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monetary policies are being stretched well beyond the normal parameters and stresses envisaged when policy frameworks were designed and inflation goals were first specified. ii ) questions that central banks are grappling with in a world of unconventional monetary policy and unprecedented monetary accommodation, several questions are on central bankers β minds ; questions such as : β’ what are the risks that global growth will be revised lower? what is the outlook for commodity prices, and especially oil prices? how can the advanced economies the last five years of merchandise trade growth has been the weakest period since the 1980s. between midoctober 2015 and mid - may 2016 g20 economies introduced new trade measures at the fastest pace seen since 2008. ( wto director general β s mid - term report on trade developments issues on 25 july 2016 ). countries with policy rates at or below 0. 5 percent now account for around 65 percent of global gdp. around usd13. 4 trillion of bonds carry a negative yield. global foreign exchange market turnover reached an estimated $ us5. 3 trillion a day in 2013, up from $ us3. 8 trillion in 2007 and $ us1. 5 trillion in 1998. global trading in otc interest rate derivatives β mainly swaps and forward rate agreements β increased almost ten - fold between 1998 and 2013 ( from $ us265 billion in 1998 to $ us2. 3 trillion in 2013 ). the notional amounts outstanding in otc derivatives markets ( mainly interest rate contracts ) reached almost $ us700 trillion in 2013, compared with $ us500 trillion in 2007 and under $ us100 trillion in 1998. chen, j, mancini β griffoli, t, and sahay, r ( 2014 ) β spillovers from united states monetary policy on emerging markets : different this time? β, imf working paper wp / 14 / 240. bis central bankers β speeches achieve the growth rate needed to generate the β escape velocity β to ensure a durable recovery and moderate inflationary pressure? ; β’ how long are the major central banks likely to run a divergent monetary policy stance ( although they have become more similar as the federal reserve has pushed back expectations of interest rate rises )? when might the federal reserve next raise the fed funds rate? ; β’ has monetary policy reached the limits of its effectiveness in central banks with negative policy rates and large programmes of quantitative easing? how much scope is there for additional monetary accommodation and will this be deployed β especially by large central banks, such as the | the overall increase in the ocr, which was greater in new zealand. transmission via this channel for both new zealand and australia occurs faster than for many other economies. for example, in the us and some european countries, where 25 - or 30 - year fixed rate mortgages are fairly common10. despite this, monetary policy is still effective in these countries, with other transmission channels playing a more important role11. figure 5 : average outstanding mortgage rates in new zealand and australia source : rba and rbnz while the effectiveness of various monetary policy transmission channels can differ across countries for structural reasons, these can also differ within countries but across business cycles depending on the prevailing economic and financial environment. _ _ _ _ _ _ _ _ _ _ _ _ 10 international monetary fund ( 2024 ) provides insight into the effects of monetary policy across countries through the lens of the mortgage and housing markets. 11 this point is covered in more detail in kent ( 2023 ). an example of a cyclical factor is the ongoing influence of the covid - era fiscal expansion and monetary policy easing. a combination of fiscal policy measures such as the covid - 19 wage subsidy and the implementation of additional monetary policy tools in new zealand, led to a significant increase in liquidity within the financial system contributing to strong deposit growth in commercial banks and an abundance of liquid assets. in turn this bolstered banks β stability with prudential liquidity measures12 rising well above their minimum requirements. alongside this, the composition of bank deposits changed significantly with deposit volumes shifting from more traditionally expensive term to cheaper on - call deposits, in part driven by a narrowing in the difference in rates as supply increased13. this chart shows how the proportion of savings held in term deposits, in blue, quickly declined during the covid period, as the rate premium for holding term deposits relative to on - call savings accounts fell. figure 6 : saving deposit rates and the term deposit share of total saving deposits source : rbnz bank balance sheet survey, rbnz estimates deposits account for around 65 percent of total bank funding in new zealand and so the change in composition and overall increase in supply contributed to a significant decline in bank funding costs through that period. as wholesale rates began to increase from mid - 2021 in line with more restrictive monetary policy, banks were however able to maintain lower term and on - call deposit rates for longer largely as a consequence of the higher covid - period level of savings, higher levels of liquidity, and weakening credit | 0.5 |
economy by 2047 would need to take into account these considerations. india @ cop 26 and 27 in 2021, at cop26, india presented panchamrit of india β s climate action : β’ reach 500 gw non - fossil energy capacity by 2030. β’ 50 per cent of its energy requirements from renewable energy by 2030. β’ reduction of total projected carbon emissions by one billion tonnes from now to 2030. β’ reduction of the carbon intensity of the economy by 45 per cent by 2030, over 2005 levels. β’ achieving the target of net zero emissions by 2070. india participated in cop27 in 2022 at sharm el sheikh, egypt, with a focus on mainstreaming the theme of life - lifestyle for environment. it highlighted the theme of life β everyone can contribute within one β s capacity. green initiatives by the rbi there is a growing recognition that even if governments are the most influential agency for climate change, central banks and financial sector regulators / supervisors are going to become the major stakeholders because ( 1 ) financial institutions play a key role in intermediation and hence have a more direct role in addressing climate change ; and climate change is impacting the achievement of their mandates of price and financial stability. β’ in december 2007, the reserve bank mandated β corporate social responsibility, sustainable development and nonfinancial reporting β role of banks β highlighting the importance of global warming and climate change in the context of sustainable development. β’ in 2015, loans for generation of renewable energy and public utilities run on non - conventional energy were made part of directed priority sector lending by banks. β’ in april 2021, the rbi 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. β’ in january 2022, the rbi conducted a survey on climate risk and sustainable finance to assess the status of climate risk and sustainable finance in leading scheduled commercial banks. β’ in january - february 2023, the rbi issued sovereign green bonds worth us $ 2. 2 billion ( βΉ16, 000 crore ) in two tranches to mobilise resources for the government for green infrastructural investments. β’ in april 2023, the rbi introduced a β framework for acceptance of green deposits β from june 01, 2023. conclusion central banks generally pursue a relatively narrow mandate focused on stability. climate change is certainly not a part of it. at least till now. yet as more evidence accumulates that climate | shock it experienced due to surge in prices in international markets, and reached 2 % in november 2024. this return to price stability has been accompanied by a reduction in the cost of living for households and an increase in business investments. 1 / 3 bis - central bankers'speeches also, overall inflationary pressures have been reduced, on the back of declined inflation in trading partners, appreciated exchange rate and the normalization of monetary policy stance over the past two years. during 2024, the bank of albania has achieved significant progress in two key initiatives in the areas of payments and banking supervision : joining sepa on november 21, 2024, and advancing open banking. participation in sepa will enable the conduction of cross - border financial transfers with european union countries, making them faster and at lower costs aβ¬ β an important step towards economic integration and improving services for businesses and consumers. also, the bank of albania, in line with eu regulations, has advanced in implementing open banking, by promoting the use of digital platforms with the aim of enhancing financial inclusion and establishing a more open ecosystem for clients and businesses. open banking will empower citizen with higher and more transparent access to financial services. this development is part of a broader strategy to improve financial infrastructure and digitalize the economy. both initiatives aim to expand financial inclusion, by directly contributing to the reduction of informality, in turn supporting long - term sustainable growth. regarding the future, our forecasts remain positive, mainly based on positive developments in terms of economic activity growth. the financial environment, characterized by ample liquidity, relatively low and stable interest rates, and contained risk premiums, thus transforming bank credit into an important and reliable source of financing for the albanian economy, has played an important role in this regard. to this end, the bank of albania will continue to remain vigilant to accurately reacting and in timely manner to the economic and financial developments. concluding, i would like to shift the focus to an 18 - year tradition that enriches this annual event of the bank of albania. i have the pleasure to present the winners of the governor's award for the best diploma thesis. this activity, invites albanian students from all over the world to present their work in the field of economics and finance. this year 24 participants have participated in this competition with impressive papers. i am delighted to note that the topics addressed in these studies are related to the traditional objectives and policies of central banks, but at the same time, many of them have | 0 |
negatively impacted on real economic activity in south africa. as a result the bank β s forecasts of growth in real gdp for 2012 and 2013 have been revised down. although confidence in the financial services sector has recovered strongly in 2009 and remains at high levels, confidence still has not returned to its pre - crisis level. the banking sector plays a key role in the stability of the south african financial system and remained stable during the first half of 2012 : β’ the sector remained adequately capitalised in terms of the current minimum regulatory requirements ; β’ banks continued to post healthy profitability numbers, supported by generally improved quality of assets ; β’ although the banking sector β s total unsecured gross credit exposure increased further in the first half of 2012, it remains only about 10 per cent of total gross credit exposure of the sector ; β’ the sector β s credit exposure to counterparties with legal jurisdiction in the giips countries ( greece, italy, ireland, portugal and spain ) remained insignificant with negligible exposure to sovereigns ; β’ draft 2 of the proposed amended regulations relating to banks, incorporating all basel iii related changes, was published in august in preparation of the adoption of basel iii as from 1 january 2013 in south africa. the life insurance industry maintained adequate capital buffers, and healthy increases in income contributed positively to confidence levels in the industry. the financial services board as the regulator of insurance companies is in the process of implementing the solvency assessment and management framework for the insurance sector. this framework is aimed at enhancing the soundness of domestic insurance companies and protecting policyholders through a risk - based solvency regime. the domestic bond market generally performed strongly in the first half of 2012, underpinned by south africa β s inclusion in citibank β s world government bond index. domestic financial markets, nevertheless remained vulnerable to global oil and food price shocks as well as to domestic concerns following turmoil in the labour market. as important clients of banks, conditions in the corporate and household sectors play an important role in gauging the stability of the financial system : β’ in the corporate sector much needed investment is still lacking, but recent data suggest a slight but broad based recovery in business confidence in the third quarter ; β’ the household sector β s appetite for debt seems to be increasing further, but data show that their savings portion of disposable income also increased, albeit only marginally ; β’ the declining trend in consumer confidence was borne out by a weakening consumer financial vulnerability index as well as a decline in the | the situation of individual banks in a systemic context. as to the specific institutional arrangements, several alternatives have been proposed. the solution chosen by european leaders β to build the system around the ecb β is the only pragmatic one in the present circumstances. fourteen out of seventeen national central bank governors in the eurosystem already have a supervisory role. therefore, working jointly with the national supervisory authorities, the ecb will have the legal authority and technical capability to carry out this complex task successfully. as part of the european system of financial supervision, the single supervisor will closely cooperate with national authorities and with the existing european authorities, notably the european banking authority ( eba ). moving supervisory powers to the european level should not and will not change their respective roles and tasks. but some observers have suggested that the presence in the same institution of monetary policy and supervisory decisions can lead to excessive burdens, a potential confusion of roles and / or distorted incentives. these concerns must be taken seriously. to guard against them materialising, certain principles must be fulfilled. let me elaborate, based on reflections that are being conducted within the ecb β s governing council. rigorous separation of monetary and supervisory policies the first principle is the need for rigorous separation of monetary and supervisory policies. let me emphasise that we are taking this issue very seriously and we have envisaged ways to address it. the ecb has the advantage of having a very clear goal of price stability, expressed in a transparent and measurable way. this objective has never been compromised in the 14 years of the euro so far and it will not be compromised in the future. the ecb β s attachment to the primary objective of price stability remains unquestioned. the proposal of the european commission provides for the establishment of a separate supervisory board within the ecb, which will include representatives from national authorities. this proposal allows for a pooling of supervisory expertise and knowledge, and will help to ensure that decision - making lines on monetary and supervisory policy are clearly separated. to separate day - to - day activities, the governing council will define internal procedures, making a clear distinction between the monetary and supervisory functions within the organisation. we can build on a wealth of experience in this field, looking at best practices bis central bankers β speeches from the many central banks in europe and around the world that combine supervisory and monetary policy functions. independence and higher standards of accountability the second principle is the need to safeguard the ecb β s independence, implying higher standards of accountability | 0 |
were they to raise prices to boost profits further, competitors with already ample profit margins would not follow suit ; instead, they would use the occasion to capture a greater market share. this interplay is doubtless a significant factor in the evident loss of pricing power in american business. intensifying global competition also may be further restraining domestic firms β ability to hike prices as well as wages. clearly, the appreciation of the dollar on balance over the past eighteen months or so, together with low inflation in many of our trading partners, has resulted in a marked decline in non - oil import prices that has helped to damp domestic inflation pressures. yet it is important to emphasize that these influences, too, would be holding down inflation only temporarily ; they represent a transition to a lower price level than would otherwise prevail, not to a permanently lower rate of inflation. against the background of all these considerations, the fomc has recognized the need to remain vigilant for signs of potentially inflationary imbalances that might, if not corrected promptly, undermine our economic expansion. the fomc in fact has signaled a state of heightened alert for possible policy tightening since last july in its policy directives. but, we have also taken care not to act prematurely. the fomc refrained from changing policy last summer, despite expectations of a near - term policy firming by many financial market participants. in light of the developments i β ve just discussed affecting wages and prices, we thought inflation might well remain damped, and in any case was unlikely to pick up very rapidly, in part because the economic expansion appeared likely to slow to a more sustainable pace. in the event, inflation has remained quiescent since then. given the lags with which monetary policy affects the economy, however, we cannot rule out a situation in which a preemptive policy tightening may become appropriate before any sign of actual higher inflation becomes evident. if the fomc were to implement such an action, it would be judging that the risks to the economic expansion of waiting longer had increased unduly and had begun to outweigh the advantages of waiting for uncertainties to be reduced by the accumulation of more information about economic trends. indeed, the hallmark of a successful policy to foster sustainable economic growth is that inflation does not rise. i find it ironic that our actions in 1994 - 95 were criticized by some because inflation did not turn upward. that outcome, of course, was the intent of the tightening, and | mark w olson : the federal open market committee and the formation of monetary policy remarks by mr mark w olson, member of the board of governors of the us federal reserve system, at the 26th conference of the american council on gift annuities, orlando, florida, 5 may 2004. * * * thank you very much for inviting me here this evening. when my longtime friend lance jacobson extended this invitation more than a year ago, i readily accepted. several months later, the 2004 calendar of federal open market committee ( fomc ) meetings was released, and i discovered that this meeting would occur on the day following the committee's may meeting. because fomc members observe a blackout on discussions of the economy for the week before and the week of the fomc meetings, i prefer not to talk about current economic conditions. however, i can provide you with some insight into the way the fomc functions and the impact of monetary policy on the u. s. and global economies. my former federal reserve colleague laurence meyer provided the blueprint for this presentation in a 1998 speech entitled β come with me to the fomc. β 1 that title, in turn, was borrowed from remarks given back in 1951. while my remarks are not identical in either style or substance, i have borrowed heavily from larry's presentation, and you have the assurance that they have a long history. first, a comment or two on who we are. nineteen policymakers participate in fomc meetings, although at most only twelve vote at any one time. at times vacancies on the board mean that the fomc has fewer than twelve voting members. the board has now operated at full strength for almost two years, after several years with two vacancies. each of the board members is appointed by the president of the united states and confirmed by the senate. our chairman, alan greenspan, has two designations : the president has appointed him both as a board member and as chairman. a board member's term is fourteen years, and the chairman has a term of four years. though alan greenspan's chairmanship expires this june, his term as a board member extends through january 2006. as you may know, president bush announced last year that he intended to reappoint mr. greenspan as chairman. the board vice chairman is also appointed by the president for a fouryear term. the current vice chairman, roger ferguson, was reappointed last | 0 |
actions we have taken on loss absorbency are designed to create the right oversight incentives for shareholders and bondholders by literally putting them at risk of loss. this will without doubt have an effect on culture. i want to end with a few broader reflections on the role of culture. the basic difference between the role of the regulator and management of firms is that our objective is framed exclusively in terms of the public interest. for firms, it is important to recognise that a sustainable and viable business model is one that provides an acceptable rate of return to those who take the risk of providing the necessary loss absorbing capacity, typically its risk capital. firms exist to service customers who make up the public interest, which of course means that service includes the notion of not exploiting customers, a value one might expect to be given in an organisation β s culture. today, the public perception of banking, and some other areas of finance, remains too much towards the exploitative β greed is good β end of the spectrum. major changes have occurred since the crisis which have improved behaviour in firms, but public opinion broadly does not recognise these developments and tends to think that nothing has changed. culture is an important part of demonstrating that change. now, i do see evidence of that change happening, and a big challenge for all of us, regulated and regulator is to do all that we can to keep pushing that change forward. in some cases i think there should be greater clarity in terms of the outcomes that firms are seeking from the bis central bankers β speeches changes they make, how progress is assessed and whether there is sufficient consistency across the organisation. these are all points that i know from my discussions with them are in the sights of colette bowe and alison cottrell and their colleagues at the banking standards board, and i welcome the work they are doing. it is of course very reasonable to ask what as regulators we can do to further the goal of restoring trust through strong culture. i have set out what i see as the important role of the senior managers regime. going beyond that, in the pra from the outset we have emphasised that we are a forward - looking supervisor of firms, and at the heart of our approach is the application of judgement set against a framework of rules. we cannot write a rule to take care of every situation that may occur, and as a forward looking supervisor we are applying judgement in conditions of uncertainty about the future. how firms deal with the uncertainty of the future will also shape their culture | or conduct failing in a firm which did not have among its root causes a failure of culture as manifested in governance, remuneration, risk management or tone from the top. culture has thus laid the ground for bad outcomes, for instance where management are so convinced of their rightness that they hurtle for the cliff without questioning the direction of travel. we talk often about credit risk, market risk, liquidity risk, conduct risk in it β s several forms. you can add to that, hubris risk, the risk of blinding over - confidence. if i may say so, it is a risk that can be magnified by broader social attitudes. ten years ago there was considerable reverence towards, and little questioning of, the ability of banks and bankers to make money or of whether boards demonstrated a sufficient diversity of view and outlook to sustain challenge. how things have changed. healthy scepticism channelled into intelligent and forceful questioning of the self - confident can be a good thing. in turn, culture matters to us as financial regulators because it can, left alone, tend to shape and encourage bad outcomes, but it doesn β t have to do that. what can we do therefore as regulators to shape and influence better outcomes on a more consistent basis? let me start with one thing that we cannot do. as regulators, we are not able, and should not try, to determine the culture of firms. we cannot write a regulatory rule that settles culture. rather, it is the product of many things, which regulators can influence, but much more directly which firms themselves can shape. we seek to ensure that firms have robust governance, which includes appropriate challenge from all levels of the organisation ; and promote the acceptance that not all news can be good and the willingness to act on and respond promptly to bad news. we insist that remuneration is structured to ensure that individuals have skin in the game, namely that a meaningful amount of past remuneration is bis central bankers β speeches retained or deferred and for senior people is at risk should problems then emerge. we require that risk management and internal audit in firms are effective and act to root out poor incentives and weak controls. all of this is important and central to what we do as regulators, but let me reinforce the point that culture begins and lives, and i am afraid dies, at home, with firms. it is not for us as regulators to prescribe culture, that would not work. firms and their management have to want | 1 |
, but so far we have not seen anything. 5 / 5 bis central bankers'speeches | these monetary policy decisions need to be complemented by other instruments. sometimes it seemed like you were not exactly among mr draghi β s most ardent supporters. i have always supported president draghi. but when you heard him being talked about as the saviour of the euro or the person who had rescued spain, it didn β t sit well with you. well, he didn β t see it like that either. in spain, we rescued ourselves, off our own backs, with the help of our european partners, including the ecb. mr draghi made a key contribution, but there β s no single saviour here. it was a set of circumstances and a matter of everyone carrying out their responsibilities in their individual roles. as vice - president will you continue to appear alongside president lagarde? i have no idea. i suppose it will continue like that. it β s an unwritten rule, a tradition. traditions can change, but they can also be of value. brexit, trade and currency wars, geopolitical tensions. all of this in an environment of lower growth, zero rates and stimulus plans. when you were in government you joked that you slept like a baby, in that you woke up crying every two hours. how are you sleeping now? well. very well! i wouldn β t wish what happened in 2012 on my worst enemy. the situation now is totally different ; back then we were on the brink of collapse. the spanish economy, the italian economy, doubts about the integrity of the euro β¦ the situation of the spanish banking industry was terrifying and contagion was spreading to the treasury. it was a dramatic situation. i don β t think there is going to be a recession in europe, that β s very unlikely. but yes, i am worried that we 2 / 5 bis central bankers'speeches will have two or three years of subdued growth, of below - potential growth. that is what is worrying me at the moment. and that this subdued growth may mean that the price stability objective is not met. monetary policy is not the philosopher β s stone, it cannot be used to fix everything. other policies are needed. so do you echo the calls of presidents draghi and lagarde for countries with fiscal space, above all germany, to boost spending and investment? this is important, yes, but my proposal goes further than that. our current system of national fiscal policies and national budgets, with a set of rules like the | 1 |
that wages and prices will not increase easily, this feedback will not operate smoothly. in this context, recent studies point out that people's inflation expectations tend to depend not only on developments in actual prices, but also individuals'experiences over a long period. thus, there also is a possibility that average inflation expectations will not rise readily as the ratio of the generation that has spent much of their life under deflation increases. however, there is no need to be too pessimistic about the current situation. it is a significant change in japan's economy that the year - on - year rate of change in the cpi excluding fresh food has remained at a level close to 1 percent for more than one year, owing to an improvement in the output gap. the behavior and mindset under deflation also have been changing gradually, as evidenced by the fact that base pay increases have been conducted for six consecutive years ( chart 10 ). under such circumstances, although inflation expectations have remained more or less unchanged on the whole, those of mainly households recently have risen somewhat. as people have gained the collective experience of increases in wages and prices in the past few years, it is likely to contribute to pushing up inflation expectations going forward. in this way, the momentum toward achieving the price stability target has been maintained, whereby a positive output gap results in an increase in actual prices, leading to a rise in inflation expectations. the bank projects that the year - on - year rate of change in the cpi is likely to increase gradually toward 2 percent, although this will still take time. iii. the bank's conduct of monetary policy now, i would like to explain the bank's conduct of monetary policy. the bank currently adopts the policy framework of " quantitative and qualitative monetary easing ( qqe ) with yield curve control. " under the framework, it sets the short - term policy interest rate at minus 0. 1 percent and the target level of 10 - year jgb yields at around zero percent, and has conducted purchases of japanese government bonds ( jgbs ) in the market so that the yield curve would be formed in line with this guideline ( chart 11 ). by conducting this operation, short - and long - term interest rates in financial markets have been stable at low levels and lending rates for firms as well as issuance rates for corporate bonds also have remained at extremely low levels. the bank aims at achieving the price stability target of 2 percent at the earliest possible time through | decisions as well as actual decisions. central banks worldwide have been making efforts to improve communication on monetary policy, giving due consideration to the situation in each country, to improve the effectiveness of monetary policy and to be accountable. at the most recent monetary policy meeting, the bank decided to adopt several enhancements to its communication strategy on monetary policy. in the latter part of my talk today, i would like to expand a little on the topic of central bank communication. the contents of communication on monetary policy i would first like to discuss three important elements on which the communication on monetary policy is based. the first of these is the objective or the aim of monetary policy. the second is the assessment of the current situation of the economy and prices and the outlook for both. and third is the thinking behind the future conduct of monetary policy. the first element, the objective of monetary policy, is, in many countries, stipulated in the law governing the central bank as contributing to sustainable economic growth through stability in prices. in japan, article 2 of the bank of japan act clearly states that it is " achieving price stability, thereby contributing to the sound development of the national economy. " on the other hand, the ways price stability is numerically expressed differ notably from country to country. in the case of the bank, the level of inflation rate that each policy board member understands as being consistent with price stability over the medium to long term is compiled and published as the " understanding of medium - to long - term price stability. " the current understanding falls in the range approximately between 0 and 2 percent, with most policy board members'median figures at around 1 percent. the second important element is to communicate the assessment of not only the current situation of the economy and prices but also their outlook. this is because it takes some time for monetary policy to actually affect economic activity and prices. in addition, since the outlook for economic activity and prices always entails uncertainties, it is necessary, when communicating it, to not only present a single scenario, but also to clarify the risks that might result in an upside or downside deviation. in the case of the bank, economic and price situations are communicated through means such as the monthly report of recent economic and financial developments and the press conference held after each monetary policy meeting. also in the semiannual outlook for economic activity and prices ( outlook report ), which is published in april and october, projections for the current and the next fiscal year as well as risk factors are published. | 0.5 |
exercise detected that the accounts published up to then by the group β s holding company β esi β did not reflect their actual financial nature. i must stress that this accounting noncompliance had not yet been reported by anyone β neither the board of directors of bes, nor audit firms, nor any other regulator or supervisor, nor any creditor institution of ges, nor any other individual. again, i would like to stress that all this, including the evaluation of bpi, was in due time shared with the assembly of the republic, in the context of the parliamentary committee of inquiry. third and last question : how did banco de portugal act regarding the internal control problems in esfg β s subsidiary in dubai? considering that es bankers dubai is a subsidiary of esfg in dubai, banco de portugal had no mandate to exercise its supervision on an individual basis, although the subsidiary was included in the perimeter of supervision on a consolidated basis. the subsidiary was solely subject to supervision by dubai β s supervisory authority ( dubai financial services authority β dfsa ), both in prudential terms and regarding money laundering prevention. however, within the scope of the cooperation process between supervisory authorities, banco de portugal took the initiative to establish various interactions with dfsa. as part of these interactions, dfsa informed banco de portugal of a number of shortcomings in the internal control mechanisms implemented in dubai β s subsidiary, also referring to doubts about the origin of the funds invested in www. bportugal. pt ges entities. in addition, dfsa informed banco de portugal of the corrective measures imposed. in view of this information, banco de portugal called on esfg to be informed on the state of implementation of the corrective measures imposed on said subsidiary and of the underlying implementation timeline. in parallel, contact was maintained with dfsa, in order to stay informed about the implementation of the corrective measures imposed. before concluding, let me note that, despite the constraints existing at the time regarding banco de portugal β s powers to withdraw the suitability status ( arising both from the law and jurisprudence ), banco de portugal at each moment was strongly committed to making rigorous and careful use of the means permitted by law. a posteriori, and benefitting from the knowledge and information currently available, it is easy β and tempting β to question supervisory action and to claim that supervision could have been carried out differently. however, i firmly believe that, under the extreme | in question could only be provided to the parliamentary committee of inquiry with the authorisation of the people referred to therein. this was the only reason why this note was not submitted to the parliamentary committee of inquiry. thus, contrary to what has been insinuated, this note serves to prove that banco de portugal was analysing all situations that could influence the suitability assessment of members of the board of directors of bes. www. bportugal. pt however, as i have been constantly emphasising and is already on record, namely within the scope of the parliamentary committee of inquiry, banco de portugal's decisions to prevent the carrying out of professional functions are subject to stringent legal conditions. these conditions effectively lay down specific factual prerequisites and, at the same time, the observance of general rules of procedure, proof and reasoning, governing the work of the public authority. at the end of 2013, in relation to the problems coming to light and receiving news coverage for the first time, banco de portugal did not have the necessary factual proof that β within the legal framework then applicable and given the very restrictive jurisprudence of the higher administrative courts β would allow a formal process to be opened to reassess the suitability of the members of the board of directors in question. this is made clear in the note quoted in the report, when it mentions that the information existing at that time had to be duly verified and confirmed for the purposes of any actions in terms of suitability. at no time did that information warrant the immediate removal of any member of the board of directors of bes, or even the immediate opening of a process to that end. what should be emphasised here, to remove all doubt, is that as a result of that and other information, the competent services in banco de portugal undertook work to obtain confirmation of potentially relevant facts for the suitability assessment, both regarding those concerned β namely through the exchange of written communications and through face - to - face meetings β and regarding other entities. in this assessment process ( as was fully outlined to the parliamentary committee of inquiry ), banco de portugal did not approve the registration requests to carry out functions in other grupo bes entities, which culminated in β after calling for successive explanations and clarifications from the members of the board in question, both written and face - to - face β the withdrawal of those requests by the individuals themselves in march and april 2014. in parallel, banco de portugal implemented actions to | 1 |
predict where the economy is heading, or what shocks the system will yet have to endure. we will work with scenarios and will keep needing to react to crises at short notice. it is all the more important, then, that we have a reliable compass to provide a sense of direction. our institutional framework serves to stake out this regulatory frame of reference. sound banking regulation and supervision are important elements of this compass. with regard to regulation, the recent turmoil in financial markets has made it clear that this is not the time to talk about deregulation. quite the opposite : the reforms brought in over the past 15 years are precisely what has made the banking sector more resilient and allowed it to make it through the crisis years relatively unscathed. resilience means being able to cope well with unexpected developments without external assistance. so what can banks, supervisors and regulators actually do, in practice, to maintain resilience? 3. 1 gear risk management and governance of institutions to negative scenarios the backbone of a stable, resilient financial sector is the risk management of the institutions themselves. a properly functioning set - up for the monitoring, management and control of internal processes reduces those risks over which banks themselves have some influence. that β s the best shield against risks coming in from the outside β particularly in times of intense uncertainty. when it comes to operational matters, we are witnessing a significant rise in risks from the virtual environment, not least through cyberattacks. this is exactly the time when sound management of the classics β interest rate risk, credit risk β is called for. the banks themselves cannot directly influence the macroeconomic setting. at the same time, strong changes in market interest rates impact considerably on interest margins, the present value of own funds, and credit risk. when assessing future risks, it must be borne in mind that interest rates have already risen significantly. the higher interest rates are, the weaker the impact of a 200 basis point increase appears to be β in relative terms. that β s why the basel coefficient is currently pointing to diminishing risks for many institutions. but the actual risks in the stock of loans certainly haven β t got any smaller. you see, the interest rate hikes that have already happened harbour risks and looming losses that are not yet fully reflected on balance sheets. and even if banks stand to benefit from rising interest rates in the longer term, interest margins could narrow initially. on the deposits side, there is mounting pressure from customers wanting higher interest rates | gov / news / pressreleases / 2023 / pr23033a. pdf 3. see financial stability board ( 2019 ), p. 9. 4. see the results of the bank lending survey https : / / www. bundesbank. de / en / tasks / monetary - policy / economic - analyses / - / banklending - survey - for - germany - 618070 [ https : / / www. bundesbank. de / en / tasks / monetary - policy / economic - analyses / - / bank - lending - survey - for - germany - 618070 ] 5. see grimm, jora, schularick and taylor ( 2023 ). 6. according to reis ( 2022 ), inflation volatility in the united kingdom was lower in the period from 1997 to 2016 than in the eight preceding centuries. 7. see federal statistical office, fachserie 2, reihe 4. 1. the comparison is based on the years 2001 - 06 and 2009 - 13. 8. see deutsche bundesbank ( 2020 ), p. 49. 9. see deutsche bundesbank ( 2021 ), p. 46. 10. see https : / / www. fsb. org / multimedia / safersimplerfairer / ; https : / / www. fsb. org / work - of - the - fsb / assessing - the - effects - of - reforms / [ https : / / www. fsb. org / work - of - the - fsb / assessing - the - effects - of - reforms / ] 11. the most recent information available on enterprises β capitalisation is from 2021. see deutsche bundesbank ( 2023 ), p. 71. 12. see imf world economic outlook. in 2020, the decline in gdp was 3. 7 % in germany and 2. 8 % worldwide ( https : / / www. imf. org / external / datamapper / ngdp _ rpch @ weo / oemdc / advec / weoworld ). 13. see deutsche bundesbank ( 2021 ), p. 24. 14. see deutsche bundesbank ( 2020 ), p. 41. 15. see buch ( 2023 ). 16. see deutsche bundesbank ( 2023 ) and federal statistical office for the current value based on the change in the harmonised index of consumer prices ( hi | 1 |
