of credit ratings and financial markets'evaluation with the progress of globalization of financial markets. second, the intensified global competition accompanying emerging economies'transition to market economy, which i mentioned earlier, is likely another factor. cautious corporate behavior can be seen in most advanced nations, including the united states, though to a varying degree. the yield spread derived by subtracting the expected earnings on stocks from long - term interest rates has been on a declining trend in these countries. this means that the stock markets'expectations for economic growth have been declining. while corporate scandals in the united states related to accounting rules and delayed structural reforms in europe may also have had some effect on investors'sentiment, intensified global competition seems to have contributed to the cautiousness of corporate behavior. it is quite natural for japanese firms to feel that they are most | and this alleviates the negative effect of high crude oil prices on the economy. in addition, the yen's appreciation in the past two years has partially restrained the rise in crude oil prices denominated in yen. however, closer monitoring is required of the risk of downward deviation of the economy, due to possible emergence of a profit squeeze and decline in real purchasing power, as the price of middle eastern crude oil, which accounts for a significant proportion of japan's imports, has risen in the current situation unlike during the price hike last year. in addition, as evident from continuing high price levels in the futures market, the possibility cannot be ruled out that expectations that crude oil prices will remain high may become more widespread. if the high price is actually sustained, the trajectory of global economic growth might deviate downward, and we need to be aware of the indirect effects of any deceleration of the global economy on the japanese economy through the resulting reduction in exports. the second point i would like to discuss as downside risk is the outlook for the world economy. the world economy continues steady expansion, occurring mainly in the united states and china, and it is thought very likely that it will continue expanding at a rate roughly equivalent to the potential growth rate. at the meeting in april, the g - 7 countries concurred that global expansion remained robust and economic growth in 2005 is likely to be solid. the imf forecast of real gdp growth for 2005 and 2006 is 4 to 5 percent. regarding price developments, the rise in energy and materials prices, including crude oil, has so far been absorbed by the corporate sector partly through productivity increases, and as a result, inflation has been contained. however, with the possibility of high materials prices continuing for a considerable period, awareness of a risk of inflation on a global basis has begun to increase. in the u. s. economy, although inflationary pressures are most likely to be contained, due consideration has been given to a possible increase in inflation expectations, since productivity growth has been decelerating and unit labor cost has been increasing in a situation where domestic supply - demand conditions are already tight. the u. s. federal reserve indicated its judgment on prices in the press release issued after the policy change in may as follows : " pressures on inflation have picked up in recent months and pricing power is more evident. longer - term inflation expectations remain well contained. " the bank will closely monitor, with consideration of their implications for the japanese economy, changes | 1 |
system was 11. 6 %, compared with the current minimum of 8 % required under the basel accord. it is worth stressing β as certain comments made seek to omit this or completely misinterpret it β that the fundamental intention and effect of the capital injections with public funds ( whether from the european stability mechanism or from the spanish treasury ) has been to prevent the winding - up of banks, thereby preserving customer deposits. bis central bankers β speeches it would be remiss not to mention here the problem of the hybrid capital and subordinated debt instruments sold to retail customers by credit institutions which, following the detection of capital shortfalls in the stress tests completed last september, were unable to cover their capital needs with their own resources and received state aid. these banks, on requiring public financial assistance, are subject to the terms of the memorandum of understanding signed on 20 july 2012, to law 9 / 2012 on the restructuring and resolution of credit institutions and, consequently, to the european commission β s arrangements governing state aid. the banco de espana, directly through the frob and the deposit guarantee fund, and via its participation in the arbitrage committee set up last march, is collaborating with the other authorities involved and with the banks themselves to find the best possible solution to this serious and multi - faceted problem ; not all these instruments are the same, they have not been sold in the same way, and nor will they be given the same treatment under european regulations. liquidity thirdly, liquidity. spain underwent a serious external funding crisis in 2012. the origins of this crisis lay both in the crisis in the euro area and negative market perception of our banks β solvency. a feedback loop between sovereign risk and banking risk emerged, dominated by the socalled β redenomination risk β, i. e. the risk that certain countries might abandon the monetary union. that led to a very difficult situation for our external funding, which the liquidity supplied by the european central bank allowed us to address. in the last quarter of 2012, however, the tensions eased and the liquidity of our banks began to improve. the debit position vis - a - vis the ecb decreased from β¬410 billion in august 2012 to slightly more than β¬250 billion last may. furthermore, the access of our banks to bond markets has improved. npl ratio fourth, the npl ratio. in december 2012, after the initial phase of transfer of assets to the sar | process of debt re - balancing and has made it reside, above all, on a contraction in lending. the last year in which lending posted a positive rate of change in spain was in 2008. since then, net credit flows, both to households and to non - financial corporations, have been bis central bankers β speeches negative overall, although there was a very slight increase in lending to households for house purchase in 2010. in 2012, total lending to the resident non - financial private - sector fell by 5. 8 % ; credit to households fell by 3. 7 % while that to non - financial corporations decreased by 8 %. when total credit to productive activities excluding construction, real estate development and financial services is considered, the decline was not as sharp, standing at 6 %. indeed, credit to productive activities excluding construction, real estate development and financial services was slightly positive in 2010, but has been negative in 2011, 2012 and in 2013 to date. in considering these developments it should evidently be borne in mind that credit for construction and real estate development activities had to shrink as the cyclical upturn ended and the excesses of the period 2004 β 2008 had to be corrected. the problem naturally lies in the negative rates of credit flow for productive activities other than construction and development, and in the contraction of credit for households, both for house purchases and for other purposes. and, in addition to a problem of volume, there is a problem of prices ; our households and firms are paying higher interest rates than the average rates paid for comparable transactions in the euro area as a whole, although these spreads are small in the case of financing for house purchase, very high for consumer loans and also substantial for credit obtained by non - financial corporations. to explain this we must look both at supply - side factors relating to loanable funds by banks, and to demand - side factors on the part of borrowers, households and firms. concerning the demand for credit, the recessionary environment, high unemployment, the hitherto scant growth prospects and uncertainty are evidently affecting potential borrowers. on the supply side, neither liquidity β provided in a stable fashion and at a low cost by the eurosystem β nor the shortage of capital would appear to be significant explanatory factors. we believe that on the supply side the two most influential factors are the deleveraging of banks and the lack of projects that may be deemed solvent, or offer sufficient guarantees. there are in fact figures confirming that the most dynamic | 1 |
lael brainard : us economic outlook and monetary policy - an update speech ( via webcast ) by ms lael brainard, member of the board of governors of the federal reserve system, at the c. peter mccolough series on international economics, council on foreign relations, new york city, 2 march 2021. * * * it has been one year since the first wave of the covid - 19 pandemic hit our shores β a year marked by heartbreak and hardship. we are all looking forward to a brighter time ahead, when vaccinations are widespread, the recovery is broad based and inclusive, and services, schools, sports, and social life are in person. the expected path of the u. s. economy has strengthened with the prospect of widespread vaccinations and additional fiscal stimulus, but risks remain, and we are currently far from our goals. 1 current situation after a dark winter with elevated case counts and setbacks on service - sector jobs, case counts have come down and spending is picking up. economic forecasts for growth during the first quarter have been significantly upgraded in response to the better - than - expected data. 2 january data for household spending overall came in strong β confirming that the renewal of fiscal support at the end of the year provided a much needed boost to household incomes and spending at the turn of the year. the income support provided by fiscal authorities to hard - hit workers, households, businesses, and states and localities, as well as the actions of the federal reserve to promote orderly functioning in financial markets and low borrowing costs for households and businesses, have been providing vital support for the economy. in recent weeks, vaccinations have been increasing, while weekly cases, hospitalizations, and deaths have decreased. the seven - day moving average of daily covid deaths, which peaked in mid - january, declined about 35 percent during the month of february, although sadly it is still at high levels. 3 as of yesterday, nearly 77 million vaccination doses had been administered. while the progress on vaccinations is promising, jobs are currently down by 10 million relative to pre - pandemic levels. improvements in the labor market stalled late last year after rebounding partway in the summer and fall of 2020. when we take into consideration the more than 4 million workers who have left the labor force since the pandemic started, as well as misclassification errors, the unemployment rate is close to 10 percent currently β much | the precovid level, and inflation has been running below 2 percent for years. we will need to be patient to achieve the outcomes set out in our guidance. 1 i am grateful to kurt lewis for assistance in preparing these remarks. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 see, for example, the federal reserve bank of atlanta β s gdpnow, which revised up the estimate for first - quarter growth by 5 percentage points on the release of the retail sales data. the latest estimate is 8. 8 percent. the gdpnow forecast is available on the federal reserve bank of atlanta β s website at www. frbatlanta. org / cqer / research / gdpnow. 3 for more information, see the centers for disease control and prevention β s covid data page, which is available at covid. cdc. gov / covid - data - tracker. 4 see the lower panel of figure 3 in lael brainard ( 2021 ), " how should we think about full employment in the federal reserve β s dual mandate? " speech delivered at the ec10, principles of economics, lecture, faculty of arts and sciences, harvard university, cambridge, mass. ( via webcast ), february 24. 5 the percentages are staff calculations based on the microdata from the january current population survey. for more information on this analysis, see the box β disparities in job loss during the pandemic β in board of governors of the federal reserve system ( 2021 ), monetary policy report ( pdf ) ( washington : board of governors, february ), pp. 12 β 14. 6 see olivia lofton, nicolas petrosky - nadeau, and lily seitelman ( 2021 ), " parents in a pandemic labor market, " working paper 2021 β 04 ( san francisco : federal reserve bank of san francisco, february ) ; and lael brainard ( 2020 ), " achieving a broad - based and inclusive recovery, " speech delivered at β post - covid β policy challenges for the global economy, β society of professional economists annual online conference, october 21. 7 for more information on the analysis on employment by wage quartile, see the box β disparities in job loss during the pandemic β in board of governors, monetary policy report, in note 5. 8 for examples of the range of estimates of the effects of the | 1 |
is key to keep in mind the differences between these and the financial cycle, since they are generally not synchronized and have different timeframes or temporality. there are also clear differences between the best instruments to achieve price stability and financial stability, given that the regulatory and supervisory policies can address the specific challenges of financial stability. 2. interconnection between monetary and financial policies. despite their distinct character, there is also a close interconnection between monetary policy and financial stability that must not be underestimated. many emerging economies have experienced episodes of macroeconomic weaknesses, which have intensified due to financial crises. as a result, financial stability considerations have been a very important component of risk assessments for monetary policy decisions in these countries. whereas prior to the global financial crisis financial stability was taken for granted in advanced economies, after this episode these economies have given a more prominent role for financial stability within their policy framework. in this sense, it is imperative that the challenges and risks associated with the interconnection between monetary policy and financial stability are considered. 3. carry out an integrated policy assessment. in order to assess the type of stress scenarios to which an economy β s financial system is subject to, it is essential to thoroughly analyze the interaction between several policies. this is better done by an integrated policy approach that takes into account the interrelation of monetary policy, the exchange rate regime, fiscal policy and macroprudential measures. it is necessary to comprehensively model the risks to which the economy is subject to, in order to adopt the most appropriate policies. in sum, considering these three dimensions of the analysis can lead to a more effective central bank decision - making process and help attain the central bank price stability and financial stability objectives. finally, it is important to be mindful of the accumulation of risks that can take place over time, especially in a scenario like the present one where the monetary policy stance of the advanced economies have become more accommodative, and therefore the search - for - yield phenomenon is likely to become an important driver of capital flows. it is very clear to us that there is a significant need for a better understanding of the mechanisms by which monetary and macroprudential policy interact and global financial cycles propagate and impact our own financial system. to conclude, i would like to restate that banco de mexico considers each of these topics highly relevant for monetary policy under the changing global conditions, and thus the importance of the research being discussed in this conference | international finance discussion papers, board of governors of the federal reserve system, no. 891. kose, m. a., e. s. prasad, k. rogoff and s. - j. wei ( 2006 ), β financial globalisation : a reappraisal β, nber working paper 12484 kose, m. a., e. s. prasad and m. e. terrones ( 2005 ), β growth and volatility in an era of globalisations β, imf staff papers, vol. 52, pp. 31 - 63 kose, m. a., e. s. prasad, and m. e. terrones ( 2006 ), β how do trade and financial integration affect the relationship between growth and volatility? β, journal of international economics, vol. 69, pp. 176 - 202. kroszner, r. s. ( 2007 ), β globalization and capital markets : implications for inflation and the yield curve β, remarks at the center for financial stability ( cef ), buenos aires, argentina, 16 may. pain, n., i. koske and m. sollie ( 2006 ), β globalisation and inflation in the oecd economies β, oecd economics department working paper no 52, pula, g. and f. skudelny ( 2007 ), β the impact of rising imports from low - cost countries on euro area prices and labour markets β some preliminary findings β, paper presented at the ecb conference on β globalisation and the macroeconomy β, july. reichlin, l. ( 2006 ), panel remarks at the thirteenth international conference β financial markets and the real economy in a low interest rate environment β bank of japan, tokyo. rajan, r. ( 2005 ), β has financial development made the world riskier? β nber working paper no. 11728. rajan, r. ( 2006 ), β monetary policy and incentives β, in fernandez de lis, s. and restoy, f., central banks in the 21st century, proceedings of an international conference sponsored by the banco de espana ; madrid, banco de espana. rogoff, k. ( 2004 ), β globalization and global disinflation β, international monetary fund, paper prepared for the federal reserve bank of kansas city conference on β monetary policy and uncertainty : adapting to a changing economy | 0 |
- of - right cornering of subsidies by all, which undermines their efficient and economic use. we must appreciate that these are difficult times for our economy and, therefore, we should be willing to make small sacrifices. we should be willing to live with smaller wage hikes. this is applicable to all sections of the society, especially, the elitist section. infrastructure 19. a very disquieting aspect of infrastructure usage in the country is that we demand the best infrastructure but want to access them for free. in india, vips get access to subsidies and infrastructural services first, and there is little concern for whether or not it reaches the poor and needy. we should stop this culture from becoming a moral hazard. again here, the need for good governance comes to the fore. while on the subject of infrastructure, i would like to add that one cannot fund the growth of the infrastructure sector based on debt alone. as the situation stands, many of the stalled infrastructure projects have been financed solely by debt and promoters β equity contribution is absolutely minimal. our observation is that often debt is raised in the holding companies and is down - streamed as equity in subsidiary ventures or spvs. this is a risky practice. corporate groups have become hugely leveraged and their debt servicing abilities have been severely constrained. the promoters of stalled infrastructure projects have little incentive to bring the projects on stream. as future business managers of the country, i would like to impress upon you to realise the importance of equity in running successful businesses, as it creates an incentive for managements to eschew excessive risks. we need ideas to be able to raise fresh equity. concluding message 20. i would like to conclude by giving you three messages, which i always do, whenever i get an opportunity to interact with students. my first message is that you must strive to be β third generation literate β. all of you have acquired the first and second generation literacy i. e. gained subject knowledge by reading books and the knowledge about computers and bis central bankers β speeches information technology. what i mean by third generation literacy is to become β information literate β. i read somewhere that every day, we create some 2. 5 quintillion bytes of data and more than 90 per cent of the data has been created in the last two years. i do not know how many zeroes a quintillion has, but, that definitely means a whole lot of information. every day in your | sheila m β mbijjewe : launch of the 2016 finaccess household survey speech by ms sheila m β mbijjewe, deputy governor of the central bank of kenya, at the launch of the 2016 finaccess household survey, nairobi, 18 february 2016. * * * 1. i am delighted and honoured to join you today at this launch of the key findings of the 2016 finaccess household survey that also marks the 10th anniversary of the finaccess surveys in kenya. 2. policy goal : the creation of a vibrant, efficient, stable and globally competitive and inclusive financial system to drive savings and investments necessary to achieve our development agenda as outlined in kenya β s vision 2030 is crucial. β’ there cannot be meaningful financial sector development if finance is not accessible and inclusive. β’ financial inclusion in terms of access, usage, quality and welfare remains one of the priority areas for the government. 3. financial inclusion landscape : i am pleased to be part of this financial inclusion agenda of improving the measurement, understanding, tracking progress and its dynamics overtime. this has been done mainly through undertaking finaccess suite of surveys since 2006. 4. key findings : the results we are releasing today reflect developments in the wider economy, infrastructural facilities, technological innovations, financial sector developments, policy and regulatory reforms as well as financial markets innovations. i am delighted to announce that kenya has made a lot of progress towards the kenya vision 2030 financial sector development agenda. in terms of financial inclusion, we have far exceeded the government target to increase the proportion of the population with access to finance to over 70 % by 2018 under the second medium term plan, 2013 β 2018. β’ the proportion of adult population using formal financial services rose to 75. 3 % in 2016. β’ the rural - urban formal financial access gap has narrowed since 2006. β’ kenyans are increasingly using a combinations of a variety of financial services providers and new innovations reflecting the importance of a diversified financial system with 59. 7 % of the adult population using two or more types of financial services providers compared with 18. 8 % in 2006. bis central bankers β speeches 5. there is need to foster appropriate and proportional regulation and supervision of the different financial services providers to enhance access to a broader mix of providers and products that meet the needs of different consumers. with this growing demand from consumers for a diverse mix of products and innovations, the financial sector requires an enabling environment to foster innovations to the changing | 0 |