##ntial norms and regulations. the finsac head also blamed the crisis on jamaica β s failure to adequately regulate and supervise the financial sector. he noted, in particular, that the office of the superintendent of insurance, was not adequately staffed and as a department within the ministry of finance did not appear to have the stature needed to deal β at eye level β with the moguls of the insurance industry. this was the jamaican situation in the 1990s. it may not be our present circumstance, but let β s be frank, we have our own skeletons and we should learn from the jamaican experience and seek to put our house in order. in the context of the integrated supervision project conducted by the lawrie savage group, diagnostic studies on several insurance companies were conducted. the data obtained from these studies, as well as information from the office of the supervisor of insurance, suggest that while several companies operate in conformity with the statutory requirements, there are too many cases, similar to the jamaican example, where the prudential norms and regulatory requirements are flouted. the evidence suggests that there are far too many cases of chronic statutory fund deficits, late filing of returns, inadequate reinsurance and other areas of non - compliance. the diagnostic studies also indicate that the investment strategy of some companies requires stricter regulatory attention, in part because of limited portfolio diversification and related party transactions. the latest insurance industry report makes reference to the need for companies to upgrade corporate governance and risk management structures. it also identifies market conduct in the industry as another matter of concern. in this regard, there are clearly too many instances of inadequate and delayed settlement of legitimate claims of policyholders as well as questionable, if not, unfair and deceptive marketing practices. the capacity of intermediaries to competently fulfill their role is also an issue that reportedly comes up with some frequency. specifically, there is a perception that the training of intermediaries does not always keep pace with the evolution of products offered by some companies. these are but some of the issues that call for stronger regulation and more focused supervision. and so, what are we doing? as you know, cabinet has approved that the supervision of insurance companies and pension funds be integrated with that of banking institutions under the authority of the existing bank inspection department of the central bank. the legislation to effect this transfer is currently being finalized and is expected to be presented to parliament by the end of july or early august. in the meantime preparations for the transfer are proceeding apace. internal | , operating in several fields, and spread over 20 countries β in the caribbean, central and north america and europe. the official data showed that cl financial was an extremely strong and profitable conglomerate and that clico was the centerpiece of the group. it was clear that the group had major vulnerabilities, the most notable being the excessive amount of related - party transactions. from the beginning, we recognized that regulation of the insurance industry, which was accustomed to being unregulated, was always going to be a major challenge. and we knew that clico, being the biggest company, would be in the forefront of this process. financial regulation is most effective when you have the confluence of a number of factors including an adequate legislative and regulatory framework ; an effective supervisory system ; including highly trained regulators ; a regime of supporting and supportive institutions such as the accounting and auditing profession and support from an informed and vigilant investor community β or market discipline. even with all these pieces in place, any licensee who is committed to exploiting loopholes, to taking excessive risks with policyholders β and depositors β funds, and to bending the system could go undetected for a while and in so doing could do a lot of damage. our insurance legislation dates back to 1980 and is very archaic. by way of example : β’ clico, with assets in excess of over $ 24 billion, only requires capital of $ 3 million. this compares for example with banks which must have capital equivalent to a minimum of 8 per cent of its assets. thus, a bank of clico β s asset size would have at least $ 2. 0 billion of capital ; regulatory capital requirements for the insurance industry is only now being developed. β’ even when the central bank formally took over regulation of the industry, the legislation had limitations with respect to on - site supervision ( and formally it still does not ) ; β’ while the legislation did not restrict related party transactions, there were significant deficiency or loopholes and this was, perhaps clico β s greatest vulnerability ; and β’ it is silent on the issue of actuarial methodology, which allowed companies to use their own standards which could result in a lower statutory fund requirement. as the bank and the industry proceeded to work on a new insurance act, we tried to achieve, by moral suasion, what would have been mandatory under appropriate legislation. thus for instance : β’ we insisted on on - site inspections of clico ; β’ in the face of concerns | 0.5 |
us trading times. the new enterprise is based in frankfurt. the german - chinese exchange will operate using the established and globally available infrastructure of the deutsche borse group. the three joint venture partners intentionally chose frankfurt as the financial platform from which to offer their service in a european regulatory environment and in the european and american time zones. the money flows resulting from securities settlement are to be channelled through the clearing infrastructure provided in frankfurt. in my view, china β s real economic development and the launch of the china europe international exchange will give rise to additional volumes of rmb payments. the german banking industry will decide which channels shall be used to clear rmb payments. nevertheless, i would wish that the german banking community will support the german financial market to become an rmb hub. this could be done by processing rmb transactions via the rmb clearing bank in frankfurt. potential prospects the bundesbank operates the target2 system together with the french and italian central banks, while the eurosystem is currently looking at strategically enhancing its market infrastructures. for example the eurosystem discusses to offer multicurrency services in a future target2 system. for such a new service the renminbi and its processing would be a candidate. a connection on infrastructure level between the chinese payments traffic and an enhanced target2 system β we can call it target3 β would also an option. however this will only be possible, if both systems use a harmonised iso 20022 standard. this is not yet the case today. all in all the surrounding will remain interesting and exciting. many new ideas and visions can still be developed. bis central bankers β speeches | . the countries which participate in the international capital market tend to have higher per capita growth rates than other countries. the globalisation of production and trade calls for new solutions for payments and financing. it is also a great advantage to have a financial system that is capable of channelling savings to those parts of the world that need them most for investment. however, participation in the international capital market presupposes that a country has an adequate banking system with accounting regulations and other institutions, such as thorough supervision that ensures sound banking practices. this has evidently not been the case in a number of the countries that are now affected by the crisis. nor should we forget that the banking system in sweden was not fully prepared at the time when our credit market was deregulated. if loans from the international capital market are channelled to a country where the banking system and other financial institutions are not ready to function in this community, the result may thus be loan losses. but, as you know, it takes two to tango. it may well be asked why banks in the industrialised countries have arranged loans to countries that evidently were not yet sufficiently sound borrowers. capital has been flowing to emerging markets in a broad stream in recent years. it has been channelled directly through the banks as well as indirectly, for instance via hedge funds. a good many such funds have obtained large loans from banks in the industrialised countries and, in pursuit of favourable yields, invested the money in emerging markets. this indirect lending can be likened to the swedish banks β earlier lending to finance companies. this brings us to the nature of banking in a more profound sense. traditional banking involves accepting deposits from the non - bank public and lending these funds to various borrowers. moreover, the equity capital on which banking is based is small, which implies high leverage and low solvency. if all the banks β capital had consisted instead of equity, incurred losses could have been handled more or less painlessly. with a large proportion of borrowed capital, however, there are liable to be chain reactions that successively spread through the banking system. it is precisely this that necessitates comprehensive, efficient supervision and a functional set of regulations in order to avoid unnecessary losses. that is also why central banks around the world have been assigned the function of safeguarding the financial system β s general stability. what can be done? the current problems in the global financial system need solutions for both the short and the longer run. in the short run it is a | 0 |
a positive interrelationship between higher employment and sound public finance. in that respect, denmark is a model for us in germany. our country is at present in the process of rethinking, and facing up to these difficult challenges. that is not a simple matter, especially as the structural inflexibilities existing in germany have arisen over a long period. our own adjustments are all the more important, seeing that we shall have to cope with the economic implications of german reunification for some considerable time to come. it is my hope and wish that we shall soon be able to make the progress that is needed, and achieve positive results. that will undoubtedly be the case if we follow the path taken by our neighbours in the north and north - west. at all events, the netherlands and denmark are setting important signposts, not only for us in germany, but also for the road to emu and beyond. | yves mersch : in the spirit of european cooperation introductory remarks by mr yves mersch, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at the salzburg global webinar, 2 july 2020. * * * the judgment of the german federal constitutional court on the ecb β s public sector purchase programme ( pspp ) is a reminder of the confederal nature of the european union. the judges themselves noted that β certain tensions are [ β¦ ] inherent in the design of the european union ; they must be resolved in a cooperative manner, in keeping with the spirit of european integration, and mitigated through mutual respect and understanding. β 1 in this spirit, the ecb β which is exclusively subject to the jurisdiction of the court of justice of the european union and accountable to the european parliament β supports the deutsche bundesbank in its cooperation with the german federal government and the bundestag. the constitutional court is of the view that the federal government and the bundestag have a duty to ascertain that an assessment is conducted in relation to the proportionality of the pspp. bundesbank president jens weidmann thus recently requested that the ecb authorise the disclosure of a number of documents to those to whom the judgment is directed, namely the federal government, which may then share these documents with the bundestag if necessary. we authorised the disclosure of these documents on the condition that their non - public elements are treated confidentially. in 2018 the court of justice ruled unambiguously and finally on the legality of the ecb β s asset purchases. it also found that the ecb provided sufficient proportionality considerations. 2 the ecb β s governing council constantly evaluates the potential side effects of its monetary policy measures β including the pspp. this evaluation is part of the proportionality assessment underpinning the ecb β s policy choices and is publicly available. you can get an idea of what i am referring to from our latest accounts3 ( published last week ), which show the depth and comprehensiveness of the governing council β s discussions, including on the effectiveness, efficiency and potential side effects of our monetary policy decisions. this public evidence demonstrates that we take the potential risks and side effects of our decisions very seriously. and it should help with more balanced communication of our decisions in all countries, including germany. the german authorities have access to the answers to the 43 questions we received | 0 |
jens weidmann : monetary policy in a changing environment keynote speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the joint bank of francebundesbank research conference " monetary policy challenges ", paris, 21 june 2018. * * * 1 introduction ladies and gentlemen it is a great pleasure to give the keynote speech at this conference on β monetary policy challenges β, organised jointly by the banque de france and the deutsche bundesbank. this joint conference has already become a tradition. it is held every two to three years, with france and germany taking it in turns to host the event. let me start by thanking both the programme committee β emmanuel farhi ( harvard ), emanuel moench ( bundesbank ) and benoit mojon ( banque de france ) β for their ingenious selection of papers, and our host, governor villeroy de galhau, for providing this delightful venue, for the warm welcome and for the excellent organisation by the banque de france staff. even more remarkable is that, in choosing the 21st of june, the banque de france has been extremely selfless, as i would understand if many of our french colleagues had preferred to watch france play peru in the football world cup rather than attend this afternoon β s panel. but the 21st of june is also a special day for germans and the bundesbank. exactly 70 years ago, the deutsche mark was introduced in what was known as the trizone β the three zones that were occupied after world war ii by france, the united kingdom and the us, and that were to become west germany one year later. we have indeed come a long way since those days, when much of europe was still ravaged by war. the franco - german reconciliation that developed in the following decades and eventually grew into a deep friendship is rightly considered one of the great achievements in european history, and it has been a catalyst for european integration. events like today β s bear testimony to this process β as well as to the conviction that, by working together in a spirit of openness, we have a much better chance of mastering the common challenges that confront us. this certainly also holds for monetary policy β both its role and its conduct β after the financial and economic crisis. about 2, 500 years ago, greek philosopher heraclitus of ephesus found two words to describe a fundamental concept of human life and the world | for monetary policy, our good inflation performance and the fiscal measures taken so far have given the bank of canada some room to ease monetary conditions in canada. i believe there is now substantial monetary stimulus in the economy, which should help counteract some of the concerns that affect the confidence of canadians, as we work our way through this crucial period of restructuring the canadian economy. | 0 |
reforms aimed at enhancing labour force participation are needed to offset the low growth in the working age population. additional measures that are needed are the removal of barriers to investment and the creation of the institutional structures needed for a rapid and efficient adoption of new technologies. in this respect, the governing council considers that there is no clear indication yet that these structural factors have led to a measurable and lasting increase in productivity growth in the euro area. this notwithstanding, the uncertainties surrounding estimates of the medium - term development of potential output growth in the euro area have become skewed to the upside. this being the case the governing council will carefully monitor further evidence of an acceleration of productivity growth in the euro area. the ecb's monetary policy would naturally take such changes appropriately into account, if and when they occur. 2. issues relating to the introduction of euro banknotes and coins i should now like to report on several decisions that have been taken by the governing council of the ecb with regard to the euro cash changeover on 1 january 2002. given the crucial importance of this matter and the responsibility of the eurosystem as a whole to achieve a smooth cash changeover, the governing council has adopted an ecb guideline on the 2002 cash changeover. the aim of this guideline is to ensure that the framework of the changeover is consistently implemented, such as the provisions for frontloading and sub - frontloading and the financial modalities for credit institutions, as well as to provide a level playing - field for all credit institutions, their agents and sub - frontloaded entities. the ecb guideline can be viewed on the ecb's website and has also been published in the official journal of the european communities. moreover, the governing council considered measures which should help to ensure the availability of euro banknotes in non - euro area countries, so that customers demanding euro banknotes are able to obtain them in a timely and efficient manner. this is particularly relevant for countries in eastern and south - eastern europe. for example, a significant amount of deutsche mark - denominated banknotes are estimated to be held in these countries, and also some other euro area currencies are held outside their national borders. therefore, the governing council agreed on the following principles regarding the distribution of frontloaded euro banknotes outside the euro area : β’ credit institutions which are counterparties for monetary policy operations within the eurosystem will be allowed to distribute frontloaded euro banknotes to their branches, or | a recent, positive aspect has been that stressed euro area countries have taken significant steps in this regard. by reducing unit labour costs relative to euro area partners they have improved competitiveness and adjusted external imbalances. in 2013, all stressed countries β except cyprus β registered a surplus in their current account balances. cyprus is expected to run a surplus in 2014. compared to 2009, the current account ( and capital transfers ) balance has improved by about 16pp ( of gdp ) in greece, around 14pp in cyprus and portugal and between 10pp and 12pp in ireland, slovenia and spain. although weak bis central bankers β speeches domestic demand has contributed to declining current account surpluses, rebalancing has also been aided by strong export performance. unit labour cost developments during the crisis have helped. in the past five years, the cumulative unit labour cost differential vis - a - vis the euro area fell by more than 20pp in ireland, 16. 5pp in greece, 13. 5pp in spain, and 9pp in portugal. yet euro area - wide potential growth has also declined. falling capital accumulation and labour utilisation have brought potential growth from a level close to 2 % in the years preceding the crisis to less than 1 % on average between 2008 and 2012. 3 a recent study4 of the centre for european policy studies makes for sobering reading, suggesting that the prospective decline in the working age population ( averaging 0. 6 % per annum until 2030 ) would translate to an annual growth rate of about only 1 % to 1. 5 % until 2030. the long - term prospects of the euro area hinge, therefore, on generating a sizeable boosting of our productivity performance. dealing with low inflation the final issue i wish to discuss is the low inflation in the euro area. we have witnessed a pronounced, albeit gradual, fall in inflation in the past year, standing at 0. 7 % in april, up from 0. 5 % in march. euro area inflation is expected to remain low for a prolonged period of time. to judge the appropriate policy response, we need to understand the drivers of the low inflation outturns. a significant part of the fall can be explained by global factors. indeed, the majority of advanced economies have seen a decline in inflation since 2011 and in most advanced economies inflation is now below central bank price stability objectives. in this generalised fall, lower energy and food contributions have played an important role. in our case, the | 0.5 |
2 bis central bankers'speeches | benjamin e diokno : navigating the philippine economy toward recovery speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the fitch ratings annual review, manila, 7 february 2022. * * * good afternoon. recent developments show the philippines is on the road to recovery, with encouraging signs suggesting that the worst may be behind us. the economy grew by 5. 6 percent last year, exceeding the government forecasts of 5 to 5. 5 percent and reversing the recession in 2020. the unemployment rate fell to 6. 5 percent in november 2021 from a peak of 17. 6 percent in april 2020. full - year inflation averaged 3. 9 percent in 2021 based on 2018 cpi series. inflation further eased to 3 percent in january 2022, supporting the narrative that inflation is on a downward trajectory. the development budget coordination committee ( dbcc ) kept the inflation target range at 3. 0 percent Β± 1. 0 percentage point for 2022 β 2024. inflation expectations are well anchored, as shown by surveys of private sector economists and forecasts of multilateral agencies. overall liquidity conditions are sound. in december 2021, m3 expanded by 7. 7 percent. lending by universal and commercial banks rose for the fifth straight month, up 4. 6 percent year - on - year. this signals an improvement in consumption and investment activities. exposure to bad debts remained manageable. the npl ratio of the philippine banking system settled at 4. 3 percent as of end - november 2021. banks are well capitalized. capital adequacy ratio of ukbs is well above the bsp β s minimum requirement of 10 percent and the bank for international settlements β 8 percent. the country β s external sector remains robust, supported by steady sources of foreign exchange. remittances rose by 5. 2 percent year - on - year to usd28. 4 billion in january to november 2021 while bpo revenues grew by 8. 3 percent to usd17. 4 billion in january to september 2021. fdis grew by 48. 1 percent in the first 10 months of last year to usd8. 1 billion, as foreign investor sentiment improved. external debt - to - gdp ratio stood at 27. 3 percent as of end - september 2021 compared with about 60. 0 percent in mid - 2000s. gross international reserves ( gir ) stood at a hefty us $ 108 | 1 |
cost of depositing excess reserves with the central bank? the answer is that the alternatives to depositing excess reserves are also costly. in fact, the cost of using alternatives to central bank deposits determines to what extent the rate on excess reserves can go negative in practice. banks can always choose to hold physical currency instead of electronic money in their accounts with the ecb. since physical currency has a zero nominal rate of return, there is what i would call an β economic lower bound β for the rate on excess reserves. it is difficult to identify but it is not zero because the effective rate of return on currency is negative. one does not even need to impose a demurrage rate or regular stamping on banknotes, as irving fischer has proposed based on gesell β s ideas. 4 there is a cost of storing, holding, and more importantly, using physical currency. 5 this involves the cost of renting, maintaining and securing storage facilities such as vaults as well as the cost of shipping currency around in a safe and timely manner. a recent ecb study estimated the private cost of cash payments to be 1. 1 % of gdp on average in the participating countries. 6 the unit social cost was estimated at 2. 3 cents per euro of transaction. this is substantially higher than the unit social cost of a credit transfer or other non - cash means of payments per euro of transaction. because the overnight unsecured money market alone currently involves hundreds of banks with an aggregate transaction volume of around β¬ 40 β 50 billion every day, replicating this scale of transacting with physical money would be a formidable and costly task, both privately and socially. i would not go as far as kenneth rogoff and conclude that having only electronic money, by pushing down the economic lower bound, would recreate room for manoeuvre for central banks in a protractedly low inflation environment. 7 the ecb is committed to bringing euro area inflation back at a level below but close to 2 %, in line with its mandate. but what is then the rationale for a negative rate on the deposit facility? why impose a cost on banks β excess reserves? one should view the negative rate in the context of the ecb β s aim to provide further monetary policy accommodation inter alia by lowering policy rates without impairing market intermediation. 8 there are a number of reasons why it is desirable to keep a certain distance stamping of banknotes was famously tried in the city of wo | fallen by nearly half since their peak in mid - 2012 ( at β¬ 572bn on 3 september, β¬ 541bn below their peak level reached in july 2012 ), market fragmentation in the euro area is still present. 14 if banks with excess reserves are predominately highly profitable banks located in non - stressed countries, then a potential adverse effect on bank profitability may be less of a concern from the financial stability perspective. similarly, if banks have good reason to borrow from the ecb, for instance when other sources of funding are not available, and if those banks that borrow are not necessarily the same as those that deposit with the ecb, then excess liquidity in the banking system may not fall. what about the impact of negative rates on market fragmentation in the euro area? evidence from actual money market transactions shows that fragmentation still significantly hampers the smooth transmission of lower rates across the euro area. banks located in non - stressed countries can now borrow in the overnight unsecured market at negative rates. rates for borrowers located in stressed countries are mostly positive and the distribution of rates is wide, ranging from slightly negative to slightly above the main refinancing rate. that said, there is some evidence that lower rates have reduced fragmentation in secured markets. the search for yield in the low rate environment has increased the demand for there is evidence that the lower interest rate environment in the united states adversely affects money market funds, see kacperczyk, m. and m di maggio, 2014, β the unintended consequences of the zero lower bound policy β, working paper, columbia business school. this is, however, less of a concern in europe where money market funds are not central to the financial system. for more information, see the ecb report β financial integration in europe β ( april 2014 ). bis central bankers β speeches higher yielding, but still safe products such as repo or sovereign bonds, including those of non - core countries. 15 the higher demand has pushed down and thus compressed interest rates in secured markets. let me conclude. given the theoretical arguments for and against lowering some policy rates into negative territory, and given the practical experience so far, what is the verdict? or, coming back to the opinions on gesell : should he be considered a prophet or monetary crank? while the final verdict is certainly still out, based on the presented evidence so far, it seems fair to say that the lowering of policy rates, with the deposit rate | 1 |
external stakeholders to improve the administrative processes for exchange controls. this includes a focus on promoting more informed dialogue on capital and financial flows and on how these relate to an understanding of the way our economy works. our financial literacy program will support this process. we also believe that literacy will encourage more transparency and accountability on policies and fundamentals over which we have control. it will better equip the private sector to ask pointed, relevant questions of policy makers. our dialogue has to draw out the importance of holding policy makers accountable to inspire confidence through the outcomes that they produce. in this regard, the degree of success achieved with liberalisation ought to be gauged by the extent to which private sector decisions around the deployment of capital is based on genuine pursuit of higher productive returns rather than a fear of erosion of wealth from real or perceived risks of domestic economic ruin. fear is still too prominent in the discussion for wanting to go outside. as such the private sector β s decisions could be underweighting the returns that their capital would generate in productive investments inside the bahamas. this point should not be downplayed given already significant liquid resources that lay idle in local banks. these resources and others are in need of greater deployment in the enterprise sector. new private sector mechanisms ought to be developed to deploy these resources. the central bank does believe that more benefits can be obtained from liberalisation. prudent reforms should continue to be advanced to put these advantages within the reach of the economy. the bank has stressed though that liberalisation should be gradual. after all, the process of developing the systems and capacity to manage a transformed economy is itself gradual. with these points in mind, the bank trusts that you will find today β s seminar useful. we look forward to your constructive input. thank you. | curriculum has started. we will hear more about the progress made by the ministry of education and human resources development on achieving this goal when our key - note speaker delivers his address later this morning. let me share with you the outcome of the financial education we facilitated through our primary school adoption program with our three commercial banks and the six primary schools to teach financial education in their schools with a set of lesson outlines supplied by the child and youth international group. the outcome has been very positive. teachers, who taught financial education to their students, reported that the learning objectives in the lessons taught not only impacted the attitudes of their students but on them as teachers as well. they also observed a marked change in their children β s habits of spending their allowances. they note children see the value of savings, and have allocated bis central bankers β speeches their allowances towards their own bank saving accounts with a commercial bank, rather than spending them all. something else too is happening. a parent who attended the feedback session reported that the children also returned home and taught their parents about savings and other topics learnt from their classes. the parent noticed changes in children β s attitude towards money. further the adopted school teachers reported that member of classes in their schools extended their acquired knowledge on goal setting and savings towards a common goal. they all contribute an agreed sum of money towards a common β piggy bank β or β monkey β money boxes each week towards an amount for their end year school function. indeed, the idea to save little over time has caught on to these children and i encourage parents to support their children to achieve their saving goals. today the children from these adopted primary schools will, demonstrate on stage in their respective stalls what they have learnt in dramas and songs about financial education. these positive outcomes from the teachers and students in applying what they have learnt over the past six weeks encourage us to complete the mapping of the financial education learning objectives in the school curriculum. this indicates that if we can start teaching financial education in our schools, we could have a new generation of economic citizens that are better informed about financial matters than we are today. before i end my opening remarks, let me get back to this four - word theme β take part. save smart! β let me say that this theme is not all about money. it also encourages and empowers our children and youth to manage other resources as well. we make decisions on the use of resources each and every day of our lives. therefore, we need to start em | 0 |
world trade volume and consumer prices in advanced economies are also projected to decline. the world bank, in its global economic prospects report, january 2015, has reduced global growth projection for 2015 from 3. 4 per cent to 3. 0 per cent. japan has come out of a technical recession but is still quite some distance away from the bank of japan β s target of 2 per cent inflation. the bank of canada and the reserve bank of australia have announced rate cuts in view of weak growth. global growth, therefore, continues to be in a sluggish phase, which has been characterized as β secular stagnation β by larry summers. 2 the us offers the best prospects in the developed world but eurozone continues to be a matter of concern even as the european central bank embarks on quantitative easing ( qe ) programme to fight deflation. greece continues to trigger fears of a renewed eurozone crisis though the european finance ministers appear to have reached an agreement to extend greece β s financial rescue plan for imf world economic outlook update, january 2015. u. s. economic prospects : secular stagnation, hysteresis, and the zero lower bound : larry summers. bis central bankers β speeches another four months. the possibility of a grexit, however remote, may induce a chain of events which markets may not be prepared for. ukraine and the middle east are sources of geopolitical risks. given the prospects in the us economy, the us dollar has strengthened against most currencies and, in particular, against the euro, canadian dollar, australian dollar and the japanese yen. with a stronger us dollar and low oil prices, what is of interest is the policy course the us federal reserve is likely to pursue β when it will take the first step in a cycle of rate rise and, subsequently, at what pace will it tighten monetary conditions. emerging market & developing economies 3. the recent update on the imf world economic outlook projects that growth in emerging markets & developing economies ( emdes ) to remain broadly stable at 4. 3 per cent in 2015 and to increase to 4. 7 per cent in 2016 β a weaker pace than forecast in october 2014. projection for growth of indian economy was marginally revised downward from 6. 4 per cent to 6. 3 per cent. the world bank, in its global economic prospects report ( january 2015 ) has also cut down the growth projection of emdes from 5. 2 per cent to 4. 8 per cent for the year | foreign exchange transactions are bilaterally negotiated, they are cleared and settled through ccil. today cdss prices / spreads are by far the most closely monitored early warning signals for real time changes in credit risk of an entity whether private or sovereign. this is because cdss make it possible to back out an implied credit price even when one is not discovered in the underlying cash market instruments like bonds or loans. thus, cds market has tremendous practical application as a reliable diagnostic tool in stress - testing for supervisors and regulators. besides, a cds market will also enable efficient hedging and trading of credit risk and synergise development of active and liquid corporate bond and repo markets. like equity, credit risk subsumes all other risks as it is a function of forex risk, interest rate risk, leverage risk, liquidity risk, governance risk and that is why cdss and equity prices are, in equilibrium, almost perfectly negatively correlated. as is invariably the case with any major crisis, the ongoing global financial crisis has unleashed a passionate debate over the design of a new global financial architecture. the opinion on overarching role in global financial surveillance is sharply divided between assigning it to financial stability forum, on the one hand, and to imf, on the other. however, the trouble has been not so much with the existing, inter - temporally evolved, global financial architecture as really with how it was actually worked in practice. recent huge losses at global banks running to about usd 1 trillion are not because existing best practices failed but because those responsible for implementing and enforcing them failed them! after all, of all risks to regulators and regulatees alike, human resources risk is by far the most serious as it is the source of all risks as confirmed by the ongoing financial cataclysm. the crux of the matter is what we need is not more or less regulation and governance but good regulation and governance. this has been the undoing of both regulators / supervisors and financial firms / banks alike. in the way of example, in the usa, the traditionally very healthy aaa rated mono - line bond insurers mbia and ambac changed their business model from insuring only their staple municipal bonds to insuring cdos and abs. while this went unnoticed by insurance regulators, pershing square, a hedge fund, spotted trouble and started shorting both equity and credit risk of these two companies. but even after this, regulators failed to take notice and corrective action with the | 0.5 |
ignazio visco : rebalancing trade and capital flows remarks by mr ignazio visco, deputy director general of the bank of italy, at the global economic symposium 2010, istanbul, 29 september 2010. * 1. * * the role of macroeconomic policies in the global crisis policy responses to the global crisis have helped stabilize confidence and limit the threats of financial instability, but at the cost of a huge accumulation of public debt. this could potentially lead to a higher cost of borrowing if markets were to become concerned about its sustainability, and of a protracted period of very low policy interest rates and abundant liquidity, which may end up fuelling new asset price bubbles, thus building up the conditions for the next crisis. in order to reduce the risk that again in the future a combination of distortions may lead to large and destructive financial crises, it is essential to address both macroeconomic and financial policy failures. important changes in financial market regulation and banking supervision are already being introduced. in the macroeconomic area, an effort is being conducted to strengthen the coordination of economic policies in the context of the g - 20. beyond exiting from exceptional expansionary policies, the global economy will face the challenge of adapting to an extended period of higher private saving in the advanced economies, where the process of deleveraging is still at its early stages. a shift to a more sustainable global pattern of demand is needed, with important policy implications to facilitate this adjustment over the medium term. policy frameworks should adjust to allow for stronger growth in private demand in economies with substantial external surpluses that have accumulated large reserve positions over the past several years. in other words, the composition of global demand will need to shift in order to deliver strong, sustained and balanced global growth, as in the g - 20 intendments. supply - side policies and structural reforms will be important to support potential growth β which may have been damaged by the crisis. one may wonder what would have happened to the global economy had this policy framework been implemented in due time. such a counterfactual scenario has been studied by catte et al. ( 2010 ) who show that, if a substantial and globally coordinated demand rebalancing had been undertaken in the early 2000s, internal and external imbalances would not have accumulated to the extent that they did ( catte, p., p. cova, p. pagano, and i. visco ( 2010 ), β the role of macroeconomic policies in | the global crisis β, banca d β italia occasional papers, no. 69, july ). in particular, the scenario considered contemplates tighter monetary and supervision policies in the united states and an increase in domestic demand in major surplus economies. the latter would have been the result of wealth effects obtained through productivity enhancements in the nontradable sector in advanced surplus economies and of policies aimed at directly rebalancing growth towards domestic demand β such as measures that reduce households β precautionary savings and reforms of corporate governance which decrease retained earnings, coupled with exchange rate appreciation β in emerging economies. even though it is difficult to say whether in that scenario the financial crisis might have been avoided, its propagation would likely have been less destructive, as both the us financial system and the global economy would have been less vulnerable to it. specifically, us housing prices would not have expanded at the same pace as they did and the pattern of current accounts would have been better balanced. overall, the results of such a counterfactual scenario highlight the complementarity of policy actions in deficit and in surplus countries with respect to the correction of both internal and global imbalances. notwithstanding announcements about the importance of coordination and cooperation in the design and development of crisis strategies, in practice, countries have proceeded to adopt policies that appear to be national in character. strengthening multilateral coordination to mitigate global distortions remains a priority. the issue of cooperation extends beyond the design and implementation of stabilization policies and appears particularly relevant in managing exchange rate flexibility. 2. exchange rate flexibility and financial flows for countries in surplus, the rebalancing toward domestic demand should normally be accompanied by an exchange rate appreciation to help re - direct production toward nontradables and part of the additional absorption toward imports. the consequent terms - oftrade gains would help stimulate domestic consumption. in principle, an effective exchange rate appreciation can be achieved in different ways depending on the exchange rate regime. greater exchange rate flexibility could, for example, take the form of exchange rate fluctuation within a moving ( e. g. gradually appreciating ) target band, defined with reference to either the dollar or a currency basket. it is possible to imagine a wide range of variants of this regime depending on the width of the band, the speed of appreciation, the composition of the basket and whether the margins of the band are β hard β or β soft β, as well as depending on the degree of pre - commitment | 1 |