worsen exchange rate and inflation expectations, and make it harder for ukraine to access the international capital markets in order to repay the heavy debt load of the coming years. there are other significant risks. they include : the continued cooling of the global economy and a further deterioration in terms of trade an escalation of the military conflict in eastern ukraine and new trade restrictions introduced by russia a drop in the harvest of grain, fruit and vegetable crops in ukraine in the wake of unfavorable weather the higher volatility of global food prices, driven by global climate change a decrease in foreign capital inflows. why did the nbu decide to cut the key policy rate by as much as 2. 5 pp? the balance of risks has practically remained unchanged since the previous monetary policy 2 / 3 bis central bankers'speeches meeting, while inflation has slowed down to its target of 5 % Β± 1 pp even faster than the nbu expected. under such conditions, the nbu has decided to cut the key policy rate by as much as 2. 5 pp. this is another step towards creating favorable conditions for reviving lending to the real sector and speeding up economic growth. what will the nbu β s monetary policy stance be in future? in light of the more rapid improvement in ukraine β s macroeconomic conditions, the nbu has now somewhat more ambitious plans compared to when it published its october forecast. if the inflation rate stabilizes in its target range of 5 % Β± 1 pp, the key policy rate could be reduced to 7 % by late 2020. the nbu estimates the new neutral level of the key policy rate to be precisely at 7 %. the most pronounced cuts in the key policy rate are expected to take place in h1 of the current year. this will lead to further decreases in loan rates for businesses and households, thus stimulating business activity. this is our baseline scenario. if the above inflation risks materialize, the key policy rate could be decreased more slowly. conversely, faster implementation of reforms, coupled with significant investment inflows, could enable the nbu to cut the key policy rate at a quicker pace. thank you for your attention! 3 / 3 bis central bankers'speeches | exact data on that gap are difficult to come by. estimates suggest that it might reach up to 40 % for a fully collateralised loan. 15 4 / 7 bis central bankers'speeches reduction of that gap, which has many causes, requires a comprehensive strategy. determined structural reforms should play a prominent role in the action plan for national and european authorities, regardless of the actual solutions adopted by individual countries. for instance, debt enforcement procedures should be streamlined, and their cost lowered. this may require in particular that judicial and out - of - court capacity is increased. to mitigate the information asymmetry, access to financial information about distressed debtors and public data registers should be made easier. investment in improving quality of that information is often needed, and may be rewarded by investors with higher transaction prices. within the comprehensive strategy, there may be a role for national governments to support the correction of the npl market failure. necessary structural reforms may require a lot of time to yield fruit and to earn credit with investors. this is a very tangible issue also in italy, where recent reforms of the debt enforcement claims have not yet produced the expected results, and therefore have not influenced npl prices to the desired extent. asset management companies ( amcs ) may aid in correcting the market failure. they can swiftly clean up npls from bank balance sheets, and resolve them over a longer period of time. acquisition of assets at their long - term economic value, instead of market value which is depressed by low liquidity and high uncertainty, minimises fire sale losses. sweden, germany, ireland, spain, slovenia and korea, for example, used these tools to manage their banking crises, often with a focus on loans backed by real estate. there is one common feature in this type of amc : state support. by putting capital and funding guarantees at stake, governments can signal their commitment to the structural reforms and bring forward the related benefits. a similar role may be played by securitisation schemes. 16 the eu legal framework does not close the door to setting up an amc with government sponsorship. the rules also allow for precautionary recapitalisation of banks by the public sector in cases of significant financial stability concerns, subject to strict conditions laid down in the brrd ( art. 32, 4 ), covering hypothetical losses estimated under an adverse scenario of a stress test. precautionary recapitalisations also have to respect state aid rules that generally require bail - in of | 0 |
economic fragmentation. other downside risks we discussed at the meetings were a severe tightening of global financial conditions, sharper monetary policy impact amid high debt, stickier inflation, systematic sovereign debt distress in emerging markets and developing countries, china's growth and the fragmentation that is hampering multilateral cooperation. the increased uncertainty faced by the global economy is reflected in the ongoing high uncertainty around the outlook for the euro area. the governing council of the ecb will be especially focused on incoming data as part of making our monetary policy decisionmaking in the coming weeks. our recent decisions represent a significant tightening of the monetary policy stance, commensurate to the significant challenges to price stability we have been facing. and on the evidence so far, it is too early to start planning for a pause in our tightening of policy. indeed, and again based on the evidence we have to - date, rates will need to continue at restrictive levels to help re - set the balance between supply and demand in the economy and bring down inflation. supervisory milestones ahead in 2023 deputy governor's sharon donnery and derville rowland have recently spoken about our supervisory milestones for 2023. this year our principal focus will be on : the assessment and management of risks to financial and operational resilience ; continuing to drive for fair outcomes for consumer and investors ; overseeing the withdrawal of ulster bank and kbc from the irish market ; and detecting and sanctioning market abuse. transforming our approach to regulation and supervision a key priority in our strategy is to transform how we regulate and supervise the financial services sector. our objective is more efficient and effective regulation and supervision, better enabled by data and technology, and supported by new skills and enhanced capabilities. 2 / 3 bis - central bankers'speeches we will retain our risk - based approach to supervision but operate in a more integrated manner across our expanding mandates. we are currently in the early design phase of this, but it is something we would like to discuss with you in the future. we are aiming to put innovation at the centre of our approach to regulation and supervision, both in how we enhance our own operational capabilities and also in how we harness the benefits and mitigate the risks arising from innovation within firms and the financial sector as a whole. on the enhancement of our innovation hub, i understand there was a good discussion, with useful insights, at the innovation sub - group about actions that we can consider as part of this work. we will engage with you and the wider | i want to mention two : the uk β s departure from the eu and market - based finance. the uk β s departure from the eu following the uk β s exit from the eu on 31 january 2020, negotiations are currently underway to try and conclude a free trade agreement ( fta ) between the parties before the end of 2020. if there is no agreement on a new fta and no extension of the current transition period then the eu and uk could move to trading on wto terms from january 2021. in previous analysis, the 3 / 6 bis central bankers'speeches central bank has discussed the risks to the economy from future potential post - brexit trade arrangements. 3 given the extensive linkages between ireland and the uk, the uk β s withdrawal from the eu will affect the irish economy through a range of channels. with the uk exiting the eu customs union and single market, trade between ireland and the uk will not be as frictionless as today. and while the successful conclusion of an fta could eliminate tariffs on most eu - uk trade, other frictions would arise that would make trade in both goods and services more cumbersome. these non - tariff barriers include the possible need to manage new import and export formalities, including customs and security declarations. trade in agri - food products β particularly important in an irish context β could also be subject to new additional checks and inspections. in the case of a wto arrangement these effects on trade would be compounded by the imposition of tariffs. it is important to note that new tariff and nontariff barriers would negatively affect both importing and exporting. over 20 per cent of imports of irish - owned firms are either completely or very highly reliant on imports coming from the uk, the majority of these imports are intermediate inputs used for further production in ireland. 4 ( figure 8 : effects of different uk withdrawal scenarios on irish output ) in addition to disruption to trade flows, the uk β s departure from the eu could affect the economy through other channels. in the short - run, the ongoing uncertainty over nature of the uk β s future relationship with the eu after the transition period could cause firms to delay investment spending. heightened uncertainty could weigh on sentiment more generally, dampening spending by households. exchange rates and financial markets could also be affected. in the long - run, the uk β s departure is expected to have negative effects on the uk economy through lower productivity and weaker investment. slower uk growth arising from | 0.5 |
is lost, damaged or stolen as the credit card statement can vouch for the fact that you bought the item even in the absence of the original receipt ; β’ it helps you build a credit line which can be used by the credit reference company to support your creditworthiness when applying for a loan ; and bis central bankers β speeches β’ in the case of emergencies, a card can become handy in paying for requirements which may be completely outside your budget. these are some of the basic conveniences of credit cards which will come about with the extensive use of this instrument in this country. apart from the cardholders, credit cards have other wider advantages which impact on the greater economy. from our perspective as a central bank, we are keen to promote the use of non - cash and more efficient payment systems for its convenience, flexibility and security. we consider it as one of the instruments that can contribute to the promotion of financial inclusion as has been clearly demonstrated in other countries where cards are a common tool for the settlement of financial transactions. in the united states, for instance, 80 % of households have at least one credit card. in zambia, with the growing emphasis on trade within the regional economic groupings like sadc and comesa, plastic money in the form of credit cards, is a very practical way of facilitating settlement of cross border transactions. another benefit which may be associated, with the more extensive use of e - money is the potential increase in tax compliance among the retail and wholesale sectors. the use of credit cards generates accurate records of purchases which currently may not be captured by the zambia revenue authority because business houses may declare false figures. with the use of a credit card there is no provision to cheat the taxman by refraining from issuing a receipt as the record of the transaction will speak for itself. whilst on the subject of greater tax compliance, i would want to see some form of requirement for most businesses to use points of sale terminals and other non - cash forms of payment in our shopping malls and central business district businesses where we see a resistance from businesses to embrace this technology in favour of cash. but let me end my remarks this evening by pointing out a number of problems and challenges that might be associated with the use of credit cards. the biggest disadvantage of credit cards is that they encourage the holders to spend money they don β t have. if the credit card does not require that you pay off your balance each month, this balance will accumulate. the longer you wait to settle, the more | evolution in risk management practice across a broad array of financial institutions. through horizontal reviews that focus on specific dimensions of risk management, we have a reasonably good sense of where the frontier in risk management practices is across the industry, and understand where the gap between this frontier and average practice is the greatest. the size of this gap in practice can increase in market conditions where competitive pressures and a search for return works to erode discipline. i thought it might be useful to highlight some of the areas where leading practice is farthest ahead of typical practice. leading practice does not imply that there is a definitely superior model that we expect all firms to converge to over time. in most of these areas, there is some diversity in what defines the frontier of excellence. we recognize this, even as we encourage firms to put in place stronger and more sophisticated systems more commensurate with the complexity of the risks they are taking. β’ comprehensive aggregation of credit exposure : the most sophisticated among large diversified financial institutions have well - developed systems for aggregating credit exposure, with a common methodology and results available relatively quickly, across the full range of transactions and business lines they engage in with a single entity or groups of entities with correlated risks. β’ stress testing and scenario analysis : firms at the leading edge have moved well beyond reliance on β value - at - risk β complemented by stress tests of discrete shocks. they employ stress tests built around more exacting, forward - looking scenarios integrating large moves in a number of variables, more tailored to the risk profile of the firm and current market conditions, and the reactions of other market participants and counterparties. β’ counterparty credit risk management : the most sophisticated firms use much more careful and sophisticated approaches for measuring potential future exposure, and they analyze how exposures may respond in conditions of significant market stress. with respect to hedge fund exposure in particular, the leading firms employ comprehensive evaluation of the risk profile of the hedge fund to set credit thresholds and terms and a more disciplined approach to setting sufficiently high levels of initial margin. β’ measuring and managing interest rate risk : leading institutions assess their exposure to interest rate risk in a comprehensive manner across the firm β s business lines. the most advanced approaches are able to assess the impact of rate, spread and implied volatility movements under multiple scenarios in both normal and stressed market conditions. these institutions also strive to achieve a balance between shorter term earnings impacts, and the longer - term preservation of economic value. β’ liquidity risk : similar evolution has | 0 |
that they are well along in their own preparations worldwide and many of them are pushing their numerous local suppliers to be prepared to maintain the flow of materials and services. that is a significant positive step. the recent conversion to the euro was very smooth, thus proving that a job similar to the one we have at hand can be successfully accomplished. but that intense focus in europe, along with other world financial troubles, has obviously been deflecting all too much attention away from y2k issues. i worry that time will simply run out for some activities in some countries, particularly in the developing economies, and as a result risks exist for some level of disruption in various locales around the world. all of this has been affecting our economy in a variety of ways. on the positive side an important element in some y2k programs is the accelerated replacement of aging computer systems with modern, state - of - the - art hardware and software. such capital expenditures should raise the level of productivity in those enterprises, and addressing y2k has increased the awareness of many senior executives of the complexity and importance of carefully managing their corporate information technology resources. the increased replacement demand also has contributed to the spectacular recent growth in this country β s computer hardware and software industries. a reverse effect, which i believe will shortly become visible, is that many institutions will β freeze β their remediated and tested systems for the remainder of this year, effectively foregoing the installation of major new hardware and software systems. this moves some spending on technology forward from 1999 into 2000. so, ultimately, we are largely shifting the timing of these investment expenditures, rather than changing their total amounts very much. another area in which uncertainty about y2k readiness is likely to have noticeable effects in 1999 is in the management of inventories. as the millennium approaches, i expect businesses will want to hold larger inventories of goods as insurance against y2k - related supply disruptions. such a shift from β just - in - time β inventory management to a β just - in - case β posture is likely to prompt an increase in orders and production during late 1999, with these stocks subsequently being run off in the first half of 2000. we at the fed, for example, will do precisely that in our management of the production of new currency. while year 2000 preparation efforts may give a temporary boost to economic activity in some sectors, the probable net effect on the aggregate economy is slightly negative. other than the obviously very valuable ability to maintain operations | promoting expenditure. 56. the second task is to bring inflation down first to 5 per cent, and then even lower, consistent with india β s broader integration into the global economy. a high inflation scenario makes both savers and investors uncertain. the current inflation we are experiencing is a consequence of both supply shocks and demand pressures. the reserve bank β s monetary tightening has been aimed at restraining demand and anchoring inflation expectations. this has to be supplemented by supply side responses to raise the potential output of the economy. tenth challenge : good governance 57. i have so far highlighted nine challenges to accelerating our growth. identifying these challenges and drawing up plans to address them is the relatively easy part. what is infinitely more difficult is the translation of those policies into action. that brings me to the final item on my list β the challenge of providing good governance. 58. that good governance is at the very heart of economic growth and poverty reduction, and even political legitimacy, is one of the undisputed lessons of development experience from around the world over the last 60 years. 59. in the ultimate analysis, it is the quality of governance that separates success and failure in economic development. across countries, application of the same policies in roughly similar contexts has produced dramatically different results. in our own country, we have seen vast differences across states in development outcomes from out of the same mix of development policies. these differences across countries as well as across regions within countries, even as they adopt similar policy packages, arise because of differences in governance. indeed research shows that per capita incomes and the quality of governance are strongly correlated indicating a virtuous circle in which good governance results in economic development. rejig the elephant dance 60. let me now conclude. i have highlighted ten challenges that we need to address in order to accelerate output growth with focus on the quality of growth. i must admit that this list is by no means exhaustive, and individual lists can vary both in content and emphasis. i hope my list would, at the least, serve as a reference point for thinking through. 61. as people we are understandably eager for our economy to sprint like a tiger rather than amble like an elephant. yet few animals have an elephant β s stamina. and elephants do not always amble ; they dance too. and when elephants start dancing, they can go on for a long long time. but while dancing, an elephant can go off course occasionally. that calls for rejigging the dance. as | 0 |
soft landing than a recession induced process. for the uk, this is consistent with how we have revised our outlook for growth, and the numbers themselves so far this year. inflation expectations appear to be better anchored, which i put down in good part to the presence of independent central banks with clear mandates and nominal anchors, usually in the form of inflation targets. but, crucially, policy does have to respond to ensure credibility is maintained. moreover, while second round effects may be smaller that does not tell us how much smaller and less persistent they will eventually end up being than in the past. on this basis, at the moment i put more weight on the first case β self - correction - but some smaller weight on each of the other two. these weights can of course change over time. this is an important issue of the moment for monetary policy. it is directly relevant to the question of how challenging the last mile of returning to our inflation target level on a sustained basis actually will be. the well - known argument goes that an independent central bank operating a transparent low inflation target successfully over time will anchor inflation expectations more consistently. in this world, in the short - run monetary policy can respond to shocks with suitable flexibility, acting consistently but not always identically, to return inflation to target. in the uk case, the evidence suggests this may have worked insofar as we are seeing a lower level of inflation persistence than we expected a year ago. but, we need to be cautious because the job is not completed β we are not yet back to target on a sustained basis. policy setting will need to remain restrictive for sufficiently long until the risks to inflation remaining sustainably around the 2 % target in the medium term have dissipated further. the course will therefore be a steady one. before considering challenges going forward, i want to pull out one further point from recent experience. in an effective monetary policy regime we should have flexibility in the short term on public how quickly we return inflation to target. looking back over recent years, i think it is common ground that the covid and ukraine shocks could not have been anticipated, and certainly not in sufficient time for any consequent monetary policy actions to have had an effect on monetary conditions. but there are two follow - up questions that i get asked. one starts with the words β with the benefit of hindsight β what would you have done. the second, asks about actual policy choices once the shocks took effect. this is where so - called trade - | meeting the target later on by avoiding a disruptive bust. the crisis and subsequent great recession seem to make this logic even more compelling. but unfortunately, by the time an unsustainable credit boom has been diagnosed, a small increase in policy rates is unlikely to do much to cool it. and a large increase is likely to generate unacceptable collateral damage to the real economy. in a paper for the federal reserve β s annual conference at jackson hole a couple of years ago ( bean et al., 2011 ), i reported the results of some simulations of what might have