capital positions were evaluated under a hypothetical stress scenario that involved a deep recession in the united states ( with unemployment reaching 13 percent ) and a notable decline in activity abroad, combined with sharp decreases in both domestic and global asset prices. this exercise was designed to capture both the direct and indirect exposures and vulnerabilities of u. s. financial institutions to the economic and financial stresses that might arise from a severe crisis in europe. the results show that a significant majority of the largest u. s. banks would continue to meet supervisory expectations for capital adequacy despite large projected losses in an extremely adverse hypothetical scenario. conclusion the recent reduction in financial stresses in europe is a welcome development for the united states, given the important trade and financial linkages connecting our economies. however, europe β s financial and economic situation remains difficult, and it is critical that the european leaders follow through on their policy commitments to ensure a lasting stabilization. i believe that our european counterparts understand the challenges and risks they face and are committed to take the necessary steps to address those issues. for our part, the federal reserve will continue to monitor the situation closely, work with our financial institutions and foreign counterparts to enhance the resilience of our financial see board of governors of the federal reserve system ( 2012 ), β federal reserve announces summary results of latest round of bank stress tests, β press release, march 13. bis central bankers β speeches system, and be ready to use our tools to help stabilize u. s. markets should the situation require such action. thank you. i would be pleased to respond to your questions. bis central bankers β speeches | promoting commercially viable microfinance ventures. in this connection, greater flexibility has been provided for foreign banks to enhance their presence in non - urban areas. given the objectives of financial inclusion, it is hoped that foreign banks support this initiative given the flexibility that is being accorded to widen the outreach to segments of the economy which are currently underserved. also embedded within the financial inclusion agenda is the responsibility that banking institutions have towards their customers, and to ensure that adequate information is provided to consumers and investors to make informed judgments. in the area of product development, both the interest of consumers and businesses will be taken into account. financial institutions that demonstrate their ability to act responsibly can look forward to greater business flexibility to innovate. financial institutions that uphold the necessary principles in their business strategies stand to reap long - term gains from enhanced franchise value, a strong reputation and positive association with socially responsible values that will engender public trust and confidence. the third area relates to the need for banking institutions to enlarge their sphere of influence going forward given the changing environment. banks will increasingly be exposed to external developments and the forces of market discipline. there are several particular areas in which banking institutions can take strategic positions to influence such developments. first is to leverage on the β network economy β through strategic alliances. with global integration deepening further at the same time that competitive forces are exerting pressures on margins, the way forward would be to build on strategic alliances to increase capacity and expand reach, while containing costs. strategic alliances with third parties, including those within and outside malaysia, provides efficient opportunities to capitalize on the strengths of each partner and in the process promote development, the transfer of skills and improvement of best practices and pave the way for successful cross - border ventures. the second relates to the area of international standard setting. with the gaining momentum of international standards in such important and pervasive areas such as capital adequacy standards, financial reporting and cross - border activities, it is important for financial institutions to participate more constructively in the standard setting process together with the regulatory community in order for such developments to take into account domestic circumstances and risks. the third is in the area of ongoing negotiations on trade agreements. banking institutions need to follow these developments and negotiations closely to consider implications it would have to their organisations and future business strategies. the last area of influence relates to communication strategies. with increasing market discipline, effective communications has become more critical. institutions will need | 0 |
earlier lunches in this series. the resources boom it is now well understood that the β mining boom β is shifting gear, and that we are entering a new phase. the story of the boom has always had three phases. 2 in the first phase, commodity prices rose to very high levels. as a result, australia β s terms of trade rose to levels not seen in a very long time. these prices had a hiatus in 2009 with the global downturn but resumed their upward trend quite quickly. see anika foundation. see stevens g ( 2012 ), β producing prosperity β, rba bulletin, december pp 81 β 87. bis central bankers β speeches in historical context, the high prices have been quite persistent. 3 this led to the second phase, in which resource producers ramped up their investment to take advantage of demand for raw materials, in particular iron ore and natural gas, and to a lesser extent coal. resource sector investment rose from an average of about 2 per cent of gdp, where it had spent most of the previous 50 years, to peak at about 8 per cent. that big rise is now over, and a fall is in prospect, with uncertain timing. it could be quite a big fall in due course. the third phase is now under way, in which we will see investment spending fall back, but a lift in volumes shipped of the various commodities. the latter has already started β for iron ore, volumes are rising at about 15 per cent per year β but shipments will probably increase further yet for some time and then stay high. shipments of natural gas will not start increasing strongly until 2015, and will probably have several years of very strong growth, and then remain high for a few decades. in that third phase, real gdp will get a lift. national income measured in current dollars will also get a lift from the higher volumes, but that is likely to be offset in part, at least, by lower prices. the lift in real gdp coming from this rise in exports will be driven more by higher output per person ; in fact, the level of employment needed to extract and ship the materials will be less than the level needed to build the capacity to do so. let β s be clear that australians will continue to benefit from the higher level of resources output for a very long time. there has been a large lift in the global demand for natural resources that our country happens to have in abundance. most people agree that the rate of growth of that demand will be lower | a chance on a new product, a new investment or a new worker. in the case of households, according to surveys sentiment is neither particularly weak nor particularly strong at present. it is reasonable to expect that households will play a role in driving demand over the years ahead β and in due course that will help to lift business confidence. but in thinking about that role we need to understand the ways in which household behaviour has changed. the credit boom the title of this talk, β economic policy after the booms β, uses the plural quite deliberately. there were two β booms β. before the mining boom, or at least before its full flowering from about the middle of last decade, there was an earlier boom. it was global, but australians took part in it. i am referring of course to a boom in credit, which saw a very significant increase in borrowing by households in particular, and a rise in asset values, especially dwellings. this was associated with a lengthy period of unusually strong growth in consumption. bis central bankers β speeches this boom did not end in australia as painfully as it did in some other places, but end it did. consider two charts i showed at the anika foundation lunch two years ago in july 2011. these have been updated, and use revised data. 5 graph 1 graph 2 the level of household financial assets from june 2002 has been revised almost 15 per cent higher on average, predominantly reflecting upward revisions to estimates of households'holdings of unlisted equity. as a result, the debt - to - assets ratio has been revised lower by 0. 8 percentage points on average. trend growth in household assets was also revised slightly lower. in contrast, growth in household disposable income was revised slightly higher, leading to a small upward revision in the saving ratio in the 2000s. bis central bankers β speeches it is even clearer now than it was two years ago that the behaviour of households has changed in a very important way. real consumption per person had risen faster than real income per person for 30 years, from the mid 1970s until about 2005. ( only the last third of that period is shown here. ) that changed some years ago now, and after a noticeable fall in consumption in late 2008 and early 2009, spending and income have grown roughly on parallel tracks. since 2009, trend growth in per capita consumption has been about 1. 4 per cent per annum, half what it had been from 1995 to 2005. one contributing factor is seen in the second of the | 1 |
in inflationary expectations can generate a self - fulfilling mechanism. should inflation expectations become unhinged, it would be difficult and costly for the monetary authority to re - establish price stability. third, communicating an explicit inflation objective will clarify the fed β s intentions regarding the level of inflation it considers consistent with its mandate. some economists have suggested that raising our inflation goal above 2 percent would be an effective tool for lowering real interest rates. i am very wary of such a strategy because i don β t believe we can control inflation expectations that precisely. it is at least questionable whether we could credibly raise inflation expectations. and were we able to do so, how easily would we be able to bring them back down? trying to manipulate the public β s expectations may risk undermining the fed β s credibility and the public β s confidence in the institution. fourth, we eventually will need to normalize our monetary policy and exit this period of extraordinary accommodation. having an explicit inflation objective will help us maintain our commitment to price stability while we do that and increase the credibility of that commitment in the eyes of the public. as business leaders, you understand the importance of credibility in your own institutions. an institution's reputation is built on its credibility for fulfilling its commitments. once that foundation is compromised, it is very difficult to rebuild. the fed must do all it can to preserve its hard - earned credibility. i believe an explicit inflation goal can help us do that. bis central bankers β speeches conclusion in summary, the u. s. economic recovery will continue and gradually strengthen over time. i expect annual growth of less than 2 percent this year to gradually accelerate to around 3 percent next year. as the economy strengthens, prospects for labor markets will continue to improve and the unemployment rate will gradually decline. as we move forward in this time of change, the federal reserve remains committed to its long - run statutory goals of price stability and maximum employment. we remain vigilant on inflation and committed to clear communication of our monetary policy. i believe that this communication, and our accountability to the public, could be greatly enhanced were the fed to adopt an explicit numerical inflation goal. having such an objective in place would prove particularly useful in the current environment in which the fed is providing monetary stimulus using new tools that are not as familiar to the public and the markets. it will also help at a time when some may view the fiscal situation as threatening the independence of monetary policy. and it will help in the future | , the balance sheet of the federal reserve has changed from one made up almost entirely of short - term u. s. treasury securities to one that is mostly long - term treasuries, plus significant quantities of long - term mortgage - backed securities. this concentration of housing - related securities is problematic because it is a form of credit allocation and thus violates the monetary / fiscal policy boundaries i just mentioned. the second aspect is the overall size of the balance sheet. many central banks expanded their balance sheets in an effort to ease monetary policy after their usual policy instrument β an interest rate β had reached the zero lower bound. do central bankers anticipate that their balance sheets will shrink to more normal levels as they move away from the zero lower bis central bankers β speeches bound? is it desirable to do so? or should monetary policy now be seen as having another tool, even in normal times? some have suggested that central banks adopt a regime in which the monetary policy rate is the interest rate on reserves rather than a market interest rate, such as the federal funds rate. this would then permit the central bank to manage its balance sheet separately from its monetary instrument, freeing it to respond to liquidity demands of the financial system without altering the stance of monetary policy. in principle, this would take pressure off central banks to shrink their balance sheets from the current high levels and simply rely on raising the interest rate on reserves to tighten monetary policy. the alternative is to return to a more traditional operating regime in which the central bank sets a target for a market interest rate, such as the federal funds rate in the u. s., above the interest rate on reserves. implementing this regime would require a smaller balance sheet. i am very skeptical of an operating regime that gives central banks a new tool without boundaries or constraints. without an understanding, or even a theory, as to how the balance sheet should or can be manipulated, we open the door to giving vast new discretionary abilities to our central banks. this violates the principle of drawing clear boundaries between monetary policy and fiscal policy. when markets or governments come to believe that a central bank can freely expand its balance sheet without directly impacting the stance of monetary policy, i believe that various political and private interests will come forward with a long list of good causes, or rescues, for which such funds could or should be used. economic theory and practice teach us that monetary policy works best when it is clear about its objectives and systematic in its approach to achieving | 0.5 |
benjamin e diokno : keynote message - 18th amlc anniversary keynote message by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 18th amlc anniversary, kuala lumpur, 23 october 2019. * * * atty. jorge s. brania, head of aml desk of insurance commission, anti - money laundering council member and insurance commissioner, atty. dennis b. funa. securities and exchange commissioner javey paul d. francisco, who is attending on behalf of amlc member and sec chairperson, atty. emilio b. aquino. amlc secretariat executive director, atty. mel georgie b. racela. men and women of the amlc secretariat, good afternoon and welcome to the 18th anniversary of the amlc. eighteen is a significant number. in the philippines, like in most countries, the age of majority is 18. it is a coming of age, a transition into adulthood. and this is very fitting for the amlc as we are also undergoing a transformation. we are doing so by introducing improvements in our policies and operations with the hope that they will be beneficial to our country long after our terms have ended. to be honest, the year has gone by fast, but it has been a productive and exciting one for the amlc. first. the amlc adopted the 2018 implementing rules and regulations of the amla, as amended. the new rules ensure that covered persons will be held accountable for their violations of the amla. it also requires covered persons to adopt robust anti - money laundering and terrorism financing prevention programs. the amlc also issued the guidelines on identifying beneficial ownership which seeks to promote transparency in the use of legal persons, legal arrangements, and nominee arrangements. this is to ensure that these types of arrangements will be legitimately used and not for the purpose of distancing one β s identity from the proceeds of crime. second. the amlc has strengthened its cooperation and coordination with partner law enforcement agencies in the drive against money laundering and terrorism financing. the amlc has conducted various workshops with its partners as means to widen their awareness of different money laundering typologies, and to capacitate them in detecting and preventing such activities. in turn, the amlc continues to benefit from having established relationships with law enforcement partners in the area of development of money laundering and terrorism financing cases. third. from january 2018 to july 2019, the am | amando m tetangco, jr : sustainable inclusive growth and good governance speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 2016 general assembly of the league of municipalities of the philippines, manila, 10 february 2016. * * * distinguished officers and members of the league of municipalities of the philippines ( lmp ) under the leadership of national president sandy javier, fellow workers in government, special guests, magandang hapon sa inyong lahat! thank you for inviting the bangko sentral ng pilipinas to your general assembly with the theme β 2016 and beyond : promoting good governance and sustainable inclusive growth. β this is the first time for me to speak before an association of local government executives. some of you may be wondering why a central bank governor is addressing municipal governments. well, two reasons. first, lmp national president javier is a former classmate in college and two, bsp shares your objective of postering sustainable inclusive growth. pareho po tayo. clearly, our government β at the national and local levels β believes that promoting sustainable inclusive growth and good governance go hand in hand. in this connection, i am pleased to report that our track record shows that we continue to achieve major gains in both fronts. just the other week, the national economic and development authority reported that that our economy expanded by 6. 3 percent in october to december last year. ladies and gentlemen, this means that the philippines has achieved 68 quarters of uninterrupted or sustained economic growth. this brought the average full year economic growth of the philippines to 5. 8 % in 2015, among the highest in asia after india, china and vietnam. our growth would have been better if we did not have to deal with the adverse effects of el nino, other weather disturbances and adverse external conditions. in fact, analysts describe philippine economic growth as remarkable, as it is taking place when the global economy is slowing down as a result of financial and geopolitical challenges. neda said this level of growth ( in the last five years ) has not been seen in the past four decades as this is based on public and private investments in areas that create jobs, increase incomes, and improve people β s wellbeing. in other words, these are investments that promote sustainable inclusive growth. on the part of the bsp, we continue to be successful in providing | 0.5 |
in life with all the pressures that come with it. you have acquired a technical skill here that has prepared you well for a working career in a competitive job market. png is posed to experience continuous economic growth and no doubt you will all play your part in our country β s development. but also make the effort to invest in your financial education to enjoy the fruits of your labour. you deserve that β for you as well as for your family. in concluding, i wish you all every success in your career opportunities and best wishes for a rewarding career and a safe financial future. thank you for the invitation to speak and god bless you all. bis central bankers β speeches | ##z bank on the opening of its branch in kimbe, and look forward to its future plans to expand its branch network throughout png. thank you for listening. | 0.5 |
make important decisions when faced with necessity, during critical situations. let us hope that it is possible to dispel that perception, by taking full advantage of the existing proposals and ongoing debate β which should be open and inclusive β to adopt the necessary measures to improve the working of the european union and, in particular, the economic and monetary union. in fact, we should avoid doing so under pressure from a new crisis. only the future will show if we are able and willing to make the necessary decisions so that the european union will be the β community of destiny β as joseph weiller put so well, and as its founders intended. thank you for your kind attention. 4 / 4 bis central bankers'speeches | the european monetary union although euro banknotes and coins only began to circulate in 2002. portugal was among its eleven founding member states. for millions of young european citizens the euro is the only national currency they know. it is common knowledge that the establishment of the economic and monetary union was the most far - reaching political step in the history of european integration. likewise, we have always known that the architecture set up in maastricht was incomplete and risk - inducing, particularly due to the absence of mechanisms to cope with asymmetric shocks. its architects implicitly admitted that the missing components would sooner or later be added, as a result of the integrationist momentum. however, history has repeatedly proven that determinism can be a mistake... up until the onset of the financial crisis, we lived under a kind of β spell β. in many countries, the decrease in interest rates boosted indebtedness, while there were illusory improvements in living conditions. neither the economic agents nor the authorities managed to clearly perceive that the monetary union would necessarily entail a new economic regime : the centralisation of monetary and foreign exchange policies warranted a completely different policy mix. fiscal and income policies acquired greater importance, but, in fact, fiscal policy was also subject to heavy constraints. when the international financial crisis broke out, it progressed rapidly, quickly exposing and enhancing the accumulated imbalances within the union. the response to the crisis focused on strengthening the coordination between fiscal policies, the development of new financing mechanisms, and the establishment of the banking union and, of course, non - standard monetary policy measures. this was far from insignificant, but, in some cases, it was perhaps a little late and surely was not enough. in many ways, we were entering a new territory as it was with the implementation of adjustment programmes, which pose unique challenges in countries within a monetary union. we need to drive the economic and monetary union reform forward. it is indeed time for reform. part of this reform merely consists in finalising the previous cycle of reforms by completing the banking union with the implementation of its third pillar and by endowing the single resolution 3 / 4 bis central bankers'speeches fund with the adequate financial resources to fully accomplish its mission. no debate is more sterile than the one on whether to reduce or to share risks. in truth, we must do both. and, in some ways, we have been doing just that. as many contend, it is human nature to only | 1 |
philip lowe : dinner remarks to a50 australian economic forum dinner remarks by mr philip lowe, governor of the reserve bank of australia, to the a50 australian economic forum, sydney, 9 february 2017. * * * i would like to offer you all a very warm welcome to sydney for the a50 forum. to those of you who have travelled to our shores from afar, thank you for visiting. i am confident that you will find your investment in time a worthwhile one. in just a short period, you will hear from the leaders in the worlds of politics, business, the policy institutions and the investment community. you will find an openness and transparency that is not always seen elsewhere around the world and you will experience a genuine desire to share perspectives. you also find a country that is prosperous and wealthy ; australians enjoy a standard of living that relatively few people around the world enjoy. you find a country that has grown consistently for some decades now, despite a pretty volatile global environment. australia β s year - ended growth rate has been in positive territory since 1991. you find a country that has a strong and stable banking system. we have deep and liquid financial markets. the public here question why banks are so profitable, not why they performed so badly during the global financial crisis. you find a country that is well placed to benefit from growth in asia, not only because of our natural resources base, but also because of stronger demand for our food and a wide range of services. you find a country with a growing and diverse population and one that has a high degree of social cohesion. our population has recently been growing at around 1Β½ per cent a year, and around 40 per cent of us were either born overseas or have one parent born overseas. this brings a dynamism that isn β t there in countries with stagnant and less diverse populations. you also find a country with strong public institutions and whose economy is resilient and flexible. we have a demonstrated capacity to address our problems and to adjust to the changing world that we live in. in the past decade, our flexibility has meant that we have been able to maintain economic stability through the biggest investment boom in the resources sector in more than a century, and the subsequent unwinding of that boom. you also find a country with positive interest rates and a conventional monetary policy framework. the central bank is independent, analytical and pragmatic. our inflation target is focused on medium - term outcomes. this approach means that | inflation to increase a bit more quickly, boosted by increases in oil and tobacco prices. we continue to pay close attention to the housing market and to household balance sheets. the picture varies widely across the country. prices for houses in sydney and melbourne are rising strongly, but apartment prices in some cities, including perth and brisbane have fallen. the population is growing strongly, but there is a large number of additional dwellings to come onto the overall market this year. growth in rents is weak, but vacancy rates in most markets are not unusually high. and investor demand looks to have strengthened in the closing months of 2016. so it is a complex picture. one reason for trying to understand this complex picture is that the level of household debt is relatively high. overall, households are coping reasonably well with this. but there are clearly risks. so it is a positive development that over the past couple of years, banks have tightened their lending standards in some areas. this tightening was partly prompted by the supervisory measures put in place by the prudential regulator, apra, and the reserve bank and apra continue to work closely together monitoring developments. 3 / 4 bis central bankers'speeches another issue that we are paying close attention to is developments in the labour market. employment growth slowed over 2016 and the growth that did take place was almost entirely in part - time employment. as is the case with the housing market, conditions vary across the country. looking forward, the number of job vacancies and job ads suggest that some strengthening in employment growth might be in prospect. our central forecast though is for the unemployment rate to remain close to its current level for some time to come. in summary then, the bank β s central scenario is for some pick - up in economic growth and for inflation to move gradually higher. as always, though, there are risks around that outlook. as our record demonstrates, our economy does have a degree of resilience and flexibility that has allowed us to maintain stability during a pretty difficult time in the global economy. there is no reason that this can β t continue. but we do need to continue to build that resilience, while we take advantage of the considerable advantages that we have as a nation. thank you. welcome again. i hope you enjoy your time in australia. 4 / 4 bis central bankers'speeches | 1 |
will follow the directions of the principals. a simple example : the shareholders of a company choose a manager to run their company. but sometimes it happens in this model that the agent tries to turn the power structure around and to switch from one who simply follows directions to one who deliberately sets the agenda. this effort can often be successful because the agent is a relatively small group of people who hold all the relevant information and share very similar motivation, while principals tend to be much more numerous and less informed and their objectives are often highly differentiated. and so, corporate managers are often able to push through their will even if it goes against the interests of many shareholders ; international organisations often take steps that their founding members do not like to see ; and by the same token the eu administration is able to shape the integration process in ways that differ from what many member states previously intended. to give you just one banal illustration of this process : the remuneration of employees of international organisations and of eurocrats is invariably higher than the remuneration they would be able to earn in similar positions at home. therefore, the principals watch β with little joy, of course β a brain - drain in favour of their agent. thus, an agent gets dominance over its principals and principals even contribute to this dominance. the observation that agents try to become more powerful than their principals is usually considered to be beyond the boundaries of political correctness, so we rarely hear about it. the same holds for another hindrance to proper execution of the european integration idea, namely the asymmetry among different principals, that is, among different member states of the eu. in itself, a difference in the weight of a small state and a large state may make sense ; but if certain eu member states have a much bigger informal impact than others on the positions that the eu takes in international political or economic forums, the big - impact states may be tempted to β nationalise β the voice of the eu. many attempts at nationalisation of eu positions are due to what might be called the β french complex β : some leaders of bigger countries still have not fully absorbed the fact that their country is no longer the superpower it used to be and no longer leads the world, so they often try to abuse their eu - wide voice to support their national interests, positions and agenda. when they call for europe to speak with β one voice β, they often seem to expect that the single voice of 500 million eu citizens will be the voice of their national | the question of why the european union is not as economically powerful and efficient as it would like to be, is certainly complex. however, my suspicion is that one of the answers is that the eu has started concentrating too much β and in many areas almost exclusively β on the process of deeper and deeper political integration. it is almost a mainstream ideology which states that the answer or solution to virtually any problem in the eu is more integration. whenever we discuss problems with colleagues in brussels, the mainstream view typically argues : we need more eu integration to solve this. and if integration has not brought what we hoped for, it means we need even more integration. we probably did not have enough of it. well, i have some doubts about this approach, at least as regards the impact of political integration on the economy. the concept is based on a simple idea that the bigger the state, or the bigger the economy, the bigger also the wealth of the citizens of such a state or economy. this idea fails terribly when compared with simple statistics and facts. if you take a look at the correlation between the size of an economy and a measure of well - being such as gdp per capita, you will see that on average the bigger, or more populous, economies in the world are not generally richer economies. rather, it is small open economies ( including those in europe ) that tend to be richer, the only exception to this rule being the united states. so bigger does not mean richer. my own hypothesis is that instead of integration of jurisdictions, competition between them might sometimes be more beneficial to economic growth. countries should compete for investors, capital and labour force by making their tax systems, legal frameworks and other conditions as efficient and friendly as possible. competition is sometimes useful not only on the markets, but also among jurisdictions and states. political integration can, at some point, become an obstacle to competition, sometimes even intentionally. i think that the eu is, unfortunately, right now at this stage. what a shame. and why is that? well, when we choose the path of political integration, we have to watch out carefully for certain pitfalls β and i am not sure we have been careful enough in this respect. a major pitfall is the effect that we can observe whenever a group of people or institutions hires someone else to do a job for them. in economics, we call it the principal - agent model, or we say that a group of principals hires an agent. the idea is that the agent | 1 |
yves mersch : innovation and digitalisation in payment services speech by mr yves mersch, member of the executive board of the european central bank, at the second annual conference on " fintech and digital innovation : regulation at the european level and beyond ", brussels, 27 february 2018. * * * the payments industry is currently experiencing considerable transformation driven by innovation. i welcome such innovation as it will increase both efficiency and competitiveness, and this will ultimately benefit society. we are seeing the emergence of new players, new channels to access payment services and new means of payment, all of which will significantly change the payments market. these developments are largely driven by digitalisation and the opportunities it brings. but there are also challenges, some of which i will explore here today. opportunities one of the objectives of the revised payment services directive ( psd2 ) is to foster innovation and enhance competition. we are already seeing numerous innovative solutions that make use of the opportunities created by psd2, including services such as payment initiation services ( pis ) or account information services ( ais ). these were initially provided by new entrants to the market or fintech companies, but i understand that some banks are also preparing to provide these services and become third - party providers ( tpps ) themselves. there are opportunities here for all players ; each institution must find the right business model and strategy to be competitive in providing these services, an approach which will benefit their customers. in order to provide pis and ais, a third - party provider will need access to the relevant information from banks, and this will need to be communicated securely, via an adapted customer interface or via a dedicated interface. while access via the former is possible in principle, it would create fragmentation, as providers would have to develop and maintain a huge number of connections to all the different banks they communicate with. the plethora of technical solutions required would be an obstacle for new entrants. i therefore reiterate that only a dedicated and standardised technical interface β an application programming interface, or api β constitutes an efficient access solution that serves the needs of an integrated european payments market. i also believe that there should only be one β or at most a few β technical api specifications so that competition takes place at the service level and not at the technical specification level. we need to ensure that innovative services are built on harmonised and standardised technical foundations so that they can be made available across europe. let me add some more general | remarks in this context. we are in the process of building europe β s financial market infrastructure for tomorrow. building it on individual or national solutions is anachronistic as these will no longer meet the needs of the market. europeans demand services that are safe and efficient and give them pan - european access. we therefore need to apply common standards that work on a pan - european basis. the same principle was agreed when we built the single euro payments area β sepa β and that is why sepa uses the global standard iso 20022. the eurosystem also uses this standard for the infrastructures it operates β be it t2s1 or tips2, as well as upgrades to target2 or its new collateral management system. looking at the digital transformation and innovation under way, i urge all market participants to plan their investments based on common and future - oriented standards that ensure pan - european accessibility. the regulatory level playing field in order to increase competition in the area of payments, eu legislators introduced β payment institutions β, a new category of payment service providers, in the first payment services 1 / 3 bis central bankers'speeches directive. these institutions are allowed to provide payment services, and psd2 states that pis and ais fall under the definition of payment services. providers of such services have to be duly authorised and supervised. i heard from some bankers occasionally that there was an issue of level playing field between new tpp entrants and incumbent banks. tpps, they claim, face a lighter regulatory regime than do banks. in this context, let me just say that psd2 as well as banking legislation govern the respective activities and that an institutional licence is required to conduct them, which implies that the entities will be supervised in line with the risks involved. payment institutions are only allowed to provide a limited set of services, i. e. payment services. they are not allowed to take deposits and are only allowed to hold funds for the provision of payments. credit institutions, by contrast, have a much wider scope of activities than payment institutions ; they can engage in the whole spectrum of banking activities, including the holding of deposits and the granting of loans. thus, while banks and payment institutions are indeed subject to different authorisation and supervisory criteria, this does not per se mean that there is an unlevel playing field. i have the feeling that those bankers who complain about the playing field forget that some of their colleagues in the bank perform activities that go far beyond the provision of | 1 |