happened if bank rate had been 200 basis points higher during the four years before the crisis began. the answer is that while the rise in real house prices over that period would have been less than half as large, the impact on overall real credit growth would have been pretty modest, reducing it by only a tenth β hardly enough to have a major bearing on the magnitude of the subsequent bust. moreover, output would have been some 3 per cent lower. monetary policy on its own therefore does not seem especially well suited to preventing credit / asset - price booms. so the crisis exposed not only the inadequacy of our understanding of the true nature of the risks that had built up in the financial sector, but also the need for suitable instruments to deal with them. one of the key reforms in the united kingdom following the crisis has been to establish a body β the financial policy committee ( fpc ) β with the responsibility for overseeing the stability of the financial system, together with specific powers to achieve that. the fpc will exist on a statutory basis once the financial services act has passed into law, but has been operating on an interim basis since june 2011. the fpc has two objectives. first and foremost, it is charged with identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the uk financial system. but that is accompanied by a secondary goal : subject to protecting resilience, it should support the economic policy of the government, including its objectives for growth and employment. this formulation mirrors that for the monetary policy committee and should ensure that the fpc approaches its primary objective of ensuring resilience of the financial system in a way that does not unduly impede economic growth. seven of the members of the committee, including myself, are drawn from within the financial authorities : the bank of england and the financial services authority ( fsa ). | 0.5 |
buffer for capital flow volatility. in this context, a more balanced capital account is an important supporting factor. to this end, the bot is currently formulating a capital account liberalization master plan. this plan seeks to promote thai investment abroad and streamline foreign exchange regulation, thereby increasing economic adaptability and bis central bankers β speeches promoting greater awareness and capability for the private sector β s foreign exchange risk management, which relate directly to the businesses of many of you present here. in addition to maintaining stability, bot can also enhance competitiveness by ensuring financial institutions β role as effective intermediaries of capital, thereby improving financial access and inclusive growth. in this regard, i like to mention that we have launched the financial consumer protection center to boost financial literacy. clearly, a more competitive financial sector will support the process of structural change i discussed before. the second financial sector master plan, which takes into account major global developments such as regional integration and global regulatory reform, will further this vision of a modern financial sector landscape. in designing such a landscape, many key policy issues will need to be explored in depth. these issues include a regulatory framework that promotes financial sector development without compromising financial sector stability, the optimal adoption of international standards for bank supervision, a level - playing field among different domestic financial players, and the competitiveness of the thai financial system in the asean context of qualified asean banks, and so on. ladies and gentlemen, i believe that the efforts put forth by the bot will fulfill the objective of enhancing competitiveness and ensuring long - term macroeconomic and financial stability. however, we cannot do this alone, especially in a world of global economic uncertainty, domestic challenges and diminishing fiscal room. a common vision among all stakeholders is necessary for policy coordination. the advanced economies that are now experiencing public debt crisis offer valuable lessons for emerging countries as well as thailand where planned fiscal spending will add to fiscal debt. i believe that at this crucial juncture, many countries, thailand included, still have time to manage possible future fiscal stresses. austerity by means of cutting public spending is one conventional way to achieve fiscal consolidation. however, most emerging and developing countries still require essential infrastructure investment to unleash their own growth potential. austerity without growth would be futile. therefore, what is needed is constructive fiscal consolidation rather than dogmatic austerity programs. prudential cuts can be combined with infrastructure spending to raise competitiveness levels and ensure sustainable long - term growth. rest assured | tools, including large foreign reserves, the current policy capability is adequate in meeting challenges of the day. second pillar : fixing the shortfalls ladies and gentlemen, at the same time, a number of pressure points in the thai economy have started to emerge in the aftermath of the global financial crisis. the decline of economic growth in recent years relative to pre - crisis period hints at structural bottlenecks holding back the economy. exports which were the leading driver of pre - crisis growth are expected to be flat this year, lagging those of our competitors. anecdotal evidence suggests that some manufacturing sectors are struggling to be integrated into the global modern supply chain. slow gain in labor productivity, and inadequate investment may be hindering the overall technological advances, a critical pre - requisite for sustaining long - term development. these problems are potentially our existing shortfalls that need to be overcome in the second pillar of development. however, it may be too premature to put the entire blame on structural flaws. there are a number of cyclical headwinds suggesting that the recent subdued growth could be just a temporary phenomenon. the more diversified export product range in thailand implies that our global growth β beta β may be lower than that of our specialized hi - tech exporter peers. this is not necessary a shortcoming, since some high - end manufacturing sector such as semiconductor is prone to strong cyclical swings, with a short and sharp upturn followed by a protracted downturn. but by implications, export diversification that helped lessen the impact of global recession then, is limiting our sensitivity to the global recovery now. it may therefore take some time for exports to show a firmer recovery. another factor weighing on private sentiments and domestic demand until recently is the political development. economic uncertainties brought about by street protests and threats of violence late last year have had a discernible impact on private spending and tourism. but a political resolution in the second quarter has lifted the fog, and the incoming data since suggest that there has been a steady improvement in private sector confidence. the resumption of public spending is also adding to growth impetus, including through accelerated disbursement of fiscal budget, and infrastructural public investment. the government β s efforts to balance the short - term stimulus needs with the long - term improvement of fiscal spending efficiency should also be welcomed. as the fiscal support starts to kick in, the domestic demand should continue to lead this recovery. bis central bankers β speeches this cyclic | 0.5 |
city was once an epicenter of the pandemic : we were hit early, and we were hit hard. the virus spread rapidly, leading to widespread hospitalizations and a devastating death toll. during the initial months of the pandemic, one out of five jobs in the city disappeared. in the restaurant industry in particular, 70 percent of jobs were lost. other industries, such as retail and even health care, experienced outsized losses as well. 1 / 2 bis - central bankers'speeches two years later, we've seen great progress toward a recovery. the most recent data show that well over two - thirds of new york city's job losses have been reversed. still, areas of the new york city economy, especially those dependent on visitors and office workers, continue to struggle and are lagging the nation in recovery. despite the challenges, there is palpable energy and momentum propelling us into the future. now that our focus is on the recovery, we must create an equitable future for all residents of this city. we must make sure that all of the people who live, work, or own a business here have a chance to succeed. it is essential that we build a stronger foundation so that everyone can fulfill their economic potential, both here in new york and around the nation. that's why it's critical that we prioritize tackling some of the city's biggest problems, including poverty and inequality, and issues in areas such as infrastructure and transportation. these issues are not new ; they existed long before the pandemic. and there is no simple or single solution to solve them. but as we plan for a better future, we must understand how new york's challenges have evolved since march 2020 and how they are playing out in the current environment. with that knowledge and awareness in mind, we can chart the path forward. the new york fed's role this brings me to our conference today. the new york fed is proud to play a role in connecting and convening leading policy influencers, stakeholders, and thinkers from across the city and around the country. our goal in hosting events like these is to be a catalyst for collaboration and creative solutions. the panelists we'll hear from today will help us accomplish just that. they each have a deep understanding of the issues, a familiarity with the communities, and many innovative ideas to share. the topics on the agenda complement the work that many people do in this very building | john c williams : a new york moment remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at " the future of new york city : charting an equitable recovery for all ", federal reserve bank of new york, new york city, 31 march 2022. * * * good morning, everyone, and welcome to the federal reserve bank of new york. i am excited to see many of you joining us here - live - at our building on liberty street in downtown manhattan. it means so much to us to be able to bring people together to discuss the future of new york city in our first - ever hybrid public event. i'd also like to welcome all the guests and panelists who are joining us virtually. this is more than a conference. it's a moment that marks a new era for how we think about living and working in this city. in fact, if you were to wander down these halls, you'd see my colleagues bringing that idea to life. we reopened our doors to all employees last month, and we're so glad to be back and working together in person. for us, this is part of a flexible model that allows for a mix of days in the office with remote work. we believe that being here in this way is best for our employees, best for this city, and best for the federal reserve's second district, which is the region we serve. our physical presence gives us the opportunity to better engage with and learn from our communities. our mission is to make the u. s. economy stronger and the financial system more stable for all segments of society, and supporting local economies is a key part of that. the new york fed is proud to be an anchor institution of new york city, and we want the city - and all of its people - to thrive. i'd like to share a bit more about why having these discussions is so important for the future of this city and for us here at the new york fed. and with that, i must give the standard fed disclaimer that the views i express are my own and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. the city's present and future native new yorker john jay chapman once said, " the present in new york is so powerful that the past is lost. " you can feel that powerful reality when you walk the streets today. indeed, this | 1 |
and domestic capital markets via corporate and household confidence. with regard to prices, import prices are rising, mainly reflecting the rebound in crude oil prices in addition to the prior depreciation of the yen. domestic wholesale prices are declining mainly due to the decrease in prices of electrical machinery. consumer prices continue to be somewhat weak owing to the decline in prices of imported products and their substitutes. corporate service prices continue to decrease. as for the conditions surrounding price developments, the prior yen depreciation is exerting upward pressure on prices. however, with the ongoing adjustments in economic activities, the balance between supply and demand in the domestic market is likely to exert downward pressure on prices. furthermore, in addition to the declining trend of machinery prices caused by technological innovations, the decreases in the prices of goods and services reflecting deregulation and the streamlining of distribution channels will continue to restrain price developments. overall, prices are expected to be weak for the time being. moreover, given the high degree of uncertainty regarding future economic developments, the possibility that weak demand will intensify downward pressure on prices warrants careful monitoring. this report is based on data and information available at the time of the bank of japan monetary policy meeting held on june 14 and 15, 2001. the bank β s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on june 14 and 15 as the basis for monetary policy decisions. in the financial market, the overnight call rate is basically moving at about 0. 01 percent under the guideline for money market operations to maintain the current - account balance at the bank of japan at around 5 trillion yen. interest rates on term instruments are level on the whole. the japan premium remains negligible. yields on long - term government bonds recently decreased to 1. 1 - 1. 2 percent after remaining flat at 1. 2 - 1. 3 percent. the yield spreads between private bonds ( bank debentures and corporate bonds ) and government bonds are mostly unchanged or contracting somewhat. stock prices continue to be weak, reflecting the somewhat more cautious views of market participants toward future corporate profits. in the foreign exchange market, the yen appreciated against the u. s. dollar toward early june, but has weakened thereafter and is currently being traded in the range of 120 - 123 yen to the u. s. dollar. with regard to corporate finance, private banks continue to be more active in extending loans, mainly to blue - chip companies, while carefully evaluating | available as of april 2018. 2. prices let me now explain price developments. although the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food is in the range of 0. 5 - 1. 0 percent, it has continued to show relatively weak developments compared to the economic expansion and the labor market tightening, remaining at around 0. 5 percent excluding the effects of energy prices. with regard to the outlook, the year - on - year rate of change in the cpi ( all items less fresh food ) is likely to continue on an uptrend and increase toward 2 percent, mainly on the back of the improvement in the output gap and the rise in medium - to long - term inflation expectations. specifically, the medians of the policy board members β forecasts of the year - on - year rate of change in the cpi ( all items less fresh food ) presented in the april 2018 outlook report are 1. 3 percent for fiscal 2018 and β on a basis excluding the direct effects of the scheduled consumption tax hike β 1. 8 percent each for fiscal 2019 and 2020. 3 1. 3assuming that the rise in the consumption tax will be fully passed on to prices of taxable items, excluding those to which a reduced tax rate will be applied, the effect of the october 2019 consumption tax hike on the year - on - year rate of change in the cpi ( all items less fresh food ) for october 2019 onward is estimated to be 1. 0 percentage point ; the effect for fiscal 2019 and 2020 is estimated to be 0. 5 percentage point for each year. it also is assumed that the effects of policies concerning the provision of free education will not be reflected in the cpi, as statistical treatment of these effects is not yet decided. ii. keys to assessing the outlook for economic activity and prices in what follows, i would like to discuss several points that i think deserve particular attention in terms of realizing the outlook for economic activity and prices that i mentioned earlier. a. supply - demand conditions in the labor market and the income situation let me first talk about supply - demand conditions in the labor market and the income situation. as 2 / 5 bis central bankers'speeches the economy has continued its moderate expansion, the output gap has continued to improve ; the figure for the october - december quarter of 2017 β the most recent data available β was in positive territory of around 1. 5 percent. furthermore, supply - demand conditions in the labor market | 0.5 |
even tougher position with a lax monetary stance at present, which would leave us facing a much higher rate of inflation and a strong real exchange rate at the end of this expansionary episode. tightening the monetary stance under such conditions could also provoke problems and shocks for the financial system, with unforeseeable consequences. the real exchange rate is heading for a historical high this year which is unlikely to be sustainable for very long. it is important to engineer as soft a landing as possible. in this context i want to mention the study in the latest monetary bulletin which shows that the real exchange rate is no more volatile in iceland than in other countries, for example other inflation - targeting countries with which we often compare our performance. on the other hand, the importance of foreign trade varies from one economy to the next, so exchange fluctuations have a different impact on households and business in different countries. according to the central bank act, one of the bank β s roles is to promote an efficient and safe financial system, including payment systems domestically and with foreign countries. i shall not dwell on financial stability issues on this occasion. the reason is that the central bank will be publishing a separate financial stability report in april which will include its assessment of the position of the financial system. however, i would like to mention two points which are closely related to financial stability. one is the noteworthy overseas expansion by icelandic banks, which has major ramifications for the financial system. among the changes that this entails is that the banks are now less exposed to volatility in the icelandic economy, because of the large share of their activities that has been transferred abroad. at the same time, they are left more prone to shocks originating in foreign markets. this development calls for a review of the central bank β s working procedures. i shall not go into details here of possible changes, which were discussed in monetary bulletin last autumn. the other point is the growth in lending by the credit system, in particular by the banks. the surge in lending over the past two years is a cause of concern both for financial stability and the central bank β s inflation target. accounts of the credit system are published quarterly and the most recent statistics show that lending by the credit system as a whole increased by 16 % in real terms last year. the credit system embraces all undertakings involved in lending activities, including the hff and the pension funds. the latest figures for the largest credit institutions show that domestic lending by the deposit money banks ( | mar guΓ°mundsson : iceland β s economy and monetary regime β a series of crossroads speech by mr mar guΓ°mundsson, governor of the central bank of iceland, at the 50th annual general meeting of the central bank of iceland, reykjavik, 7 april 2011. * * * honourable president ; prime minister ; other ministers ; speaker of parliament ; chairman of the board ; party chairmen, bank directors ; directors of public institutions ; ladies and gentlemen : this year β s annual general meeting of the central bank of iceland is held on the bank β s 50th anniversary. but it would hardly be accurate to say that the bank is facing halcyon days at this milestone. quite the contrary : times are turbulent. furthermore, iceland β s economy and monetary regime are standing at a complex series of crossroads, and the paths we choose could have a profound impact on future developments. this is reminiscent of the situation that reigned when the bank was founded, but i will come to that later. what exactly are these crossroads, then? the first fork in the road lies in the changing economic situation. instability and recession are giving way to better equilibrium and recovery. the current account deficit from iceland β s overheating period has been turned around to an underlying surplus that has supported the krona, which is now over 7Β½ % stronger than it was at the beginning of last year. at the same time, the central bank has bought foreign currency in the market for about 33 b. kr., as part of its plan to accumulate non - borrowed reserves. inflation reached the central bank β s inflation target towards the end of last year, due to a stronger currency, spare capacity in the economy, and inflation expectations approaching the target. this development is not independent of the monetary policy stance, however, as spare capacity can be associated with a vicious cycle of falling exchange rate and rising inflation expectations if confidence is lacking. indicators suggest that a weak economic recovery began in the third quarter of 2010, and forecasts assume that it will continue this year. the recovery is still weak, not least given the substantial slack in the economy. two points of concern in this connection are that business investment is very low in historical context and export growth is rather weak in view of the low real exchange rate and robust recovery of global trade. an important factor here is that iceland β s major export sectors face capacity constraints ; therefore, exports cannot be increased to any significant degree without further investment. growth is strong in export sectors without such | 0.5 |