emmanuel tumusiime - mutebile : challenges for sound banking systems in east africa β a central banker β s perspective opening remarks by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the 16th east african community ( eac ) monetary affairs committee meeting, kampala, 23 may 2013. * * * governors of eac central banks secretary general of the eac senior staff and technical officials ladies and gentlemen good morning it is with great pleasure that i welcome you to kampala for the 16th meeting of the east african community monetary affairs committee ( mac ). it is also an honour for me to host this meeting. the purpose of the meeting is to assess the status of implementation of previous mac decisions, and to consider any salient issues that may have emerged since our last meeting a year ago here in kampala. as is usual at the mac meeting, the format will involve the presentation of a report of the technical officials of our five central banks, followed by a discussion of the issues raised in the report. the technical report will be presented by the current chairman of the technical officials, dr adam mugume, of the bank of uganda. our technical staff has worked extremely hard over the last three days to produce a very comprehensive and analytically rigorous report. i would like to thank them all for the very good job that they have done. fellow governors, you have already received a brief on the issues in the technical report from your own technical officials this morning. without wishing to pre - empt the discussions, i would like to highlight briefly the following issues which i think merit particular attention today. first, financial stability is becoming an increasingly important area of responsibility for central banks in east africa as elsewhere in the world. for the eac, several trends in recent years have the potential to heighten vulnerability to financial instability. these trends include, inter alia, the rapid growth in the volume of short term portfolio capital flows, attracted often by favourable interest rate differentials. these capital flows are intermediated through our banking systems and could potentially expose banks to both liquidity and market risk. the volatility of these capital flows, which is often caused by events in the global financial markets, sometimes leads to highly disruptive movements in nominal exchange rates which policymakers cannot ignore. the importance of regional and international banks in our economies also poses risks unless we can put in place effective systems of consolidated supervision and mechanisms for resolving cross border banks in the event of | njuguna ndung β u : economic and financial developments in kenya speech by prof njuguna ndung β u, governor of the central bank of kenya, at the luncheon with members of the eastern africa association, nairobi, 21 january 2009. * * * the chairman eastern africa association, members, distinguished guests, ladies and gentlemen ; let me first thank the chairman of the association for this opportunity to share my experiences with economic performance, the conduct of monetary policy in 2008, and the perspective for 2009. the experiences of the central bank have been vast but i will deal with economic performance and policy directions in three topical areas : β’ the conduct of monetary policy and monetary policy decisions β’ economic growth outlook β’ the global financial crisis and kenya β s economic performance a. the conduct of monetary policy in 2008 the past year has been a difficult one both from a local and global perspective. for monetary policy at the central bank of kenya ( cbk ), three challenges emerged ; β’ liquidity management in the economy ; β’ inflation upsurge ; and β’ exchange rate volatility these challenges tended to take monetary policy management to unfamiliar territory. in order to ensure price stability or fight inflation, the cbk relies on indirect instruments that affect liquidity in the economy and so the stock of money, which in turn affects interest rates and prices in the desired direction. the debate on what are the targets and what instruments to achieve the targets is relevant. money supply growth was maintained within the target range for most of the months in 2008. ( i ) liquidity management in the economy the role of a modern central bank is in general price stability, that is to fight inflation. however, for the central bank of kenya, stability of the financial system is equally important, so is the national payments and settlement system. the bank implemented the first two objectives with varying degrees of success. while inflation was high we also faced downside risks to financial stability from the safaricom ipo. the size and nature of the ipo led to large shifts in liquidity, and the unwinding process would no doubt have had longer term impacts on economic and financial variables if not properly managed. the offer attracted ksh231 billion. liquidity was skewed in favour of a consortium of banks despite the mitigation mechanisms put in place by the banking system. the bank β s approach to this therefore was to mop up excess liquidity from the banking sector using the term auction deposit and repos | 0 |
flashing lights far ahead of the 2008 global market mayhem. in order to preserve stability of the banking system throughout the crisis, resolute action had to be taken years ahead of the global financial crisis. in the period of large capital inflows, raising interest rates to tame the cycle was not a policy option due to the risk of exacerbating capital inflows even further. therefore, already in 2003, in the early phase of the cycle, the cnb started to implement a range of measures to limit excessive lending and the increase in foreign debt, which were gradually adjusted and tightened until 2007. stringent capital and liquidity requirements, way above and beyond anything we have available in the current macroprudential setup, were necessary in order to stem excessive risk - taking and instil resilience into the system to cope with a potential fallout. such measures were at that time labelled ( by banks and some of the colleagues ) " administrative " tools, but would later be classified under macroprudential policy instruments. for example, implicit tax on credit growth ( when we asked banks to subscribe zero yielding cb bonds for any euro of credit growth over 12 % per annum ), and high marginal reserve requirement on foreign borrowing by banks, together with high capital requirements. episodes of global financial crises are an excellent illustration of how macroprudential policy measures can be activated in a counter - cyclical manner. in the upward phase of the financial cycle, they were undertaken in a timely manner, with the aim of limiting banking system's exposure to risks and strengthening its resilience by building additional reserves. after 2008, in the downward phase of the cycle, this extra liquidity was released to provide support to the financial sector and the economy. the banking system remained highly capitalized and profitable at the aggregate level. only a few smaller banks left the market, and there was no need for bank resolution, apart from one regionally significant bank. a different scenario from that in a number of european countries, which went on to bail out banks at a very high fiscal cost. still, a deep recession took place during the gfc, demonstrating the need for a macro - prudential policy to work hand - in - hand with other policies. even a very tight financial regulation may fall short of fully curtailing the buildup of macro imbalances and their eventual unwinding. capital inflows came to a halt and borrowing costs surged as risk premia increased due | of diocletian in a rather negative context because of his brutal persecution of christians. however, when it 1 / 3 bis - central bankers'speeches comes to governance, he was known as a great reformer. his political, administrative and economic policies helped rome recover from the crisis the empire was going through in the third century. one of his key structural reforms, and a successful one, was the reorganization of the roman provinces. and since quite a lot of money was needed to fund this reorganization, he also introduced a new tax that was a combination of the tax on agricultural land and the tax on individuals. the tax base was determined on the basis of a gigantic land register of the wealth of the entire empire, and the tax was introduced throughout the empire, including italy which was until then free of land taxation1. so, 17 centuries ago diocletian understood the importance of maintaining a sustainable fiscal position while financing reforms, and that it required boosting tax revenues through widening the tax base while making the tax system simpler and more equitable. one of the toughest struggles diocletian faced during his reign was hyperinflation. his predecessors, like many other rulers in history, had a bright idea for having more money by minting more coins. they were doing it by adding more worthless metals to the silver coins. as a result, the roman currency was losing its value, and what followed was a period of hyperinflation. by the time diocletian came to the throne, a barter economy had become the norm in many places. so, to combat inflation, diocletian reintroduced new gold and silver coins of fixed design. however, another one of diocletian's ideas to curb inflation was to set a cap on prices and wages. in year 301, he introduced his famous " edict of maximum prices ". this was a document that attempted to list every item people bought regularly and its maximum price. the edict covered all types of commodities, as well as occupations β in total about one thousand items. here are some examples : crushed beans costed 100 denarii ; uncrushed beans, 60 denarii ; writing was 25 denarii for 100 lines of best quality writing and 20 denarii for second quality writing. 2 but although the violation was punishable by death3, this measure was widely resisted, and goods disappeared from the markets creating an even larger black market, so the edict was eventually revoked. | 0.5 |
leader has trained two or three people who are able to take over his or her job, in my view, he or she is an excellent and successful leader. inspiration and purpose are clearly the foundation upon which employees look for in a leader. they look for a leader that brings inspiration and meaning to their work. we spend more time at work than with the family. do our workers enjoy coming to work everyday? the answer of course will not be all yes. but if you can get the majority to be saying that they love to go to work each day, i think you are doing better than most. i am always stressing to my team that relationship is the most important issue at the work place. leadership is all about relationship. values play a critical role. at the top of my list of values is respect for each other irrespective of levels of seniority. in the bank, we have adopted five values and professionalism and respect are two of them. a leader is also solution focused. a common challenge that i usually pose to my colleagues is that they should not only come to me with problems but also solutions. i do not hold a monopoly on solutions. that always gets them thinking. an interesting side effect is that the problems started declining. human resources management let me now turn to human resources management β hrm. over time reference to β human resources β has evolved. it started with the word β labour β. economist will tell us that labour is one of the three factors of production β the other being land and capital. but obviously this is rather a technical label of people. the reference quickly shifted to β administration β that deals with the management functions of staff such as recruitment, compensation and evaluation. this was obviously the first attempt to introduce some β human β recognition of the resources. it then evolved into β personnel β and then β human resources β. more recently it has changed yet again to β intellectual or human capital β. when i look at the evolution of these references to people, there are two things that strike me : first β there is a growing understanding that we are dealing with people rather than physical assets. only people have intellect or emotions not machines or financial assets. second β there is more appreciation that we are dealing with capital. the term β human capital β reflects the notion that we must grow this β capital β by investing in capacity and relationship building. how does hrm fit into good leadership? they are connected by people like you and me. hr deals | supervision in a central bank allow me to say a few words about banking supervision in a central bank. housing the ssm within the ecb will enable us to benefit from synergy effects. exchanges with colleagues from market operations, payment systems and economic analysis will help the supervisors to develop a different viewpoint on current market developments, the importance of a specific institution for payments and the economic environment. one area in which cooperation will be particularly intensive is macro - prudential supervision. our aim here is to bring together insights from both the macro - prudential and the micro - prudential areas, and to address undesirable developments in a targeted way. conclusion ladies and gentlemen, the european supervisory landscape is facing a major change. with the ssm, we have created a strong, new supervisor at the european level. the ssm will be able, and have the responsibility, not to do everything differently, but to do some things better. with the conclusion of the comprehensive assessment, and the publication of the results in the second half of october, and the start of our supervisory activity on 4 november, we have a few stressful months ahead of us. but we must also remember to occasionally pause for a moment and to reflect beyond the immediate tasks at hand. the ssm may have been created as a consequence of, and as a solution to, certain problems in europe. but it is bis central bankers β speeches destined to be able to achieve much more and β at least that is my hope β to have an effect over and beyond europe. thank you for your attention. i am now at your disposal for questions. bis central bankers β speeches | 0 |
##ernable progress ( although we can increase the pace ) ; we are in the process of modernising the payments system. we have now electronically automated the clearing house, and this has reduced the cheque clearing period to only a few days. the objective is to reduce the clearing period further to one day when the cheque imaging and truncation technology is in place. furthermore, large value payments ( that is, those in excess of half a million pula ) are made electronically, in this way benefiting government and large corporations, given improved speed and security, as the risk of fraud is reduced. the real time gross settlement system has also been in operation for a good number of years ( at least 7 years ). a platform of visa international called visanet provides a national net settlement service for all participating banks. internet banking, using a desktop computer, is complimented by mobile phone transactions for paying utility bills, money transfers and managing bank accounts. many pensioners and beneficiaries of government social security programmes are able to access their entitlements through smart card technology that is operated by local shops and businesses, irrespective of their place of abode. as a result of these ict - driven infrastructure improvements, people located in areas far away from developed parts of the country now have access to financial services. the time saved in long distance travel to go to banks and / or pay bills is significant. more broadly, the much needed financial inclusion is being facilitated by affording and extending basic services of money transfer, payments and safe - keeping to those living in all but the most remote communities. this is most important in our society where the extended family remains of central importance. it is particularly gratifying for those of us with long enough memories to recall the effort that was previously required to effect even the most basic transaction from such locations. cross - border payments have also been facilitated. in the sadc region, the payments integration project is well underway, and the sadc integration regional electronic settlement system ( siress for short ) is expected to be commissioned later this year. just as for infrastructure for domestic financial transactions, the prerequisite for effective cross - border payment systems is that they must be safe and secure. to echo the sentiments made by the honourable minister yesterday, this means an effective legal and regulatory framework is indispensible in each jurisdiction, in order to satisfy the much needed legal legitimacy of electronic signatures, as well as other identification and evidential information. bis | governance. the overarching theme in our discussions all through this week must be about people. we must constantly ask ourselves, what are their needs? how does technology and innovation meet these needs? most importantly, how do we place people at the centre? in closing, let me once again reiterate what a privilege it is for cbk to be hosting you. the journey of building back better cannot be undertaken alone. platforms such as the nairobi online city provide opportunities for many more of us to come together. let us walk together, as we collectively work towards restoring the lives, livelihoods and dignity of our citizens. it is now my distinct honour and pleasure to declare the afro - asia fintech festival nairobi online city officially opened. i wish you all a fruitful virtual journey as you traverse the world over the next three days. thank you! | 0 |
over the past decade, at about 1 % per year in terms of gdp per capita growth. the euro is now well established as a credible currency, of which citizens can be proud. this is important for all the member states of our union, both individually and collectively, as we together face the challenges of the global economy. responding to the crisis : bold actions in line with steadfast policy orientation none of these achievements happened by accident. they were only possible because our actions were enshrined in our medium - term oriented monetary policy strategy. the financial crisis has changed neither our strategy, nor our objective. the ecb β s response to the crisis has always been in line with both our strategy and our medium - term objective of price stability. but we did broaden the range of our tools to adapt monetary policy to the challenges of the crisis. what we did was to insure euro area banks against present and future liquidity shortfalls. banks are the backbone of our financial system. 70 % of firms β external financing comes from banks. they finance a very large share of the investments made in europe. jeopardising banks β ability to lend to companies would have meant jeopardising the jobs of millions of europeans. because of the crucial role of banks in the real economy, we decided to provide liquidity in unlimited volumes and with longer maturities to banks. in parallel, we reduced the interest rate at which they can borrow to a historical low of 1 %. and we launched a programme to purchase euro - denominated covered bonds, i. e. pfandbriefe, issued in the euro area. the aim was to jump - start this market, which had suffered considerably in the crisis and which is so important for europe. overall, the eurosystem β the ecb and the national central banks β purchased eur 60 billion of pfandbriefe across the euro area. this has provided an important contribution to revitalising this market after the crisis. we will hold the bonds to maturity and the profits will be distributed to our shareholders. because of these and a number of other important steps, fears of a β kreditklemme β have not materialised. our bank lending surveys show that lending in the euro area β even in the middle of the crisis β was not significantly constrained by supply - side factors. that being said, monetary policy responsibility can not substitute for government irresponsibility. excessive government borrowing by some member states | play an even greater role in maturity - matched refinancing of mortgages in switzerland in the future. in addition, banks can improve their liquidity by holding portfolios of swiss mortgage bonds themselves. mortgage bonds could be converted into liquidity quickly and simply, as required, by means of repo transactions β either in the swiss franc interbank market or at the snb. | 0 |
alan greenspan : regulation, innovation and wealth creation remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the society of business economists, london, u. k., 25 september 2002. * * * since the dawn of the industrial revolution here in britain, virtually every generation in the industrialized world has witnessed advances in living standards. a never - ending stream of innovation has led inexorably to expanded trade and improved productivity in many nations throughout the world. today, we can see on the horizon vast new means of communicating and computing, practical applications of advances in biotechnology, and doubtless many other innovations. but a half - century from now, the goods and services that we produce and consume will, to a significant extent, reflect applications of insights not yet formed or even imagined. could the residents of sophisticated eighteenth - century london, prior to sir william herschel's demonstration of invisible radiation, even contemplate the existence of radio waves that would reach around the world? i still have trouble grasping how the shortwave transmissions of the bbc travel thousands of miles to find their way to my bedroom at night to be picked up by my transistor shortwave radio. our modern electronic devices work according to the laws of quantum mechanics, which were laid out in the 1920s by erwin schrodinger, werner heisenberg, and paul dirac ; they postulated that at the subatomic level the world did not obey the centuries - old newtonian views of how the forces of the universe function. the major revolutions of albert einstein had occurred a few years earlier and nuclear power was a generation or so beyond. i raise such examples only to emphasize that we cannot realistically project future innovations and the potential for those innovations to create economic value. novel insights, by definition, have not previously entered anyone's consciousness. however, that unanticipated discoveries of how to create wealth will emerge in the decades ahead no longer seems as conjectural as it may have, for example, before the industrial revolution. full realization of the benefits of past innovations, and of those our grandchildren will experience, will depend on the forces of globalization already in play to develop the commercial potential of new technologies and to transmit the application of these technologies across our economies. by spreading expertise and expanding the division of labor and specialization to ever broader markets, those forces led to enhanced trade in the past half - century, which in turn has dramatically elevated the | ##quent. newly issued covered bonds backed by high quality mortgage loans and issued by strong financial institutions may find a growing investor base in the united states. the federal reserve has long accepted a broad range of high - quality collateral from depository institutions at its discount window. highly rated, high - quality covered bonds would generally fall within that broad range as eligible collateral. private lenders also are likely to find such bonds attractive as collateral for credit extensions. financial innovation, properly understood, can increase the diversity of funding sources, improve the distribution of risks, and provide incentives to monitor such risks - - all helping to promote economic growth. the federal reserve seeks to encourage new and innovative sources of funding, and will continue to work with other policymakers and market participants to accomplish this important objective. | 0.5 |
the state ( repayable advances ) and two schemes implemented by the hellenic development bank β a guarantee scheme and a co - financed interest subsidy scheme for new corporate loans. these are expected to reach an overall loan volume of about β¬13 billion, or 7. 7 % of gdp. they come on top of the broader fiscal package in response to the pandemic, including interest subsidies for existing performing loans, bonds and bank overdrafts, reductions and deferrals of tax and social contributions, and labour market support measures. so far, the ecb β s policy measures and the relevant greek policies have supported bank lending to corporates, which has increased substantially, while credit standards have remained broadly stable. a large net flow of loans β above β¬1 billion β was registered in july, supported in particular by the guarantee scheme of the hellenic development bank. at the same time, greek small and medium - sized enterprises continue to have serious concerns about their lack of access to financing. their financing gap remains high, despite the increased availability of bank loans and the decline in interest rates. in order to underpin the recovery, policy support remains necessary to safeguard the continued supply of credit. looking ahead, it is essential to complete the financial sector reforms needed to support the process of npl reduction and guarantee an adequate supply of credit during the recovery. these reforms include improving the e - auctions framework, revising the insolvency framework, reducing the backlog of pending personal insolvency cases before the courts, and clearing called state guarantees on bank loans. the funding provided by next generation eu is an opportunity for greece 2 / 3 bis central bankers'speeches the funding from next generation eu creates an extraordinary opportunity. for the first time in history, the european union will issue common debt to counter a common shock. this will bring fiscal policy more in tune with monetary policy at the european level, and may represent an important step for european integration : we borrow together to recover from the crisis and to invest in our future. all eu countries will benefit from this common response. but to be effective, european measures require careful planning and decisive action at the national level. in time, the need to buffer the immediate impact of the pandemic will be replaced by the need for investment and reform to support a sustainable recovery. as the national support measures are phased out, a well - planned and coordinated approach will be necessary if we want to avoid cliff effects. policies will have to find the right | link or no link? β bis working papers, no. 346, bank for international settlements, may. bis central bankers β speeches incentive for both borrowers and lenders to take more risk. the consequent build - up in leverage leads to financial instability. 4 β’ jeremy stein puts it succinctly : β monetary policy is fundamentally in the business of altering risk premiums β. third, since monetary policy affects risk - taking and the credit cycle, which in turn affect financial stability, monetary policy should therefore take account of financial stability. β’ jeremy stein argues that since economic agents will find ways to circumvent regulatory measures to control risk - taking, it is better to use monetary policy to β get in all of the cracks β. β’ conceptually, this amounts to augmenting the taylor rule with an additional term to capture deviations in financial variables from their equilibrium values. β’ monetary policy has a role in β leaning against the wind β of financial stability risks. while the first two propositions are gaining credence and traction among policymakers, the third proposition is heavily contested. β’ the fact that monetary policy has an impact on financial stability does not necessarily mean that it should directly seek to achieve it. monetary policy and financial stability : uncomfortable bedfellows? let me offer two reasons why operationalising a financial stability role for monetary policy may be difficult. leaning against winds from opposite directions? first, conflicts could arise between the price stability and financial stability objectives. β’ financial cycles are typically longer than business cycles, and the two cycles may diverge. β’ the interest rate appropriate for price stability may not be consistent with financial stability. β’ how does one lean at the same time against two winds blowing from opposite directions? one reason why the winds might blow from opposite directions, especially for emerging economies, is the role played by international liquidity and capital flows. β’ philip lane has detailed the strong inter - linkages between global liquidity conditions, international debt flows, and domestic credit conditions. β’ maurice obstfeld argues that because of the impact of financial globalisation, monetary policy carries a big burden trying to achieve both financial stability and macroeconomic stability. the experience of emerging asia during 2010 β 2013 is illustrative. β’ asian economies were broadly in full employment with low inflation and some downside risks to growth from the eurozone crisis. borio, c and zhu, h ( 2008 ), β capital regulation, risk - taking and monetary policy : a missing | 0 |
and allow it to collect public deposits. the licensing of the wmb portrays a new approach considered by the project and bpng to be an effective means to meet the expectations of the local people. the establishment of the lae branch of wau microbank should be seen as a sign of expansion of the microfinance sector in png as more entrepreneurs from the formal and informal sectors will now be served by this microbank. the morobe province has a vibrant economy and there are prospects for the expansion of the microbank to other areas of the province. the success of this branch will show the nation that a microbank can quickly become viable also in urban areas. this province is fortunate to have the microfinance policy of the government being tested with the establishment of the pilot microbank in wau as a β laboratory β for testing microfinance products and methodologies. the province should embrace and support the microfinance initiatives as an alternate β vehicle β for delivery of financial services to a wider sector of the urban and rural communities. the mcc supported by the bpng are working together to assist any institution, public or private, that wish to serve the microfinance market. i commend the project team from mcc and ibbm for extending the provision of microfinance services to lae city through the establishment of the branch of wau microbank. the bank also acknowledges the continued support of the donor organisations including the adb and ausaid without which this project would not have been established. i am sure your support will be extended to the other provinces as well. i also wish to thank the morobe provincial government and administration for taking a proactive stance in this expansion plan for the wmb. thank you ladies and gentlemen. | and family were the first - line source of extra funds for 30 percent of adults in developing economies, but nearly half of those said the money would be hard to get. furthermore, women and the poor were less likely than men and richer individuals to successfully raise extra funds and more likely to rely on friends and family as their go - to source. further, about 50 percent of adults in developing economies were very worried, in particular, about covering health expenses in the event of a major illness or accident, and 36 percent said health care costs were their biggest worry. in sub - saharan africa, worry over school fees was more common than in other regions ; 54 percent of adults worry about them and for 29 percent it is their biggest worry. 2 / 4 bis - central bankers'speeches what went wrong? why so many obvious problems and does it matter for our instititutions? as i mentioned at the beginning of my remarks, it should matter to every one of us, and every one of our institutions. what perhaps happens is that we end up as free - riders, letting others do the heavylifting. or we are not practitioners of the broken window theory - reluctant to deal immediately with emerging problems. considering the example of operating a restaurant, do we leave our customers struggling with the menu, instead of seeking to understand what they want, explaining the items of the menu and adapting them to the customer? against this backdrop, i will outline three broad themes to reflect on as we collectively work to strengthen the financial health of kenyans. in doing this, i will draw substantially from the kenya banking sector charter ( the charter ) issued to the banking sector by the central bank of kenya ( cbk ) in 2019. the charter sought to operationalize the vision of a banking sector that works for and with kenyans. it is anchored on four pillars of customer centricity, risk based credit pricing, transparency and disclosures and ethical banking. this morning, i will focus on the customer centricity and transparency and disclosure pillars. first, customer centricity is key in addressing the financial health of our citizens. financial services and products should take into account the day to day needs, of customer supporting their resilience and achievement of their life goals. tailored savings products and insurance products particularly covering medical care come into mind. further, pension products that cater for individuals in the informal sector and post retirement medical schemes are also pertinent. my challenge to the financial institutions represented here is how well | 0 |
restore a situation in which economic agents can hold such a normal expectation that the economy will grow in the future. however, the expectations of private economic agents are far from being in a normal state. making a rough back - ofthe - envelope calculation, if the expenditure of firms and households increased an additional 2 %, then nominal gdp growth would be 2 % higher. according to a household survey, the monthly consumption expenditures of the average japanese household in fiscal 2000 was 317, 000 yen, so a 2 % increase would be about 6, 000 yen. and, taking account of the multiplier effect, the expenditure necessary would be less. but things are not so simple. how expectations are formed is a difficult question. for example, while it was realized that the it boom in the us would eventually come to an end, relatively bullish views were still dominant until last autumn. in fact, at the last november meeting of the fomc, which is responsible for setting the shortterm interest rate, inflationary concern was pointed out as a potential risk factor for the us economy rather than economic weakness, and it was in november that private forecasters revised their forecasts downward. subsequently, the fomc has on successive occasions since january substantially reduced its target ff rate, though it has not yet succeeded in revitalizing the activities of it - related firms which once drove bullish expectations. looking back at the experience of japan during the bubble period, the expectations of economic agents became extremely bullish, to an extent which seems incredible in hindsight, and now we are facing a completely opposite situation. then, how do the expectations of firms and households become bullish? at this moment, i do not have a clear answer. but if one believes bullish expectations naturally emerge when an economy grows, then i think the key is simply to make efforts to raise productivity. measures to this end were outlined in the cabinet β s β basic plan β for structural reform which was announced this june. what is important is to make clear that emphasis will be on market mechanisms, that the public understand that the government is directing its efforts toward increasing productivity of the economy as a whole through such mechanisms, and implementing policy measures consistent with such a direction. speed of structural reform the second point concerns the speed of structural reform. in this regard, economists abroad have voiced concern that if various structural reforms are implemented simultaneously, there would be a substantial deflationary impact on the economy in the short run and the def | developments in such accounts affect the credit creation function of financial institutions. monetary base, which is the sum of bank of japan current accounts and banknotes issued, increased as high as 8 % a year. however, despite such extremely ample liquidity provision from the bank, the lending of commercial banks declined by half a percent a year and money supply grew only 3 %. the decline of bank loans compared with the increase in money supply means, on the part of financial institutions, that assets other than loans have been increasing, which turned out to be mainly government bonds. despite the increased provision of liquidity by the bank of japan to the money market, financial institutions only increased investment in credit risk - free government bonds and lending to firms rather declined. as such, under the circumstances where the credit creation function of financial institutions is inactive, economic activity cannot be robust, as evidenced by nominal gdp growth of only 0. 6 % a year and the consumer price index being almost flat. such figures illustrate the fact that even if the bank of japan provides ample liquidity to the market and guides nominal interest rates to an extremely low level of virtually zero percent, such action itself cannot lift economic activity. keynes once used the term β liquidity trap β to point out the possibility that the effectiveness of monetary policy might be hampered, and the current state of japan β s economy is quite close to such a situation. policy duration and quantitative easing however, even though japan β s economy is in a situation close to a liquidity trap, a central bank cannot be a bystander when the economy is anticipated to deteriorate further. against this backdrop, the bank thus took decisive monetary easing measures in march. in this regard, let me bring your attention to two points. first is the rationale behind having the outstanding balance of bank of japan current accounts as the main operating target and increasing it. the target of increasing the outstanding balance of current accounts to around 5 trillion yen is substantially more than required reserves of around 4 trillion yen. as previously mentioned, under such ample provision of liquidity, short - term interest rates will move close to zero percent under normal circumstances. in addition to a decline in interest rates, it is hoped that the quantitative increase in bank of japan current accounts itself will have positive effects. if financial institutions hold excess no - risk no - return current account balances, an incentive will emerge to increase the holding of such assets as loans, corporate bonds, stocks, and foreign currency - denominated assets | 1 |
prepayable mortgages outstanding has risen from around $ 1 trillion in 1980 to almost $ 5 trillion today. as all of us are probably aware, the old model concentrated interest rate risk in depository institutions, specifically in savings and loans. and when interest rates soared in the early 1980s, the savings and loan industry suffered huge losses with collateral effects on the real economy. in comparison, the market - based model clearly seems to have spread the interest rate risk of mortgages throughout the economy, with depository institutions still bearing some of the risk through investments in mortgagebacked securities or callable debt. what are the lessons for policymakers? i can suggest two. first, policymakers still need to fulfill their traditional supervisory role. they need to ensure that regulated intermediaries manage prepayment risk effectively and have adequate capital to absorb losses. second, i would note that new risk - transfer instruments, such as swaps and swaptions, are playing an important role in transferring the interest rate risk of mortgages to a broader and more diversified group of investors. herding my second topic today is the concern that common approaches to risk management, such as value - atrisk modeling, may be promoting herding behavior that can destabilize markets. the idea is that market participants who use similar risk management techniques may respond to a perceived increase in the riskiness of their positions by paring back the size of those positions and perhaps by paring back positions in other markets as well. such a response, while rational from the perspective of individual market participants, may have the collective and unintended consequence of reducing market liquidity at the time when it is most needed. i recognize the relevance of the questions and realize that herding might theoretically occur in a number of markets. however, based on some observations of how models are actually constructed and used at financial firms, i would like to outline three reasons why this concern might be overstated. first, the sophistication and structure of risk - management models vary widely. this point applies with full force to value - at - risk models in use at commercial banks, an area the federal reserve has some knowledge of through our supervisory oversight. our examiners have observed that banks implement a common objective - - measuring the value - at - risk of the bank β s trading account - - in highly diverse ways. given their early stage of development and the diversity with which they are implemented, the use of these models does not seem likely to create | ( 3 ) authority are for times of emergency, such as the ones we have been living through. when economic and financial conditions improve, we will put these tools back in the toolbox. the final area where we took steps was in bank regulation. the board made several adjustments, many temporary, to encourage banks to use their positions of strength to support households and businesses. unlike the 2008 financial crisis, banks entered this period with substantial capital and liquidity buffers and improved risk - management and operational resiliency. as a result, they have been well positioned to cushion the financial shocks we are seeing. in contrast to the 2008 crisis when banks pulled back from lending and amplified the economic shock, in this instance they have greatly expanded loans to customers. federal reserve board vice chair for supervision randal quarles spoke to you about these topics last week. the federal reserve has been entrusted with an important mission, and we have taken unprecedented steps in very rapid fashion over the past few months. in doing so, we embrace our responsibility to the american people to be as transparent as possible. we are deeply committed to transparency, and recognize that the need for transparency is heightened when we are called upon to use our emergency powers. this is particularly the case when congress appropriates taxpayer funds to back lending programs that the fed administers. in connection 3 / 4 bis central bankers'speeches with the cares act facilities β including the two corporate credit facilities, the main street lending program, the municipal liquidity facility, and the talf β we will be disclosing, on a monthly basis, names and details of participants in each facility ; amounts borrowed and interest rate charged ; and overall costs, revenues, and fees for each facility. thank you, i β d be happy to take your questions. 4 / 4 bis central bankers'speeches | 0.5 |
muhammad bin ibrahim : raising performance standards and improving consumer protection in the malaysian insurance industry speech by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the insurance and takaful industry annual dinner 2013, kuala lumpur, 15 november 2013. * * * it is my great pleasure to join all of you this evening at the insurance and takaful industry annual dinner 2013. this is indeed a significant and unique gathering as we have the whole of the insurance and takaful industry represented here tonight. the collective wisdoms of those present in this hall tonight, if harnessed well, could significantly alter the insurance landscape towards a more diversified, efficient, and competitive industry. we are facing an increasingly complex business environment characterised by rapid advancements in technology, more discerning consumers and mounting competition, that necessitate the industry to adapt and continually innovate to remain competitive and relevant. of importance is for the industry to remember that the fundamental of insurance is premised on safeguarding consumers β interest against financial loss when things go wrong. consumers β interest is always at the heart of the matter. my remarks this evening will touch on some regulatory changes that have taken place, in response to the changing operating environment. my remarks will have strong focus on consumer protection. the financial services act and the islamic financial services act 2013 which came into force in june this year has provided the bank with statutory duty to foster fair, responsible and professional business conduct amongst financial service providers. such regulatory developments mark an important milestone in modernising malaysia β s financial sector which goes beyond the mandate of preserving financial stability. these laws ensure a robust financial consumer protection regime. the new legislations provide explicit powers for the bank to set and enforce standards on business conduct for financial service providers that ensure financial consumers are treated fairly. the laws also specifically prohibit financial service providers from engaging in unfair or deceptive business conduct including making false, misleading or dishonest representations, and tied selling. it is important to highlight that the new legislation also provides enhanced protection in respect to consumers β pre - contractual disclosure obligations in consumer insurance contracts. among others, an insurer or takaful operator must pose specific questions to consumers for its underwriting purpose. the legislation also sets out various remedies that an insurer may rely on depending on the type of pre - contractual misrepresentation made by the consumers. changes were also introduced under the new laws to deliver a more efficient regulatory regime for insurance and takaful intermedia | april 2010. there are three basic things a central bank can do to mitigate the moral hazard associated with its crisis interventions : ( i ) limit crisis intervention to significant systemic events, as we have done ; ( ii ) encourage infrastructure development and regulatory reform that make the financial system more resilient to systemic shocks, thereby reducing the frequency and repetition of patterns leading to systemic events ; and ( iii ) maintain a flexible intervention strategy that can deal with specific types of systemic problems as they evolve. this flexibility, which acknowledges the inherent uncertainty surrounding the timing and magnitude of systemic crises, means that individual system participants will not know in advance how to transfer risk to the central bank at artificially low prices. 17 the use of auctions to price and distribute liquidity can be helpful in this regard. i β d like to expand on the second element, making the financial system more resilient to shocks. to reduce the probability of a crisis, there are actions that can be taken by the central bank and by the prudential supervisor. the actions that the bank of canada has taken or is taking include : encouraging and overseeing the implementation of liquidity - generating infrastructure, such as a central counterparty for repo trades, that help market participants self - insure against idiosyncratic shocks ; 18. maintaining standing facilities β our standing liquidity facility and emergency lending assistance β with either penalty rates or with stigma even in non - crisis times, which allow key institutions to determine when to approach the bank as the lender of last resort for funds. 19 this could stop large idiosyncratic shocks from cascading into systemic events ; 20, 21, and, monitoring financial institution liquidity against tighter criteria ( together with osfi ). on the part of prudential supervisors, the following are actions that are under way or have been proposed and that can also help make the financial system more resilient and thus mitigate moral hazard : establishing standards that encourage financial institutions to maintain sufficient liquidity to deal with the idiosyncratic or small systemic shocks they can expect to face and to have policies for sound liquidity management practices in place ; 22 this is consistent with the advice developed in 2008, except for the element of co - insurance, which was considered to be a possible measure in the first iteration of the principles guiding the bank β s extraordinary liquidity interventions. the concept of co - insurance has been replaced by the idea that financial institutions self - insure against idiosyncratic | 0 |
##repancies in different sub - components and interpret data pertaining to the third quarter accordingly. second quarter national accounts data confirm that the pick - up in private consumption demand stemmed mainly from fiscal stimulus - driven advanced demand for certain goods categories. meanwhile, the demand for goods that were not subject to tax reductions stayed almost constant ( figure 27 ). figure 26 : contribution to gdp growth figure 27 : consumption of resident and from spending by periods non - resident households ( percentage point ) ( seasonally adjusted, at 1998 prices, billion tl ) - 1 - 2 7. 1 5. 9 13. 5 3. 8 12. 5 11. 5 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 - 0. 1 gdp - 0. 4 - 1. 0 - 1. 1 p riv. stoc k expo rts public privat e imports cons. change spending inv. source : turkstat, cbrt. co nsumption co nsumption excl. furniture, housing goods and services, trans portatio n, communicat ion source : turkstat, cbrt. recently issued data indicate that this trend continued in the third quarter as well and consumption demand has adopted a weaker course following its marked increase during the second quarter. although private investment is expected to increase slightly in the third quarter, the low capacity utilization rate and the high uncertainty in demand is expected to hold back the recovery in investments. accordingly, total aggregate domestic demand is expected to stay flat in the third quarter, after increasing significantly in the second quarter ( figure 28 ). figure 28 : total aggregate domestic demand ( seasonally adjusted, at 1998 prices, billion tl ) 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 * * forecast. source : turkstat, cbrt. data pertaining to the third quarter indicate that external demand remained weak and the negative contribution of net exports to quarterly growth persisted. the course of external demand will be determined by the outlook of the speed and timing of global recovery. the medium - term outlook for global growth indicates that the gdps of developed countries would not reach the pre - crisis level for an extended period of time. within this framework, external demand is expected to continue to suppress aggregate demand for quite some time ( figure 29 ). figure 29 : actual and forecast gdp growth in developed countries ( seasonally adjusted, 2008q | will be implemented and further enhanced by structural measures that would strengthen fiscal discipline. in this respect, it is assumed that the fiscal stance will remain expansionary β but less so than the one in 2009throughout 2010, and fiscal tightening will gradually be adopted starting from 2011. moreover, in line with the mtp, it is envisaged that the rising debt - to - gdp ratios will reverse their course steadily starting from 2011, and hence the risk premium would not display any significant changes throughout the forecast horizon. table 1 : annual growth forecasts previous forecast new forecast previous forecast new forecast world - 1, 4 - 1, 1 2, 5 3, 1 developed economies - 3, 8 - 3, 4 0, 6 1, 3 united states - 2, 6 - 2, 7 0, 8 1, 5 euro area - 4, 8 - 4, 2 - 0, 3 0, 3 developing countries 1, 5 1, 7 4, 7 5, 1 all oecd - 4, 1 - 3, 7 0, 7 - united states - 2, 8 - 2, 8 0, 9 - euro area - 4, 8 - 3, 9 0, 0 - world - 2, 3 - 2, 3 2, 6 2, 7 united states - 2, 6 - 2, 5 2, 4 2, 6 euro area - 4, 4 - 3, 9 1, 0 1, 1 imf oecd consensus economics * source : imf world economic outlook, july and imf world economic outlook update, october. oecd economic outlook, june and oecd economic outlook, september. * consensus forecasts, september and october. against this background, assuming a limited amount of further easing and constant policy rate until the end of 2010, medium - term forecasts suggest that, with 70 percent probability, inflation will be between 5. 0 and 6. 0 percent with a mid - point of 5. 5 percent at the end of 2009, and between 3. 9 and 6. 9 percent with a mid - point of 5. 4 percent by the end of 2010. furthermore, inflation is expected to decline to 4. 9 percent by the end of 2011 and to 4. 8 percent by the third quarter of 2012 ( figure 35 ). figure 35 : inflation and output gap forecasts * ( percent ) output cΔ±k tΔ± a cgap Δ±gΔ± forecast tahm in a range * ralΔ±gΔ± | 1 |
terminals, atms, internet payments, mobile payments and card payments. all these methods of payment have to be accessible for everyone. one particularly successful european initiative i'd like to mention is pay - able, a platform that strives for barrier - free access to payment terminals. inspired by the european accessibility act, implemented in the spring of 2019, we released a report outlining numerous best practices for accessibility. many of these practices are of course focused on digitisation. the report outlines two concrete solutions : firstly, various banks have included speech technologies in their various payment apps. secondly, an increasing number of atms and payment terminals use voice assistance and light and sound signals to help disabled users. and fourth and finally : i also represent dnb on the steering committee of the money wise platform. this platform was set up by the dutch minister of finance and several other public and private sector organisations. every year we carry out all sorts of projects to improve dutch people β s knowledge of financial products. and to encourage financially responsible behaviour. her royal highness queen maxima is honorary patron of the money wise platform. what we have learned is that campaigns for raising public awareness are much more effective when they fulfil two conditions. first, when stakeholders work together. and secondly if events are repeated, ideally internationally. you may already be familiar with money week. this is a programme of activities we put on every year to help schoolchildren learn about using cash, making card payments and encouraging them to use money responsibly. unsgsa stimulates global financial inclusion this is just some of the work that queen maxima is involved in. she has also acted as the un secretary - general β s special advocate for inclusive finance for development for over a decade. she focusses on two target groups in particular : entrepreneurs in need of microfinancing, and women who still do not have a payment account or good financial literacy. this is one area where fintech can play a powerful role. good cooperation is the key to success for financial inclusion i think i've already said this a couple of times, but it's so important i'll tell you a third time! the key to success for financial inclusion is good cooperation between all stakeholders. across the public and private sector. a sophisticated vision and strategy can help create support and unite stakeholders. we have learned that the most successful initiatives are closely in tune with the country's culture. initiatives need to offer public and private stakeholders the chance | sustainable way? what if governments introduce legislation to ensure sustainable use of resources? unsustainable companies would be relatively hard hit, and their profitability could be at risk. and thus, the financial sector that invested in them through stocks, bonds and loans. move from 1 to 17? in short shouldn β t we move our work on sustainability from 1 to 17 sdgs? couldn β t there be more risks than just climate? need these risks not be managed? should the prudential supervisor not broaden its focus? and what about impact? couldn β t we do research into access to finance? into potential bottlenecks for financing the sdgs? couldn β t dnb have anything to say about striving for impact towards achieving the sdgs? would that bring us to the fringes of our mandate? or possibly beyond? the answer is not yet clear. fortunately, this is exactly what we will look into in 2018. how do the sdgs fit in our mandate? it won β t be easy for us. we don β t have an exact answer. it β s pioneering. it β s challenging. it β s a struggle. but it β s one we β re happy to undertake. even doing this, however, we β ll probably still fall short of the new paradigm advocated in the manifesto. because we would most likely be looking at each of the sdgs separately and assess to what extent they pose risks for the financial sector ( both in terms of β physical β and in terms of β transition β risks ). to the extent they do, we would squarely be within our mandate. but i know eric will call for a more far reaching approach. moving from risk to impact, and looking to all sdg β s holistically. so we have a lot of work to do. a lot of thinking to do, a lot of pioneering to do. the principles and the manifesto pose serious questions for serious times. questions that we also ask ourselves and that we struggle to answer. so whenever you β re feeling like the task ahead of you is insurmountable, perhaps you will find comfort from the fact that your supervisor is struggling just as much as you are. but we β re all struggling in the right direction. | 0.5 |
slide 5 ). these correlations were sometimes not easy to detect simply because, contrary to headline inflation, underlying price pressures are often moving through the global economy at varying speeds, as it takes time for changes in supply and demand in one country to affect prices elsewhere. of course, such correlations say little about the ultimate source of the shock, and hence the appropriate policy response. in an integrated global economy, inflation may co - move across economies for two reasons : either because of common shocks that hit all countries simultaneously, even if not symmetrically, such as the oil shocks of the 1970s, or because of idiosyncratic or regional shocks, such as the asian financial crisis of 1997 or the euro area sovereign debt crisis of 2012, that are large enough to affect output and prices worldwide. today, we are seeing both forces at work. household wealth from accumulated savings boosts corporate pricing power the common shock relates to the impact of the pandemic on global household wealth and firms β pricing power. strict lockdowns across virtually all countries allowed households around the world to accumulate huge amounts of involuntary excess savings. in the united states, these amount to about usd 2. 7 trillion, or 16. 9 % of annual disposable income in 2019. in the euro area, this figure is β¬ 900 billion, or 12. 4 % of annual disposable income in 2019. to a considerable extent, these savings stem from the forceful fiscal policy response to the crisis. in the euro area, for example, furlough schemes have helped keep many people in employment, protecting labour incomes, while us households benefited from generous stimulus cheques ( slide 6, left - hand side ). although excess savings are distributed unequally both across and within economies, they have visibly boosted corporate pricing power by generating an environment in which consumers worldwide are both more willing and more able to tolerate price increases. 3 / 8 bis central bankers'speeches this can be seen in two ways. one is through the particularly strong price dynamics in contact - intensive services industries. restaurants, cinemas and other service providers are increasing their prices as economies reopen ( slide 6, right - hand side ). in the euro area, these sectors are currently the main drivers of services price inflation, which is at its highest level in 20 years. these catch - up effects are not happening simultaneously across economies, as social contact restrictions are being removed at different speeds. but they are happening in most advanced economies because fiscal policy has | isabel schnabel : the globalisation of inflation speech by ms isabel schnabel, member of the executive board of the european central bank, at a conference organised by the osterreichische vereinigung fur finanzanalyse und asset management, vienna, 11 may 2022. * * * accompanying slides can be found on the european central bank β s website. there are two competing views on the impact of globalisation on domestic inflation. one view is that the global component of inflation by and large reflects price swings in energy and commodity markets. 1 globalisation may affect underlying inflation, but these effects are judged to be economically small. the alternative view is that global economic slack matters for domestic underlying inflation and that globalisation may have lowered the sensitivity of inflation to domestic slack, that is the slope of the phillips curve. 2 although the strength of such global factors may differ across economies, a failure to properly account for them may result in significant forecasting errors. this is the β globalisation of inflation β hypothesis. in my remarks today, i will argue that the pandemic, and more recently russia β s invasion of ukraine, are providing tangible evidence in favour of the second hypothesis. large global excess savings and exceptionally strong global excess demand for many internationally traded goods and commodities have contributed to raising the pricing power of firms across advanced economies. this has fed into underlying price pressures even in countries where domestic slack remains present. in the euro area, the strong surge in selling prices has mitigated the impact of the adverse termsof - trade shock from higher commodity prices and has boosted corporate profits in sectors most heavily exposed to global demand. as a result, euro area firms have recently been as much exporters of inflation β through higher export prices β as they have been importers. the extent and persistence of future underlying price pressures will depend on two things : the degree to which firms will be able to continue passing higher input costs on to consumers, and whether higher profits will translate into higher wages. the fact that inflation is, to a considerable extent, driven by global factors does not mean that monetary policy can or should remain on the sidelines. on the contrary, persistent global shocks imply that the firm anchoring of inflation expectations has become more important than ever. and as risks are growing that current high inflation is becoming entrenched in expectations, the urgency for monetary policy to take action to protect price stability has increased in recent weeks. is inflation in the euro area | 1 |
%. germany recorded both the lowest overall and youth unemployment rates in the euro area. employment is at an all - time high with 45 million in work in the first quarter of this year. with the labour market becoming tighter, wage growth has picked up more dynamically in the recent years, supporting domestic demand. the euro is as popular today as ever before in its 20 - year history. i β ve lived in germany myself for two years. why does one hear so much dissent on monetary policy? this reaction, which contrasts with the general approval that our measures received in the rest of the world, might partly be explained by the novelty of our measures, and partly by the way central banks β communications channels work in the eurozone. banks, insurance companies, pension funds, business models and savers β behaviours needed to adapt to qe and negative interest rates and this wasn β t easy. we were fulfilling our duty ; the treaty is asking us to take the actions we are taking to preserve the stability of the euro. also, explanation of our policies to the citizens of the eurozone relies on national central bank communication. whenever they supported governing council decisions at national level, public opinion at country level was also supportive. once a decision is taken, dissent should stay within the governing council. we need to talk about today. first of all, if you look at your ammunition chest, how much have you got left? all instruments from interest rates to asset purchases, to forward guidance are ready to be calibrated. we also need to reiterate that we are symmetric in pursuing our objective, i. e. that to keep inflation above our target as much as below it. also, in the future, if the experience is telling us anything, it is this : we have to have a fiscal policy of some significance in the eurozone. the first time i mentioned this was in a speech i gave in jackson hole in 2014 and i repeated it thereafter several times. i always mention the fact of the need to move from a rules - based national fiscal policy to an institution - based fiscal capacity. we have countries that have fiscal space and don β t use it. even if they were to do something, what would be useful to the rest of the euro area would only be the spill - overs. this means that steering the aggregate euro area fiscal stance in an optimal way through decentralised policies is difficult to achieve given that national policies are geared to national stabilisation needs. furthermore | which the decisions of households and firms are not materially affected by the need to insure against future arbitrary or mischievous changes in government policy. just as alan would define a good monetary policy as one which leads people to stop talking about inflation, i think he would call a good tax policy one under which people stop talking about the tax system. in the last decade we have had a debate about whether such stability should be implemented by quantitative targets or not. in monetary policy we have seen the spread of β inflation targets β, and targets have begun to permeate other areas of economic policy too. you will not be surprised to learn that i think that such numerical targets have a role. but whether they are appropriate or not is a subsidiary question, and it is one that is related to the political economy of how to ensure the transparency of policy, the accountability of those responsible for it, and the way in which households and firms form expectations of policy : monetary, fiscal or other. since the political economy varies from one country to another, so will the appropriate method of achieving price stability in particular, and economic policy stability in general. the crucial and overriding point is that a market economy cannot flourish if policymakers behave in ways that lead private agents to expect future economic policies β be those future monetary, fiscal, or legal policies β to be subject to arbitrary or capricious changes. of course, an expectation of a stable regime will rarely translate into stable outcomes, and it would be irresponsible of policymakers to let such a misconception take hold. a well designed set of institutions will lead to responses being predictable, but cannot guarantee that outcomes will be. and there is a pressing issue here. in the us, inflation has been both low and rather stable. over the past decade it has varied between 1. 0 % and 3. 8 %, so we can with some justification say that inflation no longer β materially enter [ s ] into the decisions of households and firms. β in the uk inflation has, if anything, been even more stable. but this success carries a risk for the future. inflation expectations may be sensitive to a large but temporary shock that moved inflation outside the range within which it has remained for some years. with their belief in stability jolted, households β inflation expectations might move by much more than was justified by the temporary nature of the shock. that would make it more difficult for the central bank to bring inflation back to target. the moral of this particular | 0 |
yaron amir : competition in the banking system speech by mr yaron amir, governor of the bank of israel, at the banking supervision department conference on competition in the banking system, jerusalem, 2 april 2019. * * * summary : some of the significant measures and reforms aimed at enhancing competition have already come to fruition, and others are in the process of coming to fruition. there are additional supporting processes that are required now, such as the development and application of financial and technological instruments, and the deepening of the capital market, which will contribute to competition in the credit market and increased consumer well - being as they advance. these processes are becoming possible mainly in view of the development and application of advanced technologies that were not available until just recently. removing information gaps, leveraging existing information, and utilizing technological ability for informed analysis and learning in real time about the credit market will enable more correct pricing that is more in line with the risk to various layers of the credit market β households and small and medium businesses β thereby contributing to development of the market. the market must be developed while managing risks and developing proper regulation, in order to make sure that, despite the risks, the benefit from these processes will make them worthwhile. two financial instruments that should be advanced in order to make the capital market more sophisticated and deeper, and which will contribute to the continuing increase in competition, are securitization and long - term interest rate derivatives. * * * good morning. first, i would like to congratulate the banking supervision department on this conference, and welcome the honored guests. the issue of competition in the financial system is one that occupies many people in israel and abroad. advancing competition has been a top priority of the public and of the bank of israel in recent years, and for good reason. advancing competition in the financial system, when done properly, has many positive effects on all entities in the economy, first and foremost the broad public. today, i would like to discuss various aspects that can enhance competition in this market, thereby increasing consumer well - being and economic growth. some of the significant measures and reforms aimed at enhancing competition have already come to fruition, and we are already enjoying the results. others are in the process of coming to fruition. and there are additional supporting measures that are now required, such as the development and application of technological and financial instruments, and deepening the capital market. as these are advanced into the future, they will in turn contribute to | , 3 per cent in 2012, and 3, 9 per cent in 2013. there are still significant risks to the global environment, but the intensity and immediacy of these risks may have been reduced somewhat with the recent agreement on the greek bail - out which has helped to prevent a disorderly default. this agreement is expected to allow for greece to roll - over its debt that is maturing this month. it would be premature to think that the european crisis has been resolved as there are a number of interrelated and mutually reinforcing dimensions which mean that uncertainty remains. although the risks from the sovereign debt crisis appear to have been reduced for the meantime, questions about the sustainability of the solution persist, particularly in the light of the fact that the european authorities have emphasised that the greek bail - out model is not a precedent. the portuguese economy is also under stress, and we could still see a repetition of the greek crisis being played out there in the coming months. in the absence of a clear commitment to deal with a possible portuguese crisis, the risk of contagion to other more systemically important economies, such as italy and spain, will increase. although some of the peripheral european countries are relatively small, they have a combined bis central bankers β speeches sovereign debt of around us $ 1 trillion, with a significant proportion being held by european banks. the actions to resolve the greek debt problem have involved significant losses to private sector bond - holders, many of which are european banks. in terms of the agreement, bond holders will accept losses in excess of 70 per cent of the value of the debt. partly as a consequence of these developments, european banks are now undercapitalised, with estimates ranging between us $ 300 billion and us $ 400 billion. this has resulted in significant deleveraging by european banks, with indications of them selling assets in order to achieve their required ratios. this credit crunch in europe is being exacerbated by the need to meet new capital requirements of raising the tier 1 capital asset ratio to 9 per cent by june 2012. there are concerns that european bank lending could decline by around us $ 3 trillion over the next 18 months. the interbank market is also dysfunctional in europe, reflecting the lack of trust between banks. the ecb has attempted to alleviate the situation with the establishment of the long term refinancing operation ( ltro ) facility, which has to date granted an estimated us $ 1, 35 trillion in loans to banks at | 0 |
well. so, banking supervision can be seen as an exercise in tempering this β optimism bias β. our most basic task is to be a tad more pessimistic than others and to challenge the banks accordingly. though it may seem counter - intuitive, in some cases supervisors are more open to change than banks. banks sometimes focus on the short term, on the here and now. their preferred postbrexit outcome would probably be to stick to business as usual, to leave things β staff, it, risk management β as they are. but this is not an option, unfortunately. so it is up to the supervisors to push banks to be agile and act before it β s too late. european banking supervisors have worked hard to ensure that banks are prepared for brexit. we have been clear about what we expect. we have published information on our website, we have set out our expectations in interviews and speeches, and we have spoken directly with the banks, of course. 1 / 5 bis central bankers'speeches from the start, we identified areas of concern for individual banks β particularly those that plan to relocate from the united kingdom to the eu. we made it clear that we would not accept β empty shells β. and we made it clear that we would not accept comprehensive back - branching practices, where banks would provide services to eu clients only from branches in the united kingdom. we outlined the main areas we would be looking at when evaluating banks β risk management, their staffing and their booking models. we have clearly stated that we expect all banks to have sufficient capabilities in place to manage all material risks locally, that is, here in the euro area. we have also spelled out that the outsourcing of functions or services must not compromise operational independence. regarding booking models, there are still a small number of banks that have not fully adjusted in line with our expectations. again, it looks as if some banks are not as adaptable as supervisors would like them to be. the good news is that even these banks have now started to take action. we are aware, of course, that for some banks brexit implies big organisational challenges. we will work with these banks to find acceptable solutions. but let me be blunt : many of these banks are big enough to shoulder these changes and to bring staff to the eu, even though they might not see the need. the impact of brexit will vary from bank to bank, of course. that β s why we | ##oria or disillusion. β he went on to draw some strategic conclusions, saying that : β β¦ we were given two eyes : one to watch money and credit aggregates and one to watch everything else. ultimately, these two policy perspectives are to be combined in a single strategy which subsumes them both in a unified β albeit complex β and robust framework for action. β this was alien language in the homeland of the β jackson hole consensus β, which did not envisage a role for monetary analysis or financial disorder in monetary policy - making at all. it has become common parlance since, even there. at the same time, i have questions β many questions β on how best to integrate balance sheet considerations into policy - making in a way that does not undermine the best legacy of the pre - crisis era : our price stability mandate. let me elaborate. bis central bankers β speeches balance sheet restructuring previous crises have shown that prompt and decisive balance sheet repair after a period of excessive credit growth is the best way to restore sustainable growth. 1 post - recession growth may not even be significantly weaker than normal if the overleveraged financial sector aggressively cuts back excess credit in the recovery phase. 2 like balance sheet imbalances, structural impediments to growth and to an efficient allocation of resources are generally very relevant for the conduct of monetary policy and need to be tackled decisively. trying to stimulate growth through standard aggregate demand policies may be ineffective and, under certain circumstances, even counterproductive in balance sheet recessions, when structural breaks on potential growth predominate. 3 it is for this reason that the changes to euro area and eu governance introduced in response to the crisis are so important and need to be implemented with determination. the reforms undertaken in many stressed countries, especially those benefiting from official external assistance, should eventually lay the foundations for a robust recovery. most importantly, the steps being taken to create a banking union should help to address existing balance sheet problems. the initial focus is on banks β balance sheets. the comprehensive assessment of their balance sheets currently being done by the ecb is a critical element. thousands of supervisors are carefully scrutinising the books of the euro area β s largest banks. at the end of this process, the assets in banks β books should accurately reflect the economic realities. that means that the value of loans to over - indebted firms and households will be adjusted to reflect the actual debt servicing capacity of these debtors. incentives for | 0 |
measures via commercial banks ( through interest rate and bank credit channel ), but, on the contrary, the asset prices channel may become effective in the monetary policy transmission process. an expansionary monetary policy might fuel asset prices, which, in turn, might increase the leverage of the shadow banks, expand their balance sheets, reduce their risk premium and thereby increase lending to non - financial sector and finally the level of real activity3. d. procyclicity and amplification of business cycles 18. shadow banking activities, which broadly remain less regulated, have been reported to act pro - cyclically, which might amplify financial and economic cycles. their leverage would rise during booms ( as they face little problem in arranging funds ) as assets price rise and margin / haircuts on secured lending remain low. on the contrary, during the downturn phase ( as the funding becomes difficult ) as asset prices fall and margins / haircuts on secured loan become tighter, shadow bank get compelled to undertake deleveraging. 19. pro - cyclicality of shadow banks may also get exacerbated owing to their interconnectedness with the banks. fsb ( 2012 ) observed that inter - connectedness of the shadow banks with the banks might aggravate the pro - cyclical build - up of leverage and thereby heighten the risks of asset price bubbles, especially when the investment assets of the two systems are correlated. this pro - cyclicality in the financial system might amplify financial and business cycles. high pro - cyclicality of the shadow banking sector has implications for the real sector, which might also get affected adversely as funding by the shadow banks to the real economy during the economic downturn might take a hit. shadow banking and indian economy 20. the type of entities which are called shadow banks elsewhere are known in india as the non - banking finance companies ( nbfcs ). are they in fact shadow banks? no, because see also adrian, et al ( 2010 ). bis central bankers β speeches these institutions have been under the regulatory structure of the reserve bank of india, right from 1963 i. e. 50 full years before many in the world are thinking of doing so! evolution of regulation of nbfcs in india 21. in the wake of failure of several banks in the late 1950s and early 1960s in india, large number of ordinary depositors lost their money. this led to the formation of the deposit insurance corporation by the reserve bank, to provide | these achievements have to be strengthened and replicated across africa to further promote the inter - complementarity of goods, trade facilitation and free movements of the factor of production, amongst others. the process of integration would also assist in regional infrastructure development in critical areas like energy, transport, communication / ict systems, roads and rail transportation. this would reduce production costs and increase economic activities across the continent. in addition, it would also strengthen africa β s political voice, improve collective negotiations to achieve more favourable outcomes on the external front. other benefits would include enhanced access to international markets and fair price for resource exploitation as well as attracting investment flows to the continent. investment in human capital africa has a young population compared to the ageing societies across the world. skill acquisition is critical to turn this resource into wealth. for example, for the manufacturing sector to take off, the new development strategy must avoid the current fragmented approach to education which is not adapted to the developmental needs of the african economies, hence, emphasis should be placed on tailoring education to growth sectors. education and training in cutting edge technologies would enable countries to adjust more swiftly to the challenges of globalization as enterprises become more flexible and better able to absorb new technologies. as such an integrated approach to education would enhance human resources development and create sufficient skilled manpower desired for the enhancement of industrial production. in particular, acquisition of requisite skills is also crucial for the development of africa β s informal sector, which account for the lion share of employment. in the short - term, technical and vocational skills are critical for building agroallied industries using basic technology. utilization of natural resources for development aside human resources, the continent should leverage on the vast endowment of natural resources like land, water resources, solid minerals, oil and gas and renewal energy to launch itself into the next development phase. unproductive practices such as land tenure system must be discarded, while property rights, and rule of law must be enforced. agreements on mining rights must ensure fair pricing and sustainability of these natural resources. institution of good governance and zero tolerance for corruption institutional development and good governance anchored on the rule of law are paramount for sustainable development. strong political commitment on the part of the relevant authorities is also quintessential. enhancing the operation of public enterprises is essential to address corruption and improve efficiency. like china, african countries should encourage the adoption of a zero tolerance policy against corruption by instituting severe punishment to penalize and control / eliminate corruption. 7. 0 some | 0 |