caroline abel : beneficial ownership guidance and training workshop for banks and other financial institutions welcoming remarks by ms caroline abel, governor of central bank of seychelles, at the beneficial ownership guidance and training workshop for banks and other financial institutions, beau vallon, 11 july 2024. * * * representatives of the regulatory authorities, facilitators from the eu global facility on aml / cft, participants, good morning. it gives me great pleasure to welcome you all to the fourth day of the week - long training workshop on enhancing beneficial ownership transparency - a topic of growing importance globally. as you know, a beneficial ownership law was one of two key pieces of legislation that came into force in august 2020. the enactment of the bo act and the aml / cft act was part of efforts to align the country's legal framework to international standards and protect the integrity of our financial system. while enacting these two laws marked a significant milestone, the commitment and collaborative approach of the relevant authorities and reporting entities to ensure their enforcement and effectiveness is even more critical. much has been done to date, but we must acknowledge that there are still areas for improvement. the beneficial ownership guidance and training workshop for targeted stakeholders demonstrates the ongoing commitment to implement the necessary measures and build capacity. at this juncture, i would like to commend the collaborative efforts of the respective teams from the financial intelligence unit, the financial services authority and the central bank - the three institutions mandated to ensure sectoral aml / cft supervision - for spearheading this week's training programme, with the invaluable technical assistance of expert facilitators from the european union's global facility on aml / cft. ladies and gentlemen many legal entities worldwide are trying to operate in secrecy, using complex and opaque ownership structures to facilitate illicit activities such as tax evasion, corruption, money laundering, and terrorism financing, highlighting the critical importance of beneficial ownership transparency. although geographically isolated, seychelles is as vulnerable to such risks as any jurisdiction, hence the need to build resilience and maintain the integrity of our financial system. effective customer due diligence to identify who ultimately owns, benefits from, or controls a legal entity or arrangement is vital to improving the assessment of potential risks and employing risk - based supervisory approaches. these efforts assist in 1 / 2 bis - central bankers'speeches detecting unusual or suspicious transactions, thus preventing our financial system from being used as a vehicle for illicit financial activities. beneficial ownership | the chair country. the president of the world bank and the managing director of the imf attend the g 20 meetings, thereby ensuring that the activities of the g 20 are integrated into the agenda of the bretton woods institutions where necessary. there are also other invitees to the g 20 meetings such as the oecd, undp and the regional development banks. why is the g 20 important? the g 20 can be seen as a watermark in international economic diplomacy in at least two ways. first, it is a major step forward from the old divisive style of global governance of the bretton woods system characterized by little communication and much acrimony between major developed ( g 8 ) who were largely seen as donors, and developing ( g 77 ) countries that were seen as the recipients of bilateral and multilateral aid. differences in perception remain, but there is now a paradigm shift in the donor - recipient equation, a better appreciation of each other β s viewpoint, and an emerging consensus on what increasingly appears to be an incipient new international order through g 20 reports and declarations to which both sets of countries are committed. this new style of international governance had been in the making for some time. the bigger emes, particularly the brics, 2 were growing at a much faster pace than oecd countries for a long time, and were becoming increasingly systemically important. it became clear that for any multilateral economic consultative process managing globalization to be effective, their inclusion in the process was imperative. even prior to the global crisis, the g 8 found it expedient to invite the big emerging economies β the g 5 ( brazil, india, china, mexico and south africa ) β to their summits as special invitees, but only to select sessions in what was termed the heligandamm process. the global financial crisis has simply underscored the need to associate major emerging economies in global economic governance. from being the sources of constant instability in the global economy, some of the larger emerging economies are now increasingly seen as nodes of stability and growth. the second factor that makes the g 20 unique is its attempt to coordinate the macroeconomic policies of systemically important economies to make them more effective in a world where national macroeconomic policy instruments are being blunted via rapid global integration through trade and financial markets. following its concerted and coordinated policy response to the crisis, the g 20 set about the task of addressing reform of the global economic and financial architecture, and | 0 |
##ved globally between 1990 and 2015. β thanks to greater labour mobility, today about 260 million people live in a foreign country, up from less than 80 million in 1970, and flows among developing countries now exceed those towards advanced economies. however, not everybody has benefited in the same way from the economic expansion provided by trade and innovation. economic backwardness, poverty and high mortality rates are still dramatic problems in many developing countries, especially in sub - saharan africa. even in the more prosperous countries, many have been left behind. inequality in the distribution of income has declined dramatically over the last three decades at a global level, mainly as a result of the fast growth of china and other emerging markets that has reduced their distance from the richer parts of the world. however, within most countries differences in income and wealth have risen to historically high levels. finally, the rapid pace of technological progress and its unprecedented nature make it possible not only to replace physical labour but even to displace intellectual contributions in a variety of tasks once believed to be a prerogative of humans. this has raised fears of a new form of technological unemployment, to which the medium - skilled population is also vulnerable, and has helped to spread a sense of insecurity, raising the demand for protection. the two other factors shaping our present and future conditions β demographic transition and climate change β are not independent from, and have actually been reinforced by, global economic integration and technological progress. higher living standards and wider access to better healthcare have increased life expectancy across the globe. for the first time in our history, the world faces not only a growing population β estimated to reach almost 10 billion in 2050, up from 7. 5 billion today ( and 2. 5 billion in 1950 ) β but also an ageing one : there are almost 1 billion people aged 60 or over in the world ( 13 per cent of the global population ) and this age group is growing faster ( at 3 per cent per year ) than younger age groups. in most advanced countries, as well as in china, declining birth rates, with increased life expectancy, are pushing up the so - called old - age dependency ratio, the population over 64 relative to the working - age population ( aged 15 to 64 ). in europe, ageing is progressing at a very fast rate : in italy, the old age dependency ratio has risen from 12 per cent in 1950 to more than 35 today ; in germany, from 14 to 32 per cent. demographic transition, | would lose impact after a while. these forecasts were in line with pricing in forward and futures markets. however, these expectations did not materialize. both crude oil prices and agricultural commodity prices continued to rise. the adverse impacts of supply shocks reached unprecedented levels during the first half of 2008. under normal circumstances, supply shocks are expected to have a temporary impact on relative prices, not changing the course of medium - term inflation. nevertheless, the emergence of multiple shocks at the same time and their persistence for a considerable period aggravated the risks on pricing behavior. in fact, the research conducted by the central bank staff indicates that economic agents increasingly focus on past inflation while forming their inflation expectations. after evaluating the said developments, the central bank concluded that the increases in food and energy prices in recent years reflect a structural change stemming from the global economic environment. in other words, these shocks are likely to prevail for a longer time period, contrary to previous forecasts. there is no clear evidence at this point that this trend will reverse in the short term. moreover, our revised projections suggest that even with the maintenance of a cautious policy stance for the foreseeable future, reaching the 4 percent target is going to take an extended period of time. dear guests, under these circumstances, the central bank of turkey had two options. the first one was to stick to the inflation targets, as many central banks do today, but to avoid implementing a monetary policy that is consistent with these targets. in other words, the central bank would accept a priori that inflation would surpass the target in the foreseeable future. the absence of any policy response would be justified by the presence of supply side shocks. the central banks that adopt this approach are bound to lose their credibility gradually, as long as the inflation continues to remain above the targets. the second option involves revising inflation targets to an attainable level and implementing a monetary policy that is in line with the new targets without compromise. that would help control economic uncertainties and create a new anchor to be used by economic agents in their decisions. dear guests, in light of these evaluations, the central bank of turkey announced the framework of its monetary policy for the upcoming period in the april 2008 inflation report and in the letter on inflation targets that was sent to the government on june 3, 2008. the first pillar of the monetary policy framework is the target revision. the main purpose of the target revision is to create an achievable disinflation | 0 |
rameswurlall basant roi : cross - border banking and regulatory reforms - implications for africa from international experience opening address by mr rameswurlall basant roi, governor of the bank of mauritius, at the joint imf / bcbs / making finance work for africa conference, imf africa training institute, ebene, 1 february 2017. * * * managing director of the imf, madam christine lagarde chairman of the basel committee on banking supervision fellow governors executive directors and senior officials of the imf distinguished guests ladies and gentlemen good afternoon i am pleased to welcome you all to mauritius. i wish you a pleasant stay with us. i thank the organizers of the joint imf / bcbs / making finance work for africa conference for inviting me to give the opening address today. may i extend my appreciation to the mauritius imf africa training institute for hosting this conference. when i was here recently, i was asked to give a closing address to a house - full audience of course participants. i had shared with them my personal experience as regulator of all deposit taking institutions in mauritius. while narrating to them a number of enlightening anecdotes related to events leading to the revocation of banking licenses, problems associated with crisis resolution and presenting them with the risks and challenges that regulators face in the globalized world, i read in their looks the enthusiasm and the eagerness to take their regulatory and supervisory responsibilities seriously. interestingly, i found out that regulators in africa are keen to have better regulatory structures. understandably, one hampering factor β apart from an acute shortage of highly skilled and seasoned bank examiners β that overwhelms all other considerations is national interests as opposed to the soundness and stability of financial industries at the regional, pan - african or global level. the political will is thus seen to be missing. it β s a problem not confined to africa only. i believe that it β s in order for me to give a very quick and broad brush - stroke of our experience with the regulation and supervision of banking and cross - border banking activities. mauritius was a regional hub for payments and settlements since the 17th century. traders from the west, the middle east, india and china crossing this part of the world used to regularly meet here in mauritius for purposes