clarity on our monetary policy reaction function and then being guided by that reaction function in our decisions. we should respond to incoming information on the medium - term inflation outlook and the balance of risks surrounding it. and we should keep our policy tight until we see inflation firmly converging back to 2 % over our policy horizon, taking into account the lags with which our monetary policy operates. when we were normalising rates the pace of adjustment was key. but with rates now moving into restrictive territory, it is the extent and duration of monetary policy restriction that matters. by smoothing our policy rate hikes β that is, moving in small steps β we can ensure that we calibrate both elements more precisely in the light of the incoming information and our reaction function. this framework will allow us to return to our target without undue delay. and it will allow us to do so at minimal cost to the economy and employment, reducing the risk that we tighten too much. the uncertain economic environment the current uncertain economic environment makes forecasting inflation particularly challenging. the medium - term inflation outlook was revised substantially upwards in our staff projections last december. headline inflation was projected to stand at 3. 4 % in 2024, before falling to 2 % in the third quarter of 2025 ( chart 1 ). and core inflation was expected to remain above target throughout our horizon, declining to 2. 4 % on average by 2025. the risks to this outlook were primarily on the upside. chart 1 euro area hicp headline inflation and inflation projections ( annual percentage changes and percentage point contributions ) source : eurosystem staff macroeconomic projections for the euro area, december 2022. notes : the dashed yellow line denotes projections. the latest observations are for the fourth quarter of 2022. but key assumptions underpinning economic projections can change quickly. in fact, recent surveys and the latest european commission forecast see headline inflation significantly below our december projections for 2024. [ 5 ] and risks have become more balanced. let me now review the key factors making projections difficult in the current environment. energy prices energy inflation has slowed more than projected in december. as a result, headline inflation is also falling : in january it was well below what we expected in december, driven by the energy component ( chart 2 ). if the drop in energy prices is sustained, headline inflation may fall below 3 % towards the end of the year. chart 2 inflation in the euro area ( annual percentage changes and percentage point contributions ) sources : eurostat | generating significant carry - over effects for 2025. and this delayed the moment at which inflation was projected to return to our 2 % target, with important implications for our monetary policy decisions. moreover, according to the projections, most of these measures would not be limited to vulnerable population groups, potentially creating an expansionary impulse for demand. as i argued recently [ 11 ], this risked creating a highly inefficient interaction between monetary and fiscal policies. fiscal measures that were introduced to protect consumers β purchasing power might paradoxically trigger a contractionary monetary policy reaction that would hit the real economy, reducing household incomes and increasing the interest bill for governments. this would be like giving with one hand and taking away with the other. this assessment of the inflationary effects of the fiscal measures is however surrounded by high uncertainty. discretionary fiscal spending is hard to predict accurately, and the measures could be adjusted to avoid inefficient interactions with monetary policy. indeed, some governments have announced that they may reduce spending on energy price brakes or move to more targeted income - based measures. moreover, falling energy prices are likely to imply that energy support measures will be less extensive than foreseen in the december projections. this is also contributing to the rebalancing of risks to inflation. wage developments another factor that drove up our projections was wage growth. as workers sought compensation for high inflation, we expected wages to accelerate. this robust wage dynamic boosted the baseline projection and the risks surrounding it, as accelerating wages coupled with a tight labour market could raise the spectre of a wage - price spiral. wages are still a source of upside risk. in the seven countries covered by the ecb β s wage tracker, recently concluded agreements signal that wage pressures are rising ( chart 6 ), albeit remaining consistent with the december projections. chart 6 wage developments ( annual percentage changes ) sources : left panel : eurostat, ecb, national sources. the difference between the ecb wage tracker and negotiated wage growth series in 2022 is mostly due to different series of negotiated wage growth for france, with the ecb euro area tracker using wage growth in sectoral negotiations in france. data on indeed wage trackers can be found here. right panel : calculations based on micro data on wage agreements provided by bundesbank, banco de espana, the dutch employer association awvn, oesterreichische nationalbank, bank of greece, banca d β italia and banque de france. data for fr are based | 1 |
amando m tetangco, jr : innovative and efficient delivery channels for banking services in the philippines remarks by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the launch of globequest touchpoint, makati city, 4 august 2006. * * * mr. gerry ablaza, mr. gil genio, the officers and staff of globe telecom and innove communications, fellow bankers, special guests, good evening. as head of the bangko sentral ng pilipinas, the institution that oversees the banking sector, i am truly glad β¦ efforts to develop innovative and efficient delivery systems for banking services continue in many fronts. tonight, we witness the unveiling of globequest touch point which, i understand, is a completely integrated electronic or e - banking package. in other words, it is an end - to - end technology solution : from hardware to software, to i. t. experts, to data center services, down to network infrastructure. for all intents and purposes, it is equivalent to outsourcing an e - banking system. this is an exciting proposition that has a lot of growth potential, moving forward. today, we have 872 banks, of which only 55 or 6. 3 % have electronic banking services approved by the bangko sentral ng pilipinas. please note that these 872 banks have more than 7, 600 branches. what they need therefore are efficient and secure communication systems and infrastructure. the economies of scale that i. t. companies such as innove offer, therefore, will be particularly valuable to smaller banking institutions that may not have the technological expertise and enough resources to build their own e - banking facilities. ladies and gentlemen, it was the advent of automated teller machines or atms that allowed banking services and transactions to continue beyond traditional banking hours. now, atms no longer have this monopoly ; new and better electronic banking options allow us to do transactions outside the confines of banks premises and beyond regular banking hours. today, we have internet banking, mobile banking or phone banking. remote access through the internet and mobile devices has allowed banks to provide additional channels to deliver more services to their clients. mobile banking through the use of cellular phones is now popular as text messaging has become a means to remit funds, pay bills and loans, and make deposits. accessing a bank β s web portal through mobile devices is also expected to | become a common occurrence as advances in technology further improve the capability of mobile devices to rival even current personal computers. it is interesting to note that there are also non - bank institutions 1 that deploy atms to serve the needs of the depositing public in remote areas of our country. thus, today, banking services are within reach of segments of the population that previously had no access due to geographic and cost constraints. all these have resulted in greater convenience to the public who can now choose to bank anytime, anywhere. in the same vein, banks have also benefited from these technological advances, as efficiencies improve and operational costs are reduced. indeed, the philippine banking industry continues to undergo rapid and extensive transformation, due largely to improvements and innovations in communications and information technology. nevertheless, even as we mention its upside, we recognize that these technological innovations carry risks, which must closely be monitored, managed and balanced against the benefits. examples of private sector atm deployers are nationlink and encash. in response to this need, bsp has undertaken the following : created specialized supervision units such as that for information technology ; issued circulars to guide the development of electronic banking as well as to ensure consumer protection and awareness ; and adopted international best practices to keep us at par with the rest of the world. the increasing interdependencies of banking, telecommunications, and information technology, pose a challenge for bsp to continuously adapt to a rapidly evolving technological and business environment. nevertheless, with the support and cooperation of all stakeholders, such as globe and innove β¦. i am confident our vision of a globally competitive financial industry will be realized, eventually. finally, let me conclude by congratulating globe telecom and innove communications on the launch of globequest touchpoint. this is indeed a vital empowering solution toward providing the public with anytime, anywhere access to banking services. i hope you will continue to generate even better and more cost - efficient technology solutions. maraming salamat po at magandang gabi sa inyong lahat! | 1 |
should, for that reason alone, be left on the back burner. autonomous monetary policy autonomous monetary policy is a kind of β absorber β of economic shocks. it is meant to reduce their impact and smooth the economic cycle. it prevents an economic contraction being borne by the unemployed and those on low incomes more than is necessary. certainly, the more flexible is your economy ( in terms of public finances, the labour market, and so on ), the easier it is to cope with shocks and the less monetary policy is needed. however, the case of the eurozone shows how tricky it is when the absorber in the form of monetary policy is switched off and nothing replaces it. the shocks are bigger and hurt more. listeners themselves can answer the question of whether the labour market and labour law are likely be made more or less flexible ( and dismissals made easier ) in the future. in doing so, they will answer the question of whether there will be a need in the future for more or less domestic monetary policy in the czech republic, a country whose conservative population is so averse to upswings and downswings. 1 / 3 bis central bankers'speeches the β convergence trilemma β the standard β monetary trilemma β, which you know very well ( a country cannot simultaneously have a fixed exchange rate, an open capital account and autonomous monetary policy ), is accompanied in a converging economy of our kind with something i call the β convergence trilemma β. no country can simultaneously have high convergence growth, a fixed exchange rate, and low macroeconomic imbalances, be they internal or external. in our case, catching up with our wealthier, low - inflation western peers means a long - term tendency for our currency to appreciate. this is hardly consistent with a permanently fixed exchange rate. the paradox of the eurozone the eurozone paradox is that the best possible members of the club are the countries that are so stable themselves in monetary and economic terms that they don β t need β to buy in stability and credibility β. such countries have fewer and fewer reasons to adopt the euro. conversely, the more a country begs to have the euro, the bigger the problem it will represent. this explains why almost no one is conducting a euro debate in sweden, even though it does not have a derogation and many would like to see it in the eurozone. canonically, the same goes for us : either we can continue to stabilise ourselves | the business plans which they agreed in order to receive the sanction of the european commission dgcomp for the state aid they received, to reach a net interest margin of 2 per cent. given they are constrained by contracts on the trackers, there is only a limited range of options for achieving this. only then can they build and hold sufficient capital to be compliant with international regulations, to be fully financially autonomous and not dependent on an implicit backstop of the state, to have the resilience to deal with future shocks and to serve customers properly. their recent return to profitability is modest and significantly dependent on provision write - backs rather than normal business profitability. the crisis continues to have serious legacy issues that cannot be resolved easily or painlessly. to mention just one example, ensuring that borrowers whose loans have been sold to unregulated firms do continue to obtain the consumer protections that they previously had is a concern which the bank has been to the fore in advocating. i am glad to see this reflected in legislation ( on which the bank has actively advised ) currently being enacted by the oireachtas. without detracting from the importance of appropriate pricing on the svr loans, i should not conclude without emphasising that delays and uncertainties surrounding the resolution of non - performing loans remains a much more acute problem. the latter problem is of course one which we have discussed in this committee repeatedly and on which progress remains damagingly slow. also, they are required by the terms of the business plans which they agreed in order to receive the sanction of the european commission dgcomp for the state aid they received, to reach a net interest margin of 2 per cent. given they are constrained by contracts on the trackers, there is only a limited range of options for achieving this. bis central bankers β speeches | 0 |
##p, as it had already been expressively named, would also suit the bank of finland's needs. for us, the key selection criteria were : β’ it enables the streamlining of work flows in the best and most economically sensible way, by making widespread use of modern bar code techniques, for instance. β’ it reduces the need for our own resource input in it by offering an almost fully - fledged system as well as the equipment to run the system. β’ it supports harmonisation of the eurosystem's cash distribution function towards a single euro cash area. β’ it is in line with the eurosystem's mission, strategic objectives and organisational principles. having decided to join the cashssp, negotiations were commenced on the necessary agreements, pricing policy and a more detailed operational framework. it is clear, that when trying to find the common denominator in information technology, business options and in sharing costs and benefits, negotiations are not necessarily simple or easy. in the course of the process, our cooperation partners have, however, shown understanding for the questions we have raised, and the negotiations have taken place in a very constructive and fruitful atmosphere ; as an expression of these efforts we are now here to sign the agreement, and the bank of finland's cashssp project can be formally launched. at the practical level, we have already been preparing this project for a long time. despite a comprehensive cooperation agreement, the success of cashssp will be based on confidence between all parties involved and on the quality of ongoing cooperation. the parties are committed to help each other to the best of their ability. an excellent example of this is the assistance that the nbb is already providing to us in the form of system installation and user training. in a broader context, cooperation by national central banks in the cashssp project is a significant case of the new, truly european approach to central bank operations, which is evolving within the eurosystem. member ncb's are now looking for ways to deepen their cooperation in a flexible and creative manner, developing areas of specialisation on the basis of their relative strengths. this is, without doubt, a welcome development. according to the organisational principles of the eurosystem, as adopted by the governing council, " potential synergies and economies of scale shall be identified and exploited to the extent feasible ", and " the eurosystem shall energetically pursue organisational options that ensure effectiveness, efficiency and prompt action " | all. the cmu would also allow banks to attain funding, securitize their loans and sell them to investors. this could have the potential to distribute risks more evenly across countries, thus absorbing future shocks. furthermore, active capital markets require banks to act as intermediaries, thus it could provide stable or even a countercyclical source of revenue for banks. it is also critical that we build back better after covid - 19, focusing on environmental sustainability and helping the eu and member states to transition to climate neutrality by 2050. the capital markets would enable different types of green instruments to be developed to help towards this goal. and, as the current crisis has shown, there are ample opportunities for member states and the eu to issue social bonds that can help to build more inclusive and equitable societies. efficient and liquid capital markets could provide a solid foundation for extending this. to conclude the public authorities β role in helping society cope with the economic impacts of the covid - 19 pandemic has been significant. most eu banks have understood the gravity of the situation and have continued to provide funding to households and companies while at the same time preserving prudent capital positions. going forward, we need to increase the role of the capital markets to enhance the resilience of our economies. for this we need the cmu, which could help the eu to become socially, 2 / 3 bis central bankers'speeches environmentally and economically more sustainable. i think it is a goal worth pursuing. 3 / 3 bis central bankers'speeches | 0.5 |
already expected to settle at a considerably lower level, falling to around 3. 5 per cent, before returning to around 2 per cent in 2024. these projections are subject to a high degree of uncertainty, as the most recent developments also suggest. indeed, in the last two quarters, the forecasting errors made by the ecb and by the eurosystem β s staff were much higher than in the past. our analyses indicate that the direct effects of the forecasting errors relating to energy prices β which are the main exogenous variables, whose changes are inferred from the prices of futures contracts β explain over 60 per cent of the overall error made in forecasting inflation ; the share rises to 80 per cent when indirect effects are also taken into account ( e. g. those on sectors such as transport ). these results confirm the validity of the models used, though they draw our attention to the quality of the forecasts employed as inputs, which include, among others, in addition to energy prices, developments in world trade. there has undoubtedly been a general underestimation of the effects that the excess demand in the united states, particularly in the durable consumer goods sector, would have on the rest of the world via energy prices and, together with the impact of the measures adopted to counter the pandemic, via supply chain bottlenecks. even more significant, however, has been the underestimation of the geopolitical tensions, with the sharp drops in gas supplies from russia β observed as early as the beginning of last year β attributed first ( and probably mistakenly ) to the cold winter in that country and then to pressures by the russian government in connection with the nord stream 2 pipeline. but the most important factor has, of course, been the outbreak of the war : while the prices of futures had continued to predict descending oil and gas prices up to the end of last year, the conflict has left not only current but also expected prices at very high levels. the repercussions of rising energy prices for inflation, which were therefore to be considered as temporary owing to the widespread expectations of base effects soon turning negative, instead became more persistent. the risks of a de - anchoring of inflation expectations and of a price - wage spiral the worsening of the terms of trade and the loss of purchasing power caused by rising energy prices will tend to hold down final demand in the euro area, moderating the pressure on prices. however, the risk that long - term | on f & p standards. i thank you all for your engagement with the review and support for the f & p framework, given it is one of the key tools we have for ensuring continued trust and resilience in our sector. progress, don't regress so let me return to the topic of financial services and the economy, in particular in the face of a period of structural economic challenge and change. i think the importance of financial services for the economy is clear. but if trust is the true currency of this system, and resilience is essential to providing financial services through the cycle, then i hope it is equally clear that it is in both the economy's and the sector's interest that is well - run and well - regulated. this i believe has been the consensus of the post crisis years. and, for me, the evidence of success is in how the financial sector has managed the inflation shock, the pandemic itself and the impact of russia's war in ukraine. as we look towards the challenges ahead, however, it appears to me that the consensus is at risk of slipping. and rather than progressing by securing stable growth, we risk regressing into the mistakes of the past. you won't be surprised to hear from me that if a trustworthy and resilient financial sector is in all our interests, then calling for lighter regulation or for lower standards or indeed howling at the moon of no regulation at all is in no - ones'interests. i recognise the importance of competiveness. in fact i believe it is imperative we in europe focus on improving productivity in order to deliver better living standards for our citizens. tackling productivity problems, delivering more innovative companies in europe, and financing the digital and green transitions, are all important challenges we need to address. 4 / 7 bis - central bankers'speeches but i humbly suggest that financial de - regulation is not the answer. the nyberg report, the honohan report, the banking inquiry are not historic documents but rather the story of our very recent past. a story echoing similar stories in many other jurisdictions, such as the financial crisis inquiry commission in the us, and of course the larosiere report in europe. driving growth through'lighter touch'financial regulation failed. rather than delivering better growth it led to one of the most growth destructive events of the last century. not to mention the human costs at the time and in the aftermath ; as well as the long | 0 |
parts of the tradables sector, particularly for those not directly benefiting from the recent rise in world commodity prices. with new zealand β s current account deficit sitting around 9 percent of gdp, it is our view that the exchange rate cannot be sustained at current levels over the medium term. does trying to lower the new zealand dollar run counter to monetary policy and the reserve bank β s low inflation objective? we do not believe so. intervention is about seeking to moderate the trend in the exchange rate and rebalancing monetary policy pressure. it does not fundamentally alter monetary policy and does not signal a future easing of conditions. the direct liquidity impact of fx interventions is always offset via the bank β s money market operations. the mechanics of foreign exchange market intervention are quite simple. the reserve bank acquires foreign currency reserves by selling new zealand dollars. this activity may be limited by the amount of foreign reserves we are prepared to accumulate ; but is not limited by the bank β s ability to supply nz dollars. in this sense, intervention to lower the nz dollar is less restricted than in the reverse situation where intervention is working to support the nz dollar by running down reserves. many countries around the world have policies which allow foreign reserves to be built up as the exchange rate rises and reduced when their currencies come under pressure. unlike many commercial traders, the reserve bank has the scope to hold additional foreign reserves for an indefinite period. when the exchange rate eventually falls to a more sustainable level, the holding of foreign reserves should become profitable as their value will increase in new zealand dollar terms. claims by some observers that the bank has somehow β thrown away β taxpayers β money by intervening simply do not stack up. fx intervention is a supplementary monetary policy tool and is considerably less potent than the central ocr instrument which has an important influence on the trend of the exchange rate. as noted in the bank β s june monetary policy statement, the outlook for the ocr will depend on how inflation pressures evolve over the months ahead. evidence that inflation pressures are abating will be an important step in seeing the exchange rate return to more sustainable levels. | ##ationary monetary policy since the late 1970s, and by the early 1980s most oecd countries were announcing some form of money or credit target in an attempt to convince public and markets that they were taking the challenge of controlling inflation seriously ( reddell, 1999 ). but the focus internationally was on these β intermediate β targets β the quantity of money or credit β rather than targeting inflation itself. intermediate targets were thought to be informative for monetary policy as they were 1 bernanke et al. ( 1999 ) provide a widely - cited definition of inflation targeting. 2 italy, greece and portugal all published single year targets for inflation at times during the early 1980s, and sweden briefly operated a form of price level targeting in the 1930s. however, none of these provided a complete, sustained structure for inflation targeting of the kind now understood by the term. in the 1970s and 1980s, west germany conducted monetary policy in a framework that closely resembled inflation targeting, although it was officially designated as money targeting ( bernanke and mihov, 1996 ). in addition, in 1995 the bundesbank itself drew a distinction between its approach and inflation - targeting, arguing at the time that inflation - targeting was the inferior approach. ref # 7482042 v2. 2 susceptible to a degree of central bank control. however, the extent to which intermediate targets were connected to the objective of price stability was subject to debate. 3 in the 1970s and 1980s, new zealand had a very poor track record of price stability. annual inflation had been around 10 to 15 percent since the early 1970s ( figure 1 ), and was considerably higher than inflation in our main trading partners. a key driver of high inflation in new zealand over this period was government spending, accommodated by generally loose monetary policy ( grimes, 1996 ). there had been episodes of tight monetary policy over this period. but successive governments had been unwilling to face the short - term costs to output and employment that disinflation brought with it, and had loosened policy again. figure 1 : annual cpi inflation ( target range shaded ) source : statistics new zealand. bringing high inflation under control was a key priority for the labour government that came into power in new zealand in july 1984. 4 in 1986, the then minister of finance roger douglas invited officials to explore options for reforming the monetary policy framework, aiming to reduce the scope for political influence that had seen past attempts to control inflation fail so badly. the framework that evolved over the next four years was the cu | 0.5 |
had offset their spells of unemployment, loss of working hours, loss of benefits, or frozen wages in their formal employment β very much β or β somewhat. β in addition, three - fourths of uber drivers say that the greater control over their work schedules that uber allows has made their lives better. 12 however, there are likely many workers who would prefer regular full - time traditional work to contingent work, particularly if much of the power in determining hours worked in alternative work arrangements belongs to the employer. technological advances have enabled firms to use justin - time strategies for their employees, making them in effect on - call workers. this is a rising trend in industries such as retail and food preparation. several recent articles describe the challenges faced by these just - in - time workers, who must conform their hours to the daily and even hourly ebbs and flows of business, often not knowing whether they will have work on a given day until they call in that morning to inquire. 13 these arrangements can leave workers scrambling to patch together child care, elder care, and transportation to meet the often unpredictable demands of their workplace, while making it difficult to engage in regularly scheduled activities to enhance their income and opportunities, such as a second job or career training. while such workers often are not given full - time work, they often must make themselves available to work full - time hours. according to one survey, 71 percent of retail workers in new york stated that their hours fluctuated from week to week, while half said their employers could change their hours at will. 14 it is also notable that the increase in contingent work over the past decade has coincided with an increase of one - third in the share of employees working part time but who would prefer to work full time from 3 percent prior to the great recession to close to 4 percent today. in addition, contingent workers may receive lower wages, less training, and fewer benefits than their counterparts with traditional jobs. typically, the wages of low - skilled employees within a company are boosted by social norms regarding pay equity, and nonpecuniary benefits are often equalized across a company β s employees, in certain cases as mandated by law. 15 however, the wages that contractors receive are unlikely to reflect the same equity considerations. moreover, contingent work generally does not offer employer - based benefits and workplace protections that come with traditional employment opportunities, like overtime compensation, minimum wage protections, health insurance, family leave, employer - sponsored retirement plans, workers β compensation, and paid | from the strengthening of the euro. more recently, the signals with regard to the outlook for growth have been mixed. while data for january was generally favourable, data since then has been less supportive. confidence surveys and activity data have generally weakened again, against the background of the renewed sharp rise in oil prices. this is not encouraging and does not suggest that growth is likely to strengthen in the near term. however, more information from both surveys and hard data is required before firm conclusions can be drawn. this most recent episode is the latest instance in which high and volatile oil prices have raised risks. not only do high and rising oil prices threaten to slow growth, they also raise the risk of higher inflation, and it is essential to ensure that second - round effects on wage and price - setting behaviour are avoided. the impact of higher oil prices on growth and inflation will depend on the scale of oil price increases, its persistence, the economy's dependence on oil and second round effects on inflation. there is much uncertainty about the scale of the impact on growth and inflation and estimates vary widely. on balance, the evidence tends to suggest that the effects of oil price shocks have become milder over time. indeed, with regard to the inflationary impact of rising oil prices, it is notable that euro area inflation has been broadly stable in recent years. for example, despite a more than two and onehalf fold increase in oil prices from around $ 20 per barrel in early 2002, the headline rate of inflation has remained in a fairly narrow range - 1. 6 to 2. 5 per cent - over the same period, while the core rate of inflation has remained close to 2 per cent for most of the time, until recently when it has fallen. with regard to economic activity, while the impact of oil prices has become more muted over time, it nevertheless remains significant. all major economic downturns over the past three decades have been associated with oil price shocks, though not all oil price shocks have led to downturns. furthermore, a new and somewhat worrying feature of current oil markets relates to the rise in long - term futures prices, suggesting that higher oil prices may be here for some time. oil prices are not the only external factor complicating the outlook. there are also the risks posed by widening global current account imbalances, which show no signs of abating. at the same time, movements in exchange rates have come to be linked with the evolution of imbalances. | 0 |
of this complexity intact, it would produce a slightly simpler allocation of supervisory responsibilities. we can thus narrow the question i posed at the beginning, of whether the fed should supervise banks, to the question of whether the fed β s supervisory role generates economies of scope of sufficient social benefit to outweigh any associated costs. in the remainder of my remarks, i will discuss some economies of scope arising from the combination of bank supervision and other central bank responsibilities. although i will touch on a number of complementarities between these activities, my focus will be the benefits of the fed β s supervisory authority for the execution of one of its core functions : the prevention and management of financial crises. in particular, i will argue that the fed β s ability to deal with diverse and hard - to - predict threats to financial stability depends critically on the information, expertise, and powers that it holds by virtue of being both a bank supervisor and a central bank. the federal reserve β s supervisory authority as a starting point, some background on the federal reserve β s supervisory authority may be helpful. the federal reserve shares the responsibility for regulating and supervising the u. s. financial system with a number of federal and state government agencies, including the other banking agencies, the securities and exchange commission ( sec ), and the commodity futures trading commission. the fed, along with state authorities, supervises state member banks ( that is, state - chartered banks that are members of the federal reserve system ). in addition, it supervises the u. s. operations of foreign banks and, in some cases, the foreign operations of u. s. banks. the federal reserve also serves as the umbrella supervisor of all bank holding companies and financial holding companies, which gives the u. s. central bank broad oversight responsibilities for these banking organizations. however, the bank and nonbank subsidiaries of such holding companies are often supervised by agencies other than the fed. supervisory responsibility is determined by the type of charter held by the supervised company and by the principle of functional regulation, under which the identity of the primary supervisor depends on the nature of the financial activity being carried out. for example, the commercial banking activities of holding - company subsidiaries with national bank charters are supervised by the office of the comptroller of the currency ( occ ), whereas securities activities in nonbank subsidiaries are under the jurisdiction of the sec. the fed cooperates with the occ, the sec, and other supervisors in determining the financial condition of the consolidated organization. the | of the total budget for the u. s. federal government. state and local governments more or less finance their current spending and do not have much outstanding debt apart from that backed by capital formation ; and federal capital investment is very small. these statements are based on estimates of the congressional budget office, the budget and economic outlook, fiscal years 2005 to 2014 ( january 2004 ). a further discussion of the long - run budget outlook can be found in alan j. auerbach, william g. gale, peter r. orszag, and samara r. potter, β budget blues : the fiscal outlook and options for reform, β in henry j. aaron, james lindsay, and pietro nivola ( eds. ), agenda for the nation ( the brookings institution, 2003 ). see also the general accounting office, truth and transparency : the federal government β s financial condition and fiscal outlook on the trade side, figure 2 shows that the trend is definitely more worrisome. while the budget debt has fluctuated between 25 percent and 50 percent of gdp over the past several decades, the net external debt has grown steadily. until 1985, this external debt was not even positive ; that is, until that time the united states had net claims on foreigners. but because the united states has run persistent and sizable primary trade deficits since 1990, the net external debt is now 25 percent of gdp and rising sharply. the primary trade deficit is now 5 percent of gdp, violating the stability condition by nearly this same amount. at this rate, the external debt ratio will climb very quickly. while the trade deficit does have equilibrating tendencies, as will be discussed later, there are also forces that tend to increase it. econometric studies of the basic demand for imports and exports find that the u. s. income elasticity of demand for imports is higher than the foreign income elasticity of demand for u. s. exports. this means that even if the world economy grows at the same rate as the u. s. economy, our trade deficit is likely to widen, ( apart from any changes in relative prices ). 8 indeed, the u. s. primary trade deficit has widened steadily since 1990. adjustments i have just argued that the u. s. is now in violation of the stability condition for both budget and trade deficits - recently and moderately on the budget side, persistently and significantly on the trade side. what are the implications? with each deficit there is | 0.5 |
december, the federal reserve announced the creation of a temporary term auction facility ( taf ) to provide secured term funding to eligible depository institutions through an auction mechanism. the federal reserve also established swap lines with the european central bank and the swiss national bank, which provided dollar funds that those central banks could lend in their jurisdictions. at the same time, the bank of england and the bank of canada announced plans to conduct similar term - funding operations in their own currencies. the taf function, which i believe has had beneficial effects on financial markets to date, is expected to continue as long as necessary to address elevated pressures in short - term funding markets, and the federal reserve will continue to work closely and cooperatively with other central banks to address market strains that could hamper the achievement of our broader economic objectives. conclusion if recent events have taught us anything, it is that, during times of market turbulence, banks are essential providers of liquidity to others. to ensure that banks are well positioned to play this critical role, banks need to carefully manage their own exposure to liquidity risks. because liquidity problems can have significant effects on both sides of bank balance sheets, liquidity risks should be evaluated and addressed on an enterprise - wide basis, and should be tightly integrated with capital planning. | anachronisms, and, indeed, much as been written about the " disintermediation " of banks. for all the discussion of disintermediation, however, recent events suggest that depository institutions still play a crucial role in the global economy, particularly during times of turbulence. economists identify two related but distinct basic functions of banks in the economy. first, banks help direct capital to productive investments by identifying and monitoring suitable borrowers. second, banks provide liquidity to both borrowers and depositors. without minimizing the importance of the first function, i would like to focus on banks'role in creating liquidity. randall s. kroszner ( 2007 ), " liquidity and monetary policy, " speech delivered at the u. s. monetary policy forum, washington, march 9. what is liquidity? the term means different things to different people, and it wouldn't surprise me to find about 2, 000 different definitions among the lexis / nexis citations i mentioned earlier. today, i'll use a definition put forward by the bank for international settlements in 2000 : " liquidity is the ability to fund increases in assets and meet obligations as they come due. " as i will discuss in a moment, banks'role as liquidity providers is particularly crucial when markets are under stress. by pooling the assets of many depositors and offering term loans and credit lines to borrowers, banks effectively provide insurance against the uncertain liquidity requirements of households and firms. 2 while the liquidity needs of an individual household or firm may be difficult to foresee, in normal circumstances some individuals'and firms'high demands for liquidity will typically be offset by others'low demands ; hence, on average in normal times, the liquidity needs of large groups of households or firms are reasonably predictable. so when the savings of many investors are pooled together, a significant share of deposits can be used to make productive long - term loans, while a smaller share are held back as reserves to meet depositors'liquidity needs. loan commitments and lines of credit serve a similar function by allowing borrowers with uncertain future liquidity requirements to take on bank debt as needed. banks have been managing expected liquidity demands since the beginning of banking itself. this is accomplished today by, for example, holding some liquid assets such as treasury bills and possibly by funding a share of assets with long - term debt. a mismatch in the duration | 1 |