of payments and settlements. the piastres, indian rupee, pound sterling, the us dollar, gold and silver used to be the means of payments and settlements. a | board which should stand ready to challenge any key issues as the board bears the ultimate responsibility. corporate governance principles also require the bottom - up flow of information to the board through independent control functions such as the internal audit, compliance and risk management functions. however, the onus remains on the board to ensure receipt of management information as appropriate for the exercise of its oversight responsibilities. we may recall that the global financial crisis revealed weaknesses in corporate governance practices of failed banks where information on the real risks being taken by the institution did not reach the board or even senior levels of management. even if risk management systems are functioning, the absence of transmission of information to the board and senior bis central bankers β speeches management would constitute a breakdown of corporate governance principles. approving strategy is not sufficient, suitable metrics must be set to monitor the implementation of strategy and the responsibility for such monitoring falls on the board. internal audit and compliance are two independent assurance functions which constitute the eyes of the board in matters of internal control as well as legislative and regulatory compliance. whilst the banking act 2004 already elevated the internal audit function in the organization by giving it a direct reporting line to the audit committee, the guideline on corporate governance has now enhanced the value and importance of the compliance function by prescribing that it has a direct reporting line to the board or a board committee. this function has the responsibility of ensuring compliance with legislative and regulatory requirements as well as policies and procedures. moreover, a compliance certificate has to be delivered by the board to the central bank on an annual basis as we want to ensure that the board is assuming its compliance oversight responsibilities over the activities of the institution. it would be remiss of me, if, in a talk on corporate governance, i did not mention the role of external auditors. the latter provide an independent opinion on whether the financial statements of the bank are complete, fair and properly drawn up with a true and fair view of its affairs. they will also draw attention on any significant matters identified during the course of their audit work. we view auditors as partners in our quest to have safe and sound institutions and expect the highest standards from them. excessive risk taking by employees and compensation based on short term profitability have often been a serious hit to the banks. weaknesses in these areas contributed to the failures of financial institutions during the crisis where remuneration systems were not related to the strategy and risk appetite of companies and served more the self - interest of bankers rather than the long term | 0.5 |
50 per cent of its energy requirements from renewable sources ; and reducing the carbon intensity of its gdp by 45 per cent by 2030. india aims to achieve the net zero target by 2070. for achieving this target, it has released long - term low emission development strategies ( lt - leds ) at the cop27 summit. india has co - founded the international solar alliance ( isa ) with france in 2016 and announced a national hydrogen mission to increase the dependency on green energy. the mission life, i. e., lifestyle for the environment, launched in 2022, is now a global movement to connect the powers of the people for the protection of the earth. the rbi too is engaged in managing climate risks. in april 2021, it joined the network for greening the financial system ( ngfs ) to benefit from and contribute to the best practices in climate risk management and green finance. apart from including renewables as part of the priority sector credit for banks, the rbi has recently issued sovereign green bonds, and 15 the conference of the parties ( cop ) is the supreme decision - making body of the united nations framework convention on climate change. all states that are parties to the convention are represented at the cop, at which they review the implementation of the convention and any other legal instruments that the cop adopts and take decisions necessary to promote the effective implementation of the convention, including institutional and administrative arrangements. a key task for the cop is to review the national communications and emission inventories submitted by parties. the cop meets every year unless the parties decide otherwise. the first cop meeting was held in berlin, germany in march 1995. released the framework for mobilisation of green deposits. at the frontline of research on the subject, the rbi has on may 3, 2023 released the report on currency and finance, 2022 - 23 with the theme β towards a cleaner greener india β. the report has examined the macro - financial implications of climate change and the possible fiscal, monetary, regulatory and other policy options for india. in the words of victor hugo who is considered to be one of the greatest french writers of all time, β nothing else in the world β¦ not all the armies β¦ is so powerful as an idea whose time has come. β india β s time has come and we must seize it. there are formidable trials and challenges ahead, but they can be overcome if we exploit the comparative advantages. i have spoken of some of the defining dimensions favouring india β s leap | . issue to contemplate is whether this can be done in a short term or even in the medium term. 9. then would it be fair to assume that a combination of above two would be a more realistic goal to pursue for quite some time to come considering the dimension of the work involved? would it also be fair to assume that pursuing only one of the above or even both but with varying emphasis would not serve the purpose? 10. leaving this broader issue for wider discussion, let me now turn to the various initiatives taken in past few years in respect of poverty alleviation / financial inclusion / employment generation etc. priority sector lending 11. efforts are also underway to reorient the priority sector lending guidelines to serve today β s growth and inclusion agenda. an internal working group at rbi has revisited the existing guidelines and suggested revisions for ensuring channeling credit to segments that get crowded out in the absence of specific targets. these include small and marginal farmers, micro enterprises and the weaker sections while broadening the scope to include other underserved categories of national priority, such as agriculture infrastructure, social infrastructure, renewable energy, exports and medium sized enterprises. financial inclusion plan 12. let me briefly highlight what rbi has been doing for mainstreaming the marginalized sections of the society and for ensuring an equitable growth in the country. rbi has been relentless in its pursuit of achieving universal financial inclusion by following a structured and planned approach. as i mentioned earlier, the focus is not only on ensuring access to financial services and products but also taking efforts to address issues emanating from the demand side through financial literacy initiatives. phase ii of the financial inclusion plan is currently under operation which seeks to connect all the 600, 000 plus villages in the country to banks either through a brick and mortar branch or a bc agent by the end of the year. pmjdy 13. to say that government β s pmjdy scheme has been a success would be a massive understatement. one must admire the vision and intent behind the program. lot of efforts bis central bankers β speeches has gone into opening the bank accounts and most households have been connected to the formal financial system. the need of the hour now is to ensure that services are easily accessible to the account holders, are cost - effective and service efficient & most importantly the accounts remain active. for the account to remain active, the holders would need income and benefits to flow into them. focus should also be placed on inculcating savings habit among the | 0.5 |
extent and duration of the tightening of credit conditions in canada and, hence, about the tempering effect this will have on the growth of domestic demand. gauging the effects of the financial market turbulence on credit conditions, and the implications for the canadian economy, will be one of the bank's most pressing tasks over the coming months. we will provide analysis of these issues in our next monetary policy report, which will be published on 18 october. conclusion ladies and gentlemen, let me conclude. this was not a very pleasant summer for many people. turbulence in financial markets is not easy to deal with, and it is certainly not welcome. but if we can learn from these events and retain the valuable lessons, then global financial markets can emerge from this turbulence stronger and more efficient than before. ultimately, this can be to the benefit of us all. | a fundamental work - out, or restructuring, of third - party abcp is required. discussions in montreal between investors and liquidity providers as to how to achieve such a restructuring are progressing. i would encourage the parties involved to support this process β all investors and all international banks. i remain hopeful that, over time, this process will lead to useful results. the role of the central bank now let me talk about the actions of the bank of canada over the past seven weeks. essentially, our actions helped us fulfill two fundamental roles of a central bank β providing liquidity to the payments system, and formulating monetary policy. in terms of the first role, it is absolutely normal and proper that central banks should provide liquidity to the payments system, especially when financial institutions are faced with markets that have become illiquid. this is precisely the situation in which we found ourselves this summer. with money markets seizing up, many institutions found it difficult to obtain necessary liquidity. so the bank of canada, like other central banks, made it clear that institutions could access our regular liquidity facility when required. the bank of canada's standing liquidity facility can be accessed daily, at a rate 25 basis points above our target for the overnight rate, by direct clearers involved in canada's wholesale payments system. to access this liquidity, institutions can pledge a range of easily priced securities as collateral. the events in august placed strong upward pressure on the overnight interest rate, moving it above our target. and so we carried out open - market buyback operations to inject liquidity, with the goal of bringing the actual overnight rate closer to our target. we also temporarily expanded the list of securities that market participants could use as collateral in these buyback operations. in addition, we provided liquidity by increasing our supply of settlement balances as we normally do when we see an increased demand for cash balances. all told, our actions were effective in helping to improve the functioning of the overnight money market. so we have now restored our original list of securities eligible for use in buyback operations, and we have gradually reduced the level of settlement balances. and while it is true that many term money market spreads remain abnormally wide, the market is functioning. there have been increasing numbers of transactions in this area and spreads are beginning to narrow. in these circumstances, there does not appear to be anything the bank of canada could usefully do to improve the functioning of this market. the events of | 1 |
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