broad array of nonbanks and banks of all sizes that provide credit to our economy. starting with banks : the banking sector remains sound and resilient overall. most banks continue to report solid capital levels well above regulatory requirements. the rise in interest rates over the past two years has contributed to robust bank profitability, as banks earned higher interest income on floating - rate loans while interest expense on many deposits remained well below market rates. at the same time, higher long - term interest rates also substantially affected the fair value of banks β holdings of fixed - rate assets. as we saw earlier this year, fair value losses on bank balance sheets, when combined with poor liquidity and interest rate risk management, can leave banks exposed to additional risk. while acute stresses have abated, i continue to monitor this situation closely. some nonbanks can be quite leveraged. for example, available data suggest that hedge fund leverage remains elevated, especially for the largest hedge funds. it is important to better understand how their leveraged activities could impact the functioning of underlying markets. funding risks looking at funding, many financial institutions raise funds from the public with a commitment to return their money on short notice. but those institutions then invest much of those funds in assets that are hard to sell quickly or have a long maturity. this - 7liquidity and maturity transformation can create strains across markets or institutions, particularly in the absence of a lender of last resort such as the fed β s discount window for commercial banks. in the banking industry, the deposit volatility that we saw earlier this year has abated. that said, some banks have had to turn to higher - cost funding sources to make up for lost deposits and face reduced market values for investment securities. outside of banking, we also monitor a wide range of nonbank financial institutions ( nbfis ) such as money market funds, open - end funds, insurers, central counterparties, and digital assets. many of their activities give rise to a liquidity mismatch that could amplify market stress. they have daily or frequent redemption possibilities on the liability side while holding less - liquid assets. i think the securities and exchange commission β s ( sec ) recent reform on money market funds and proposal for open - end funds are encouraging steps toward mitigating funding risks arising from nonbanks. salient near - term risks let me now describe how these vulnerabilities factor into how i see the resilience of the | β evaluating urban transport improvements : cost - benefit analysis in the presence of agglomeration and income taxation β, journal of transport economics and policy, 41 ( 2 ), 173 β 188, and sgs economics and planning ( 2012 ), β productivity and agglomeration benefits in australian capital cities β, final report, coag reform council, june. infrastructure australia β s approach to the appraisal of wider economic benefits is outlined at < http : / / www. infrastructureaustralia. gov. au / reform _ investment / submissions / appraisal. aspx >. kulish m, a richards and c gillitzer ( 2011 ), β urban structure and housing prices : some evidence from australian cities β, rba research discussion paper no 2011 β 03. bis central bankers β speeches more efficiently. doing so would promote productivity growth in australia and contribute to advancement of the overall welfare of our citizens. the potential challenges in this area are, however, significant. i would like to highlight three of these. the first is the governance of project selection. clearly, not all investments in transport are a good idea, and some ideas are much better than others. there is, i detect, a deal of scepticism in the public β s mind about how projects are selected. this scepticism weakens public support for large - scale investment in infrastructure. many people are concerned that money will be wasted and that political considerations will trump economic considerations. so strong governance is critical to make sure money is spent wisely in this area. there is no substitute for rigorous and transparent cost - benefit analysis. in australia, we have made some progress in this area over recent times through bodies like infrastructure australia. building public confidence in the governance process not only helps ensure that the most pressing projects are selected, but also helps build public confidence that the money is being spent wisely. this brings me to the second potential challenge β that of financing. it is no use identifying infrastructure projects with large potential gains if a way cannot be found to finance them. the financing challenge arises not because of a lack of money available to invest in infrastructure. many private sector investors tell us that there are plenty of funds sitting on the sidelines waiting to be invested in infrastructure assets. the issue is more a reluctance of investors to take on the construction and patronage risks and / or the difficulties of charging for the use of infrastructure. given these challenges, the public sector can play an important enabling role | 0 |
last year set a record for weather - related insurance losses at around $ 140bn. 1 losses in 2018 may again be among the worst in history. this is an extension of a worrying pattern that has seen the number of extreme weather events more than triple and inflation - adjusted insured losses rise five - fold in the past three decades. 2 see munich reinsurance company ( 2018 ), β a stormy year : natural catastrophes 2017, β geo risks research, natcatservice ibid. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx the outlook is even more concerning. as noted by hrh, last month β s ipcc report shows that many land and ocean ecosystems have already changed due to global warming. 3 it concludes that the physical risks of climate change will intensify even under 1. 5 degrees of warming, including increased heatwaves, droughts, heavy rain, flooding, melting of sea ice, and species loss. in turn, this will have a marked impact on human health, livelihoods, food security, water supply, human security, and economic growth. and that is very much the ipcc β s best case scenario. the impacts will be significantly worse under 2 degrees, and the paris commitments β even if fully implemented β are consistent with more than 2. 7 degrees of warming. 4 the longer meaningful adjustment is delayed, the more transition risks will rise. to deliver on the paris agreement commitments and limit temperatures to 1. 5Β°c, carbon emissions would have to decline by about 45 % from 2010 levels to 2030 to reach net zero around 2050. 5 even if this happens smoothly, it will have major implications for most sectors of our economies. if the transition is delayed and then happens abruptly, financial stability risks will rise considerably. given this combination of immediate physical risks and prospective transition risks, the bank of england has become increasingly active consistent with our financial stability and prudential mandates. in 2015, we examined the impact of climate change on the uk insurance industry. 6 general insurers and reinsurers are on the front line of managing the physical risks from climate change, and they have responded by developing their modelling and forecasting capabilities, improving exposure management, and then adapting coverage and pricing accordingly. one of the lessons they have taken on board is that yesterday β s tail risk is closer to today β s central scenario. sadly, with respect | co. uk / news / speeches from undue risks. we will reach out to key firms and the users of payments services in the next couple of months, to understand the needs of market participants and the barriers that still exist to competition and innovation. this dialogue β along with detailed analysis of the potential benefits and impacts for monetary and financial stability - will feed into a consultation paper in 2020. we look forward to learning from the industry and will welcome your engagement in this process. rtgs renewal crucially, to deliver these priorities, and to facilitate innovation, we need strong, resilient foundations. that is why the bank is undertaking an ambitious and exciting programme to renew rtgs. for those not familiar with rtgs, it is a critical piece of national infrastructure and the backbone of uk payments. our vision is to develop an rtgs service which is fit for the future, increasing resilience and access, and offering wider interoperability, improved user functionality and strengthened end - to - end risk management of the uk β s high - value payment system. this is a challenging but necessary programme which is a key priority not just for the bank but for the uk payments industry as a whole. the way payments are made has changed dramatically in recent years, reflecting changes in the demands of households and companies, changes in technology, and an evolving regulatory landscape. we need to respond to this and, in collaboration with the industry, develop the next generation of rtgs that delivers a world - leading payments service. innovation can only thrive when firms and end users are confident they are operating in a safe and secure environment. so at the heart of the programme is the desire to make the new service materially stronger and more resilient to an increasingly complex and sophisticated environment. our current system has, and meets, targets of 99. 95 % availability. this must continue regardless of the shocks, whether traditional bcp or cyber. we are building a system that will be flexible to protect against the threats we understand today and the ones we will need to withstand in the future. the renewed service will provide a platform for private sector innovation and one which can respond to and shape a fast changing environment. we will harness leading edge technology to deliver this, coupled with changes to our policies to support growth and resilience. key features will include : the renewed service will have a flexible and modular architecture, making it easier to change components of the service or add new components. this will enable us to respond quickly to | 0.5 |
range of institutions during a longer trading window. the asx has also been consulting market participants on a new set of trading guidelines for bbsw, and this process has the strong support of the cfr. the new arrangements will not only anchor bbsw to a larger set of transactions, but will improve the infrastructure in the bank bill market, encouraging more electronic trading and straight - through processing of transactions. the critical difference between bbsw and libor is that there enough transactions in the local bank bill market each day relative to the size of our financial system to calculate a robust benchmark. are for the new bbsw methodology to be implemented successfully, the institutions that participate in the bank bill market will need to start trading bills at outright yields rather than the current practice of agreeing to the transaction at the yet - to - be - determined bbsw rate. this change of behaviour needs to occur at the banks that issue the bank bills, as well as those that buy them including the investment funds and state treasury corporations. the rba is also playing its part. market http : / / www. rba. gov. au / speeches / 2017 / sp - dg - 2017 - 09 - 08. html 2 / 5 08 / 09 / 2017 interest rate benchmarks | speeches | rba participants have asked us to move our open market operations to an earlier time to support liquidity in the bank bill market during the trading window, and we have agreed to do this. while we all have to make some changes to systems and practices to support the new methodology, the investment in a more robust bbsw will be well worth it. the alternative of rewriting a very large number of contracts and re - engineering systems should bbsw cease to exist would be considerably more painful. the new regulatory framework for financial benchmarks that the government is in the process of introducing should provide market participants with more certainty. treasury recently completed a consultation on draft legislation that sets out how financial benchmarks will be regulated, and the bill has just been introduced into parliament. [ 4 ] in addition, asic recently released more detail about how the regulatory regime would be implemented. [ 5 ] this should help to address the uncertainty that financial institutions participating in the bbsw rate setting process have been facing. it should also support the continued use of bbsw in the european union, where new regulations will soon come into force that require benchmarks used in the eu to be subject to a robust regulatory framework. risk - free rates as alternative | ##s or have an intention to issue them in the medium term1. most of the activities have been limited to conceptual research or initial proof - of - concept experiments. - - with regard to the bank of lithuania, we are generally fond of financial innovation. for instance, we even have plans to open a new generation technological sandbox for testing blockchain solutions ( called lbchain ). we therefore do not reject the potential that cbdcs carry. yet at this point we remain cautious. i also have to stress that the bank of lithuania is part of the eurosystem. for us, any significant step in the field of cbdcs would require action at the ecb level. for now, this seems like quite a distant prospect. in any case, our future positions in this domain will be based on a rigorous cost - benefit analysis. we will take into account the possible alternatives. for instance, the bank of lithuania already provides an effective payments infrastructure titled centrolink. the system supports 24 / 7 instant payments and is accessible for all payment service operators, including fintech companies. by creating a level playing field for different types of market players, we aim to encourage competition. this creates the necessary conditions for the emergence of new and efficient private retail payment products. in some sense, such developments limit the potential added - value of the retail cbdc. therefore, assessing the balance between risks and benefits from the perspective of generally conservative central banks, the wholesale cbdc seems like a more viable option going forward. however, we feel the need to acquire a better theoretical understanding of the way any sort of cbdc would function, and learn from practical pilot experiments. notably, research and monitoring carried out by international organizations, such as the imf or standard - setting bodies, could play an important part in finding an optimal future design. 1 as shown by the survey conducted by the committee on payments and market infrastructures ( cpmi ) last year. 4 / 4 bis central bankers'speeches | 0 |
took place more than five years ago, and denmark β s fixed - exchange - rate policy today enjoys unique credibility in the market. the present central rate vis - a - vis the euro represents a conversion of the exchange rate between the d - mark and danish krone fixed in january 1987. why could we weather the storms despite all the arguments that the system is so vulnerable? the short reply is that we have taken great pains to follow the β rules of the game β. first, we have used monetary policy solely to stabilise the exchange rate - whether or not the necessary interest rate was appropriate in relation to the domestic economic situation. monetary policy has been earmarked for exchange - rate stabilisation. second, it is just as important that fiscal policy has β come through β - to use a modern expression. fiscal policy has been responsible for ensuring stable and credible macroeconomic development in the medium term. adjustments have been made primarily in connection with the annual finance acts. nevertheless, in isolated cases specific measures were required. the latest example is the whitsun package of economic measures in 1998. the other main point of criticism of fixed - exchange - rate regimes is that a flexible exchange rate is necessary to shield the economy from external shocks. the same argument is used against participation in a monetary union. the hypothesis is that a flexible exchange rate allows such external disruptions to be reflected in the exchange rate. following the ems crises at the beginning of the 1990s, a number of those countries which had to give in to speculative pressure chose to let their currencies float. this enabled them to use monetary policy - i. e. the interest rate - to stabilise domestic demand and thus inflation. a new inflation - management model was introduced in monetary policy, the so - called inflation targeting model. new zealand and canada had already applied this approach for some time. however, it was the bank of england and sveriges riksbank that primarily developed the principles of this policy in close cooperation with academia. central banks applying inflation targeting aim at influencing the economy by solely using the interest rate to keep inflation two years ahead within a defined interval, typically 2 or 2Β½ per cent plus / minus 1 per cent. the interest - rate decisions are taken by a committee based on economic projections, model calculations and personal assessments. the ecb has a clear objective of price stability which is interpreted as an inflation rate below but close to two per cent. the ecb β s interest - rate decision | small economies. if the exchange rate fluctuates too much, private individuals and companies are tempted to use one or more foreign currencies instead in order to achieve greater stability. in recent years the problems encountered by small currencies have led to growing interest in currency unions and common currencies, most notably reflected by the introduction of the euro. 4. conclusion in conclusion i would like to point out that a decision for the faroe islands and / or greenland to have their own currency can obviously be made. nevertheless, to protect such an independent currency from speculation and very strong fluctuation it must be strongly attached to another currency - the danish krone in these examples. as a consequence of this attachment the economic scope would not be greater than in the current situation where the danish krone is used as the currency of the entire danish commonwealth. i would like to end by emphasising that the financial markets are very sensitive to expectations of change. if a debate on the introduction of an independent currency is initiated on the faroe islands or in greenland, there is a risk that the debate itself would generate speculative movements. this could lead to a β run β on the local banks to transfer deposits to danish banks. it could also lead to extensive exchange of faroese bankotes for danish ones. the latter is a harmless phenomenon, but extensive transfer of deposits from local banks could entail considerable difficulties for the business community. monetary and foreign - exchange issues should therefore be approached with caution by the authorities. if a change is to be made, there must be an exact plan for the whole process and for how the currency will be anchored, that means how the value of the money will be protected under the new regime. the financial markets hate uncertainty, and money can be moved in an instant if uncertainty arises. | 0.5 |
starts, reduced order reserves and assessments from the enterprises in norges bank β s regional network indicate that housing investment will continue to show a pronounced fall next year. gross investment is expected to decline by 14 per cent on an annual basis in 2009, remain at a low level in 2010 before picking up in 2011. even though the krone depreciation is curbing the impact, the global downturn is expected to result in lower growth in norwegian exports. the high level of petroleum investment was an important driving force during the economic upturn, and petroleum investment is expected to remain high in the years ahead. some investments may be postponed if oil prices fall permanently below usd 60 - 70 per barrel, especially small investments and upgrades of fields in operation. exploration activity may also be cut back. large field development projects are probably being affected only to a limited extent, while small companies and smaller investment projects may be adversely affected by the reduced availability of credit. growth in the norwegian economy slowed markedly in the first half of this year. the effects of the financial crisis will most probably be greater than envisaged only recently. the slowdown in the norwegian economy seems to be occurring rapidly and to be pronounced. mainland growth is projected to be very low in 2009, then recover in 2010 and 2011. petroleum investment will buoy up activity. the central government budget will also boost growth in public demand for goods and services. in the monetary policy report, the results of monetary policy assessments are illustrated in a chart showing projections for the interest rate, inflation and capacity utilisation in the economy. we have illustrated the uncertainty surrounding our projections using fan charts. the width of the fan charts is based on historical disturbances, and therefore expresses the average that covers periods of high and low uncertainty. there is now unusually high uncertainty surrounding future developments in inflation and output and hence surrounding interest rate developments. it is difficult to determine probabilities of different outcomes of the ongoing financial crisis. in such decision - making situations it may be appropriate to implement measures that can reduce the uncertainty and stave off particularly adverse outcomes for the economy. this now implies a more active monetary policy than normal, both in interest rate setting and through liquidity policy measures. when setting the key policy rate, we must also take account of developments in premiums in money market rates, other bank funding costs and bank deposit and lending rates. weight has been given to moving forward the reduction in the key policy rate so that lending rates for households and firms can gradually | going forward, enterprises will probably adjust the workforce to lower output growth and reduce the use of overtime. after a long period of high housing investment and rising prices, activity in the housing market is now slowing. tighter credit conditions are amplifying the fall in house prices. even though there are variations across regions, the trend in house prices is the same β from a more moderate rise at the beginning 2007 to a clear decline at the beginning of 2008. norges bank β s lending survey for the third quarter shows that banks are tightening credit standards for households. banks announced further tightening ahead. owing to growing turmoil and liquidity shortages in financial markets, banks have raised their requirements with regard to collateral and borrowers β debt - servicing capacity. growth in household credit has slowed in recent months. house price developments affect building starts, which have decreased in the past year. the decline is sharpest for residential building starts. in october, enterprises in norges bank β s regional network indicated a very low level of housing starts in the period ahead. order reserves for commercial buildings and holiday homes are high, however. commercial construction is largely financed by loans, and may therefore be affected by changes in interest rate and credit conditions. enterprises in norges bank β s regional network report that commercial building starts have declined in recent months. household saving has picked up. household income accounts show that the savings ratio excluding share dividends has risen, but is still very low and negative. household borrowing requirements have also decreased somewhat. ( household net lending has picked up slightly. ) the financial market crisis has led to higher borrowing costs for banks and has kept bank lending rates at a higher level than developments in the key rate would imply. households probably need to build up financial buffers and reduce debt, which will in turn weigh down on growth in private consumption ahead. growth in spending on goods stalled last autumn. there has been a considerable drop in car sales in particular. norges bank β s regional network also reports a decline in demand for goods related to moving home, such as white and brown goods and refurbishing equipment. growth in consumption is expected to be very low for a period ahead, but growth in private consumption may pick up again towards the end of next year. growth in mainland investment has been strong in recent years, but is now moderating. according to the national accounts, corporate investment was still on the rise in the first half of the year, but there was a considerable decline in housing investment. falling housing | 1 |
the past 7 years, we have 5 governors including the present one who has been in office for just over 1 year. however, it is important to note as well that sometimes the relationship between minister of finance and governor of a central bank turned sour not because of policy conflict but because of personality mismatch that led to eventual conflict. for instance, the current minister of finance and the present governor work well together and have great respect for each other. what then is the solution? i think the best solution is to legalize central bank independence by spelling out clearly in the central bank legislation the power, duties, responsibility and accountability of a central bank. according to the draft amendment of the bank of thailand act which is to be considered by the parliament in the near future, some such important features are : 1. a selection committee, comprising some outstanding thai senior statesmen, to nominate appropriate candidates for governorship. 2. a definite term of office for governorship ( 4 - 5 years is the norm and this can be extended for another term ). 3. clauses which spell out clearly causes for removal of governor. 4. a court of directors which comprises of the governor and deputy governors and at least five other members to oversee / manage / entrust the overall affairs of the bank of thailand. question remains whether governor should be chairman and ceo as well. there are pros and cons on this issue. 5. a monetary policy board chaired by the governor and consists of internal and external directors. external directors will be appointed by the government. responsibility and accountability of the board will be spelled out clearly. it is important to have qualified external directors to provide wider perspective and perhaps a counter balance views. since the draft amendment of the bank of thailand act will take time to be enacted because of a long legal and parliamentary processes ( we expect it to be enacted in the middle of next year ), we have decided to go ahead with the establishment of a monetary policy committee ( mpc ). the mpc consists of seven members with the governor chairing the committee. there are two external advisors who serve on the committee, providing independent thoughts and perspectives. the committee meets every six weeks on a pre - announced schedule. the main responsibilities of mpc comprises of : β’ setting the direction of the monetary policy with the objective of maintaining price stability, β’ examining and approving the monetary conditions and policy stance report, and, β’ overseeing the quarterly inflation report. why did we adopt and implement inflation targeting as our | against it, but he also has the ultimate prerogative of resigning from the governorship β. dr. puey ungphakorn was an outstanding governor who gave great importance to the bank of thailand to carry out its functions as an independent institution free from political and governmental domination, undaunted by any influential powers - that - be. for the sake of his country - and using the delicate art of being a central banker, dr. puey protested against the government whenever it did not act righteously. dr. puey believed that the government must have faith in the central bank in providing benefits for the country as a whole. the governor and senior management should have enough courage to voice their critical, even dissenting opinion when such an action is necessary. his view was that the governor and his senior management cannot be saints, but must carry out their work adhering to the principles of honesty and integrity. neither can they act indifferently, because when it is necessary to reprimand the government, they must do so. dr. puey was determined to protect its officials from political interference. he issued regulations prohibiting bank of thailand officials to stand for political office or write articles on politics, which are still in force today. i totally agree with what dr. puey had thus said and practiced without fail. however, since governor puey left the office at his own will to concentrate on another job which he loved dearly, that is, rector of thammasart university, we have had nine governors over a period of almost 30 years. out of this nine, only two retired from the office, the other seven were either fired or pressured to leave the post by the government for some reason or another and in most cases the causes of removal had nothing to do with their performance in conducting monetary policy. how could this have happened? the answer lies in the current bank of thailand act which does not spell out or lay down mechanism for the central bank to achieve its independence. governor and deputy governor are political appointees. they are appointed by his majesty the king upon the recommendation of the minister of finance and approved by the cabinet. there is no definite term of office. there are no protective clauses in the act which clearly spell out causes for removal. the most popular reason given by the government when firing governors was one of β suitability β. none of the nine governors had the chance to resign from the office in protest of the government policies as advocated by dr. puey. in | 1 |
nor shamsiah mohd yunus : raising the bar in compliance and enforcement opening address by ms nor shamsiah mohd yunus, deputy governor of the central bank of malaysia, at the international conference on financial crime and terrorism financing ( ifctf ) 2011 β β raising the bar in compliance and enforcement β, kuala lumpur, 19 september 2011. * * * it is my pleasure to wish all of you a warm welcome to this third annual international conference on financial crime and terrorism financing. we are indeed privileged today to have the presence of yang berhormat dato β seri hishammuddin tun hussein, minister of home affairs of malaysia, who has kindly agreed to deliver the keynote address, and officiate the opening of this conference. his presence reflects the significance placed by the government of malaysia on the roles and contributions of the financial sector in supporting the national agenda to combat and reduce crime, particularly economic and financial crime as well as terrorist financing, which is crucial in maintaining the integrity and stability of our financial system. on behalf of the financial sector, i wish to extend our gratitude to yang berhormat dato β seri for gracing today β s event. i also am heartened by the continuous and encouraging participation of the private and public sectors in this conference. now in its third year, this conference has become a hallmark event that brings together various stakeholders in malaysia and from abroad, to discuss issues relating to financial crimes and terrorist financing. in addition, this conference continues to receive support from, and participation of, renowned international experts and our regional counterparts. i bid you a warm welcome to malaysia, and would like to take this opportunity to extend our appreciation for your support and contributions. allow me to also to congratulate the organiser of this event, the compliance officers networking group of malaysia ( cong ) and the collaborating partners, namely the institute of bankers malaysia, the securities industry development corporation, the malaysian insurance institute, islamic banking and finance institute malaysia ( ibfim ) and the asian institute of finance for successfully putting this event together. i have been made to understand that for the first time, this conference has also received support from the academia, with the participation of universiti teknologi mara as a collaborating partner. financial crime continues to evolve in modus operandi, multiply in scale and complexity, and hence, the greater the potential harm they can inflict on the smooth functioning of the financial markets and payment | spearheading the sustainability agenda. digitalisation can further this cause, helping islamic finance unleash its full potential in striving towards fully embracing and adopting vbi to contribute meaningfully towards an inclusive, sustainable and impactful growth. there are two main outcomes for which digitalisation can be deployed to create winning strategies for islamic finance. firstly, technological advances can reduce operational costs therefore allowing islamic financial service providers to reach the underserved and the unbanked with more affordable digital financial services. high mobile penetration and internet usage, the shift towards e - commerce and increased usage of e - payments are all important trends that hold great promise to bring financial inclusion in malaysia to the next level. coupled with new technological advances such as cloud computing, artificial intelligence ( ai ) and data analytics, financial services providers are now able to better assess creditworthiness using real time and alternative data, thereby overcoming the traditional obstacle of making sound credit decisions for customers who lack collateral and credit history. in the same vein, the deployment of telematics, internet of things ( iot ), affordable usage - based insurance ( ubi ) and other value added services open up scope for the takaful industry to create efficiencies whilst addressing customer demand, further closing the protection gap of the malaysian population. a well - designed digital takaful solution that not only offers affordability but also seamless customer experience can go a long way towards elevating consumer trust and changing perceptions about the value of takaful protection, particularly among low income groups. secondly, technological advances present opportunities for islamic financial services providers to further automate their business to bring about greater efficiency and transparency as well as manage risk effectively in delivering value - driven and impact - focused products and services that can realise the aspiration of maqasid shariah. this is particularly important for products and services with multiple applications of shariah contracts as well as those instruments such as risk sharing, waqaf and sadaqah, which demand not only a high degree of transparency and disclosure but also positive customer service and engagement to engender trust and confidence. there is scope for the industry to explore the potential of new technologies that can transform risk management and compliance, remove information asymmetry and integrate the value chain of financial intermediation seamlessly with the real economy, particularly in trade and the halal industry. ultimately, realising the full benefits of digitalisation to deliver the intrinsic values of islamic finance successfully, relies on | 0.5 |
karnit flug : infrastructure development plan for israel remarks by dr karnit flug, governor of the bank of israel, at the cabinet meeting on the multiyear infrastructure development plan, tel aviv, 3 september 2017. * * * i attribute tremendous importance to the establishment of an interministerial team to advance, coordinate and monitor infrastructure investment projects, set standards and criteria for using ppp in infrastructure projects, and evaluate the adequateness of projects to be executed by ppp. the level of infrastructure in israel is insufficient, particularly in the area of public transportation, and mainly in the major cities, but also in the electricity delivery system and in communication infrastructure. the volume of annual investment is low by international comparison, and we are therefore not closing the gap in the level of infrastructure compared to other advanced economies, which weighs down productivity and the growth potential of the economy. we need to define needs with a forward - looking view, in close cooperation with the ministries, and to plan years, or, in fact, decades, in advance. one of the main barriers is the long project planning duration. in view of the many needs, it is important to set priorities and to plan and execute according to them. it is important that an informed estimation of the costs be made, and that the budgetary sources be defined, in order to avoid stopping projects and sharp cutbacks in projects as has happened in the past at times of budgetary stress. the use of ppp enables the costs of the project to be spread out over time. it is important to monitor the budgetary ramifications of all projects over time. ppp can be an important tool, if the projects executed through this method are chosen wisely. the selection must be made according to criteria that rely on israeli and international experience, as we showed in the bank of israel annual report for 2016. the large advantage of the ppp method is that the developer does not only build the project, but also plans, maintains and operates the asset over time, so that the project can benefit from the operator β s expertise and experience, and the developer has an incentive to make the investment in a way that will minimize the operating and maintenance costs over time. the main disadvantage is that the private developer β s capital cost is higher than that of the government. it is important that a government unit be established that will specialize in the management and monitoring of ppp tenders and contracts. it will require specific know - how and | expertise in tenders and contracts. even in ppp projects, it is best if the government is the one that acts to complete the statutory processes such as obtaining building permits, municipal permits, environmental quality, etc. the government has an advantage here. 1 / 1 bis central bankers'speeches | 1 |
we will be looking at further measures, similar to these. the idea behind these measures is to make our onshore financial market more flexible, facilitative and competitive. in other words, we are deepening the onshore markets towards becoming the main actor to conduct the foreign exchange needs of our economy. this journey will be exciting and require some behavioural changes. but we have no doubt that with the full support of the industry, we can achieve these outcomes. i envisage the fmc and the industry to further collaborate and come up with the new strategies and ideas to deepen and support the development of our onshore market. beyond trade or real sector activities, we should look at financial investments, in particular the non - resident investors in our bond market. we have 33. 7 % of our government bond market held by such investors. there are opportunities in this domain. 4 / 5 bis central bankers'speeches where are they hedging their foreign exchange exposures? what product can the industry offer for them to hedge onshore? given these obvious opportunities, we need to develop solutions that will benefit the industry as a whole. the significant overseas investments by residents and foreign currency exposures arising from trade activities create a need for the domestic hedging market to be further deepened. in 2015, fx market transactions volume reached a staggering usd2. 52 trillion, yet currency derivatives such as fx forwards and options only made up 5 and 1 percent of the total volume, respectively. similar concerns also exist for the bond market. both government and corporate bonds are still primarily held by residents, and we have one of the largest corporate bond markets in the region. yet, this does not translate into the development of active hedging market activities. credit derivatives made up less than 1 percent of ringgit derivatives volume in 2015. this prompts several questions. are our investors able to hedge effectively or efficiently manage the exposures of their portfolios? what instruments are on offer or traded in our markets that can serve as such tools? what are the policy changes that require rethinking to enable us to develop a deep and liquid hedging market? these are all issues that the fmc will deliberate and offer solutions. we all share the aspiration for our onshore financial market to become a highly competitive market. not just the foreign exchange market but across all its market segments ; money, interbank, bond and the derivatives markets. a market where pricing of ringgit assets are fully | . the intrinsic principle of profit and risk sharing thus provides an in - built check and balance to the islamic financial transactions. a combination of these distinct features together with the implementation of prudential risk management standards and practices would contribute to the robustness and resilience of islamic financial system. mutual respect on shariah matters this decade has thus been a phase of innovation in the global islamic financial system with a number of breakthroughs and major milestones in innovative deals and structures. the advancement of sukuk, islamic securitization, islamic private equity, islamic real estate investment fund and other financial instruments in terms of sophistication and product range has widened the international market reach of islamic finance, particularly in the cross border transactions. at the same time, this phase is also seeing a number of key issues being raised, particularly in respect of divergence of shariah views underlying a number of the islamic financial transactions. while such a divergence of opinions in islamic financial transactions is not a new phenomenon, it has presented a new set of challenges in today's increasingly more globalized market. to forge closer linkages between the global islamic financial markets would require a common understanding and acceptance on the applicable rules and standards. indeed, cross border transactions would require the jurisdictions involved to mutually recognise the validity of respective rules, practices and underlying shariah interpretations. this is key for the orderly development and for advancing the pace of progress of the international islamic financial industry. for this, it is important to have a concerted effort in providing greater clarity on the mutually acceptable strategy for the development of global islamic finance. in the current globalised environment, the role of scholars needs to transcend beyond pure advisory or shariah rulemaking, to a more strategic role in charting industry development. this could be in part be achieved by having global shariah standards for the islamic financial industry. a mutually agreeable position could be achieved with the application of mutually recognized principles and processes to deduce the shariah rulings and views. 1 there are lessons to be drawn from the previous success stories in the history of islamic jurisprudence whereby the strong sense of mutual respect prevailed among muslim jurists with multiplicity of shariah opinions. the jurists from different mazhab had high regard for differing views expressed by other jurists, even in ibadah matters. in relation to this, malaysia has taken a three - prong strategic initiative to promote greater mutual respect of the shariah | 0.5 |
s economic integration to induce the desired prosperity, we need, besides the aforementioned conditions, to ensure that it is inclusive, mutually beneficial, and that it does not, above all, come at the expense of the most vulnerable countries and populations. ladies and gentlemen, in morocco, this has always been the preferred approach. believing in the virtues of free trade and market rules, the country has opted since the 1980s for openness and informed economic liberalism, where the quest fo9r efficiency and competitiveness is not to the detriment of social considerations and solidarity. 3 / 5 bis - central bankers'speeches in this respect, morocco's geographical and historical proximity to europe has not diverted it from forging partnerships throughout the world, and has, above all, never been at the cost of its african identity. his late majesty hassan ii used to say that " morocco is a tree whose roots are deeply anchored in africa and whose branches extend into europe ". the continent has always been at the heart of the country's strategic orientations, as reflected in many speeches made by his majesty king mohammed vi over the last quarter of a century. his majesty has often called for a win - win co - development and rolled out major projects like the morocco - nigeria gas pipeline, which should help diversify energy supplies for many countries on the continent, the contribution in ensuring food security on the continent, as well as the atlantic initiative, which aims to facilitate the commercial integration of several landlocked countries. our public policies on trade and investment generally dedicate a largely tailored and favorable treatment to relations with the rest of the continent, hence facilitating the establishment of several moroccan groups in financial services, mining, telecoms, real estate, etc. the development of casablanca finance city also falls within this approach and strives to create a regional financial and multiservice hub geared toward africa. the country is also home to the headquarters of africa50 and is working on its development to promote and facilitate investment in infrastructure. ladies and gentlemen, at bank al - maghrib, our international relations fall within this global vision charted by his majesty. we have encouraged and supported the banking sector to develop its external growth drivers in africa. we ensure that this expansion makes a real contribution to the development of host countries. moroccan banks are now present in over thirty countries on the continent, where they generate almost 23 percent of their business. as a central bank, we maintain close experience and expertise - sharing ties with many of the | regional seminar of the international financial corporation and bank al - maghrib on β utilization of public credit registry data for the central bank β s institutional functions β rabat, february 22, 2018 - - - - - - - - - - - - - - - - - - - - - - - opening remarks by mr. abdellatif jouahri governor of bank al - maghrib - - - - - - - - - - - - - - - - - - - - - - - - excellency the ambassador of japan, ifc country manager for the maghreb region, ladies and gentlemen, it gives me great pleasure to welcome you today to the bank al - maghrib training center in rabat for this seminar on the β utilization of public credit registry data for the central bank β s institutional functions β. i would first like to express my sincere thanks to all the participants and speakers for having accepted our invitation, and more particularly to the ifc representatives, mr. xavier reille and mr. oscar madedu, and their team here for their valuable contribution to preparing this meeting. i would also like to give special thanks to his excellency ambassador takuji hanatani and through him the japanese government, which has made a vital contribution to developing credit information - sharing infrastructure in morocco. the relevance of this meeting lies in the sharing of experiences between the participating experts. the seminar panels, scheduled throughout the day, will set the stage for fruitful discussions between : central banks which are well advanced in terms of operating credit registries or which are starting to set them up, on the one hand ; and those which are preparing to meet the new challenges such registries impose in terms of micro and macro - prudential supervision and monetary policy, on the other hand. ladies and gentlemen, the significant importance of β credit reporting β is widely recognized today, particularly in assessing borrowers β credit risk, reducing loan defaults and expanding access to bank financing. experience has shown that countries with credit bureaus have been able to address the problem of β asymmetric information β and substantially improve the quality of credit institutions β portfolio. however, the recent crisis has highlighted the limited knowledge of counterparties β real health and revealed the pressing need for more granular, interconnected and flexible statistics. for central banks and supervisors, this need is creating a new paradigm for monitoring and evaluating financial stability, based on an integrated infrastructure of credit information sharing. this infrastructure | 0.5 |
. beyond this cyclical issue, china is set to continue growing strongly for the next decade or two. the other asian giant, india, is becoming a dynamic and prosperous economy. liberalisation policies and market reforms are freeing up the long moribund indian economy. state - owned enterprises are being privatised. ports, airports, telecommunications and financial services have been opened up to competition and foreign participation. as the dead hand of bureaucracy is withdrawn, growth is taking off, especially in the services sector. with well - trained, english speaking, and cost - competitive professionals, india has created a niche for itself as the world β s back - office as well as a global software centre. the bjp coalition β s unexpected defeat in the general elections reflects the unhappiness of rural voters who have not benefited from the liberalisation. this may cause the new congress government to be more circumspect about pressing ahead with reforms, although optimistic commentators argue that the voters are pressing for faster reforms rather than slower. whether or not that is so, the policy of liberalisation commands bipartisan support, and is likely to continue. after all, the new prime minister, dr manmohan singh, was the architect of the initial economic reforms in the early 1990s. he has appointed as finance minister mr chidambaram, who is also a reformist and a former commerce minister and finance minister. i am therefore hopeful that the thrust of liberalisation will continue, and india will play increasingly a prominent role like china β s in the regional and global economies. closer to home, the prospects for southeast asian economies are also looking better. the region initially struggled as political and security concerns deterred foreign investments and distracted governments from tackling serious economic problems. but southeast asia has stabilised considerably in recent years. governments are responding more vigorously to the threat of terrorism and restoring order and confidence. the political upheavals that swept across the region have also subsided, allowing governments to focus their attention on fostering growth and development. the thai economy has done particularly well. for the past few years it has been the fastest growing economy in southeast asia. through a series of bold initiatives, the thai government has revived the rural economy, stimulated domestic demand, and repaid its imf loans. this has bolstered confidence and got business moving again. indonesia β s economy has improved significantly despite a complex political situation. reforms were slow initially, as corruption and an unreliable legal system impeded progress. nevertheless, | β capital β is the portion of a bank β s funding that can absorb losses ahead of creditors, allowing the bank to continue operating as a going concern or reduce losses to creditors and depositors in the event of failure. a key word in this principle is readily. to be useful in supporting a distressed bank, capital instruments must be able to absorb losses as and when they arise. capital instruments can be ranked based on their subordination, permanence and loss absorbency, with common equity tier 1 ( cet1 ) capital being the highest quality capital instrument. the reserve bank will consider the roles of the different tiers of capital and whether more emphasis should be placed on simpler and higher quality forms of capital. we are particularly interested in reviewing the role of convertible capital instruments and will give this some priority in the review. 5 / 9 bis central bankers'speeches the principle of loss absorbency is also relevant for our assessment of buffers that are required in addition to minimum capital ratios. the current regime includes a conservation buffer of 2. 5 % and the potential for a counter - cyclical capital buffer under our macro - prudential framework. such buffers enhance the ability of banks to readily absorb losses while remaining compliant with minimum ratios. an appropriate structure for capital buffers will be an important issue for the review. 2. capital requirements should be set in relation to the risk of bank exposures regulatory capital requirements must reflect the underlying risk of exposures in order to avoid distorting banks β risk - return decisions. critics of the basel framework maintain that ever - increasing risk granularity has led to a spurious sense of sophistication and that the pendulum should swing back to simpler, more objective measures of risk. 14 in particular, the use of internal models to determine capital requirements has been shown in practice to lead to excessively wide estimates of risk for what is the same underlying exposure. 15 the basel committee has agreed that a simplification of the framework and a reduction in model - based variation in capital requirements is desirable. however, as noted, we are yet to see the final shape of these reforms. we believe that model - based variations in risk measurement are less pronounced in new zealand, due in part to our restrictions on internal model parameters and our relatively simple approach to market risk measurement. however, we agree that excessive complexity is undesirable and that risk differentiation should only occur when it is based on objective and credible measurement. in the review, we | 0 |
. do you think that banks will have to recapitalise? asmussen : this is precisely what we do not know as yet. every figure that is floating around is mere guesswork. but we need to have sufficient back - stops in place. there are several layers : the first is private capital, the second are national budgets and the third layer is formed by the esm that recapitalises banks as part of a banking sector programme with attached conditionality, as it was done in spain. as a last layer and only in very rare occasions, there can be a direct recapitalisation of banks through the esm. a credit crunch is a problem for growth. what other impediments can you see with respect to a recovery in the euro area? asmussen : fragmentation has decreased since last year, but it is indeed still a matter of concern. cΕure : trust in the euro has now been restored and it is an important basis for confidence and an economic recovery in europe. what is now needed is further economic reform in all countries. but isn β t the exchange rate of the euro itself too high, vis - a - vis the us dollar or the japanese yen? asmussen : we do not have a target exchange rate and we have to say that again and again. in any case, it is a sign of confidence that capital flows from outside have returned to the euro area. cΕure : when you look at the export performance of various countries, you can see many differences, so that the exchange rate of the currency as such cannot be considered an impediment to growth. that said, it is one of the indicators that we follow closely. however, it is a common complaint in france β¦ cΕure : here, i can speak from past experience. there is a particular fascination for currency matters in france that is not shared by other countries. it cannot be used as an excuse not to address the issues of structural competitiveness that french companies are facing. in france, there are fears that the risk of deflation might be very high... asmussen : we cannot see any risk of deflation. we see inflation expectations as being well anchored below, but close to, 2 % for a longer period of time. cΕure : and that is a major difference to the situation in japan. there have been comparisons, but whereas in japan, low growth has led to deflation expectations, this has never been the case | in the euro area and, as jorg has said, expectations there have remained very well anchored. but as in japan, people in europe are talking about a lost decade. cΕure : there is a risk of a lost decade in europe, if the right reforms are not undertaken. but the challenges and answers are very different from those in japan. it is true that the crisis has been a step backwards [ a setback ] for the european economy, but the underlying problems, such as declining trend growth and unsustainable social promises, were there before. the crisis has only uncovered them and has shown the need for answers more clearly and more urgently. but the high level of unemployment is certainly worrying β¦ asmussen : yes, the level of unemployment is unacceptable. but the question is what we can do about it. we have a strategy in europe that is based on stable prices, sound fiscal policies bis central bankers β speeches and growth and employment - enhancing structural reforms. it will take some time to see the positive effects, but i don β t see any viable alternative. cΕure : the high level of unemployment, particularly youth unemployment, shows the urgency of taking forward - looking reforms at the national level and, collectively, at the euro area level. with the crisis, differences between countries are becoming clearer and larger. is it a challenge for friendship between european nations? asmussen : we must acknowledge the resurgence of national stereotypes. that is worrying. the cliche that the greek people are lazy, whereas all germans are hard - working, is simply false β¦ reality is more differentiated. cΕure : we see the risk of nationalism in european discussions as well, with the temptation to defend narrow national interests. but politicians can overcome this temptation and make progress. take the banking union, for example. it is the most important step to be taken in european integration since the inception of the euro, perhaps more important than the single currency itself. it will have far - reaching consequences for national economic models and national legislation. so there is room for optimism if we succeed in taking that quantum leap forward. isn β t that overly optimistic? what can germany and france do to overcome these challenges? asmussen : you have described the challenges rightly, but the answer to them can only be more integration. france and germany have a leading role to play, because they stand at the core of european integration. they jointly, but only jointly, fulfil the definition of a superpower : if | 1 |
economic growth and productivity : italy and the role of knowledge ignazio visco governor of the bank of italy euroscience open forum 2020 4 september 2020 1. i would like to thank professor stefano fantoni for his kind invitation and the conference organisers for their determination in setting up this event during these very difficult times. in this presentation, i will focus on the well - known role of human capital and innovation as determinants of economic growth and consider how crucial delays in the field of knowledge may have translated, in italy, into the slow growth of gross domestic product ( gdp ) that we have observed in the last 30 years or so. 2. there is no need to emphasise how serious the public health emergency caused by the rapid spread of the new coronavirus all over the world has become. over 25 million of people are estimated to have been affected and close to one million have lost their lives. italy was the first western country in which the epidemic took hold, in early 2020. the toll has been very high, with more than 250 thousand people affected and 35 thousand deaths. 3. the drastic measures adopted to contain the propagation of the virus β which have included the limitation of people β s movements and social interaction, the suspension of teaching in schools and universities, and the temporary closure of many productive activities β have hit the italian economy profoundly. as the latest figures suggest, by mid - 2020, gdp had returned to the level observed in early 1993 ( slide 1 in the accompanying presentation ). in per capita terms, gdp dropped down to values recorded in the late 1980s. 4. the reason for this huge jump of about 30 years back in the past is twofold. the first is, of course, the striking extent of the collapse of the economy due to the pandemic : in the second quarter of this year, in particular, gdp fell by almost 13 per cent with respect to the previous quarter. as a result, in just three months gdp lost more than during the whole 2008 - 2013 period, which includes the double - dip recession related to the global financial crisis and the euro - area debt crisis, which had already been the worst slump in peacetime since italy β s unification in 1861. the second reason why we went so far back in the past is that, since the 1990s, italy β s gdp growth has been extremely weak. while other advanced countries have suffered similar or even worse declines of gdp in the second quarter of 2020 ( β 9. 1 per | capital formation β in accounting for the very low average size of firms, and especially their very modest ability to grow. 3. 1 direct evidence of financial literacy and adult skills on average, entrepreneurs and managers of italian smes have a relatively low level of financial literacy. in the 2008 wave of the bank of italy β s survey on household income and wealth ( shiw ), heads of households were asked questions aimed at measuring their competencies and financial knowledge. the answers to questions on ( i ) changes in purchasing power, ( ii ) differences in the levels of risk of investing in shares and bonds, and ( iii ) portfolio diversification ( questions chosen with the aim of following the lead by lusardi and mitchell in their comparisons of financial literacy among individuals and across countries ; see lusardi and mitchell, 2008 and 2011 ) show that only 47 per cent of entrepreneurs and managers of firms with less than 100 employees were able to respond correctly to all three ( relatively simple ) questions. hence more than half of these entrepreneurs and managers were not able to answer at least one of the relevant questions. this compares to 43 per cent among managers in the public sector or larger ( with more than 500 employees ) enterprises ( the difference between the two groups is only partly explained by their educational qualifications ). less than one quarter of all respondents were able to provide a correct answer to all three questions. these findings clearly suggest that there is significant room for improvement. perhaps even more worrying is the result from the 2013 oecd survey of adult skills that shows that a significant proportion of italian adults ( higher than in the other surveyed countries ) score the lowest levels of proficiency on the literacy and numeracy scales. less than 30 per cent of adults score level 3 or above ( on a 1 β 5 scale ) in both literacy and numeracy skills, compared to more than 50 per cent in the oecd average. italian workers also display lower skills in literacy and numeracy in the work place ( possibly also due to the average size of small companies ), even if they seem to score better in their ability to use ict. an insufficient level of literacy and numeracy skills might impact productivity and innovation even more than financial literacy. 3. 2 indirect evidence of the lack of financial literacy indirect evidence of the lack of financial literacy can be obtained by looking at the possible inefficient uses of financial instruments by smaller companies. one example is the potential misuse of derivatives by non - financial corporations | 0.5 |
participants, with no recourse to roll back or reversal of transactions. the payment and settlement systems act also mandated the reserve bank to regulate payment and settlement systems, encompassing not only the system providers β which are most often the commercial banks β but also intermediaries as well as technology providers. we have just begun the process of authorisation of payment systems. hopefully this will instil greater confidence amongst the users of such systems, in addition to ensuring that the systems are robust and well designed, based on sound principles of optimal risk management. we also believe they provide for high levels of reliability of operations and are in compliance with international requirements for combating money laundering. to aid the reserve bank in managing this task of payments and settlements, a board for regulation of payment and settlement systems ( bpss ), comprising both the rbi management and external experts, was established. international experts, who have reviewed our legal framework and implementation systems, have endorsed the scope and coverage of the payment and settlement systems act. recent initiatives and innovations safety is at the heart of payment systems. recognising its importance, the reserve bank took the early initiative for creating a guaranteed platform for systemically important payment systems. the result was the establishment of the clearing corporation of india ltd ( ccil ) in 2001. the ccil is owned and managed by commercial banks, and the reserve bank has no direct stake. you will recognise that this arms - length relationship is in accordance with the principles of good corporate governance. the ccil functions as a central counter party ( ccp ) for select categories of transactions such as those in government bonds, inter - bank foreign exchange market, call money market, etc., thus effectively managing, and mitigating, the counterparty risks arising out of possible default by any constituent. the ccil platforms are all fully electronic with high levels of operational security and provide straight through processing ( stp ). this is a unique initiative and has been widely acclaimed as a success. this infrastructure has efficiently mitigated counter party risks in over - the - counter ( otc ) markets β which, you will note, were at the root of the crisis in the credit derivatives segment in the current global financial turmoil. the reserve bank was instrumental in establishing in 1999 the indian financial network ( or infinet ). the infinet, similar to the s. w. i. f. t., is a platform for domestic transmission of inter - bank messages in electronic mode. the | to address their unique features while also being mindful of the systemic impact ; and k β knowledge β to enable knowledge - based decisions in a knowledge - powered economy, resulting in scientifically - engineered and output - oriented action. all the above efforts are aimed at providing a better risk management framework. retail payments hold the key to the value chain as economies achieve progress in today β s complex world. innovation, risk management, effort and increased international co - operation will be the key to success. i hope you all profited from your participation in this seminar, and more importantly, enjoyed spending the last three days here in mamallapuram. for my part, i must say that i greatly enjoyed being here. | 1 |
than the euro would have serious drawbacks. 8 therefore, reforming the current regime appears preferable to a radical change should emu membership be unattainable, at least for the next decade. the fact that the vast majority of small countries either use another country β s currency or pursue some type of rigid fixed exchange rate policy could indicate, however, that a floating currency may face difficulties over the long haul ( chart 3 ). ladies and gentlemen : no monetary framework or choice of currency will solve iceland β s economic problems once and for all. the set of solutions labelled β cure - for - all - ills β is an empty set. protracted discussions of the contents of an empty set are not only empty in themselves ; they are absolutely pointless. irrespective of the framework, economic policy must be pursued with greater discipline than has been the case to date. however, imposing a framework that forces the authorities to adopt more long - term oriented policies could improve performance. one way to do this is to join a currency union. the experience of greece and other countries on the periphery of the emu shows, however, that if economic policies remain short - sighted and solving imminent fiscal problems is delayed for too long, the imposed discipline is anything but palatable. i think iceland β s experience of its collaboration with the imf indicates, however, that it would flourish under such discipline. but if emu membership is not an option, that discipline must come from within. the reforms proposed by the central bank in two recent reports are designed to foster such discipline. in many instances, the same measures could contribute to stability and sustainable output growth as a member of a currency union and, in some respects, could be easier to implement from within it. thank you. the most viable option would perhaps be the danish krone, provided that the authorities were willing to bet on its continued stability vis - a - vis the euro. bis central bankers β speeches below are the slides shown during the speech : chart 1 chart 2 bis central bankers β speeches chart 3 bis central bankers β speeches | is unique as regards both the size of its currency area and the volatility of private consumption, even when its small size is taken into account. it appears obvious that fluctuation in private consumption is driven primarily by exchange rate volatility, as chart 1 shows. it is difficult to reduce fluctuations in private consumption unless exchange rate volatility is reduced. although it can be argued from a theoretical standpoint that a floating currency should be a shock absorber, recent research suggests that fluctuations in the exchange rate may actually be a source of shock, at least in very small economies. not only is exchange rate volatility greater, but the adjustment of the exchange rate returns less than no benefit in the form of a more stable real economy. 4 all four of these explanations probably have some validity, but there is good reason to examine the fourth of these more closely. why is exchange rate adjustment not a shock absorber in small countries, as in the textbook example, but rather a source of shock? there could be a number of explanations for this. 1. the tendency of exchange rates to fluctuate in excess of what appears to be warranted by fundamentals could be a contributing factor. in a sense, the exchange rate of a currency is an asset price and, as such, is determined by expectations visa - vis an uncertain future. expectations can swing from euphoria concerning the expected future stream of foreign currency revenue from investment that will support a currency to despair and, in extreme cases, serious lack of confidence over a protracted period. exchange rate movements have a more profound effect on the economy than do other asset prices, however. in addition to storing value, a currency is a unit of account and a medium of exchange. fluctuations in currency exchange rates induces volatility of relative prices throughout the economy, particularly in small, dollarised economies, and elevate the risk of doing business. increased aluminium production has also reduced the impact of commodity market volatility on the domestic employment level. see francis breedon, thorarinn g. petursson, and andrew rose : exchange rate policy in small rich economies, central bank of iceland, working paper no. 53. bis central bankers β speeches 2. the tendency of currencies to fluctuate beyond what can be justified by fundamentals has much wider implications in small currency areas than in large ones, as small currency areas are more dependent on foreign markets. when the exchange rate falls, the price level | 1 |
, istisna, musharaka etc. ) the risk is the expected variance in the measure of profit distribution between iah and bank. ifis have to recognize that this uncertainty or mudarabah risk can arise from a variety of factors both systemic as well as bank specific. risk mitigation for iah can be achieved through use of profit equalization reserves ( per ), investment risk reserves ( irr ) and by variation in modarib β s share. 2 at the same time regulatory regime, needs to offer perspectives on risk determination and capital assignments for the high exposures ifi β s face because of their excessive reliance on murabah and other trade and sales based transactions backed which are prone to higher degree of volatility and appropriate weights have to be assigned for both associated commodity pricing and counter party risks. while adopting a suitable risk mitigation technique, comprehensive and transparent disclosure of β β¦ β¦ risk profile, risk - return matrix, and internal governance is critical. among others, this requires coordination of supervisory disclosure rules, and accounting standards, and proper differentiations between consumer friendly disclosures to assist iahs and market - oriented disclosures to inform markets. β 3 in this regard, ifsb guiding principles on risk management has served a good purpose. they provide guidance for different risks to which if industry is exposed and offers guidance on the methodology for credit risk, market risk, liquidity risk, operational risk, equity investment risk and rate of return risk for different types of financial transactions. we are in the process of adapting these guidelines for islamic banking institutions in pakistan. finally, as the if industry diversifies, it will face increasingly more diverse range of risks associated with investment banks, mutual insurance ( takaful ), and investment companies. islamic banks, however, remain the core of the industry in many countries and offshore financial centers and account for the bulk of financial transactions and their soundness would remain a key concern for systemic stability. in islamic banking, the management of risks becomes more challenging due to its peculiar risk characteristics in line with the requirement for compliance to shariah principles. while the basel ii initiatives on the identification of credit, market and operational risks can be assimilated into islamic banking, the initiatives have to be complemented with consideration of the other dimensions of risks that are inherent in the if transactions. fourth, for effectiveness of if development, it is desirable that eventually model legislation is developed for ifs to recognize different institutions and products. this | provide insights on financial literacy and consumer protection issues. branchless banking has also proved to be an effective instrument for channelizing the government to persons ( g2p ) payments in trying times like serving the internally displaced persons ( idps ), during the devastating floods over the last three years. further, bisp beneficiaries are also being served very effectively through the same mechanism as well. in the coming days, this channel is expected to continue playing an important role towards the promotion of financial inclusion and the management of government to person ( g2p ) programs like salaries disbursements, pensions, bisp, watan cards, pakistan cards and tax collections services, etc. we are confident that the branchless banking deployments can cater to the needs of over 10 million potential beneficiaries of g2p payments in pakistan. the state bank will continue to play its role in promoting an environment which is conducive for financial innovation. at the macro level, we will continue to work with the industry and the other regulators to promote a sound, safe, efficient and inclusive mobile commerce ecosystem. our aim is to provide at least basic banking services to every adult and bankable citizen. today, as a large portion of our populations has access to mobile phones, we feel that if a workable partnership between the banking and telecom sectors continue, we shall see our dreams come true. on this front, we are already working closely with pakistan telecommunication authority and have also signed an mou for enabling the interoperability framework where all banks and telcos can join hands to serve the customers. we are also in the final stages of formulating the regulatory framework for interoperable mobile banking system. interoperable systems are essential to mass adoption of mobile commerce. at present, financial institutions and telcos can choose whatever business model suits their needs i. e. one - to - one or one - to - many ; however, i can foresee that in future, only interoperable solutions shall fasten both scalability and viability. here, let me assure that all bis central bankers β speeches the existing and the prospective one - to - one or one - to - many arrangements between banks and the telcos would not be affected with the proposed regulatory framework. i must acknowledge the efforts and initiatives adopted by ministry of information technology and the pta towards the promotion and development of mobile banking in the country. it is heartening to see that pta is playing an important | 0.5 |
outlook for potential growth. estimates of these measures have always been imprecise but are especially difficult given the rapid changes wrought by the pandemic. in the projection, economic slack is absorbed in the second half of 2022. to help manage the uncertainty surrounding this assessment, we will be watching a broader spectrum of indicators of slack, including a range of labour market measures. the outlook for inflation reflects the dynamics of overall demand and supply in the economy, as well as a number of temporary factors. in recent months, consumer price index inflation has risen above the bank β s 1 to 3 percent target range. three major factors are behind this temporary strength, all related to the pandemic. first, gasoline prices rebounded from very low levels a year ago and are now above pre - pandemic levels. second, other prices that had fallen sharply last year with plummeting demand are now recovering to more normal levels with the reopening of the economy. and third, disrupted global value chains and pandemic - related supply constraints, including shipping bottlenecks and a global shortage of semi - conductors, have pushed up the prices for cars and some other goods. overall, supply bottlenecks are creating sharper movement in prices that is pushing inflation temporarily higher, and these supply issues now look more important than previously thought. as a result, inflation is now projected to be somewhat above the target band through 2021. but these temporary effects are forecast to dissipate near the end of this year and inflation is forecast to ease back toward 2 percent in 2022. we expect the factors pushing up inflation to be temporary, but their persistence and magnitude are uncertain, and we will be watching them closely. longer term, given our commitment to hold the policy rate at the effective lower bound until slack is absorbed, the economy is projected to move into modest excess demand, so inflation is slightly above target through 2023 before moving toward target in 2024. in sum, the reopening of the economy and the strong progress on vaccinations have given us reason to be more optimistic about the direction of the economy. but we are not there yet, and we are mindful that the process is likely to be bumpy, and some scars will remain. at today β s decision, the governing council judged that the recovery still needs extraordinary support from monetary policy. we remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation | and 34 who have a university degree is still below the average for the main industrial countries, despite the significant increase in recent years following the university reform of 2002. the university drop - out rate is 60 per cent, nearly twice the average for the leading countries. the proportion of graduates who go on to earn a postgraduate qualification is very small, so that italy is fourth from the bottom in the ranking of oecd countries. the bulk of the recent increase in the number of graduates has consisted of students doing a shorter course. in the last two years matriculants have converged above all on law and the political and social sciences. more generally, by international standards the study courses of italian university students appear biased towards the humanities and social sciences and away from technical and scientific subjects. part of the difference is due to the fact that, in contrast with italy, shorter - course university degrees in other countries are mainly in technical subjects. but another part of the explanation is to be found in the high rents enjoyed by some professions, which distort families β choices, and in firms β insufficient demand for high technical and scientific qualifications. fewer public resources are allocated to higher education in italy than in many other advanced countries. this is the flip side of the larger volume of resources allocated to primary and secondary education. the basic political choice was to privilege early education to the detriment of investment in advanced knowledge. this is not a far - sighted choice in a world in which innovation is the key to growth. the public resources allocated to higher education in italy appear even smaller when compared with those made available to anglo - saxon university systems, despite their having a great many private institutions. the manner of intervening is different, however : in the united states, for example, it is mainly in the form of direct financing of deserving students and their families through scholarships and personal loans ; in italy, as in the rest of continental europe, the bulk of funds serve to finance the universities. 4. looking ahead by now nobody in italy should have any doubts about the urgent need to revive economic growth. the present lively cyclical upturn is certainly not sufficient to trigger a rapid solution to the structural defects of italy β s productive system. for the reasons that i have tried to set out here, education is one of the most important aspects of a reform strategy aimed at altering the context in which that system operates. in a modern economy the public sector organizes and regulates the market, produces public goods and corrects external | 0 |
/ publications / r _ 0804. pdf. | range of commodity prices over the past few years suggests a combination of very favourable and mutually reinforcing factors. these include robust global economic growth and the slow increase in supply of many commodities. importantly, emerging - market demand has been strong, reflecting sustained growth in per capita income, rapid industrialization and a more intensive use of commodities in production. the outlook for commodity prices matters to canada for a number of reasons. primarily, higher commodity prices increase national income by improving our terms of trade. the roughly 25 per cent rise in our terms of trade since 2002 is responsible for about two - thirds of the 14 per cent gain in real per capita disposable income over the same period. higher j. lipsky, " the global economy and financial turmoil : finding our footing " ( speech to the center for strategic and international studies, washington, d. c., 18 september 2008 ). commodity prices have other benefits, such as increased investment, portfolio gains for canadians and our pension funds and a contribution to the appreciation of our currency, which in turn lowers the cost of imported goods and services. these benefits are felt across canada β not just in resource - heavy sectors and regions. some of these effects are now being unwound owing to the recent sharp fall in some commodity prices, particularly those for energy. in our july monetary policy report update, we highlighted this possibility as a downside risk for the outlook for inflation in canada. slower economic growth in emerging markets, as well as in europe and japan, appears to be the primary factor behind declines such as the roughly one - third fall in the price of oil from its peak in the summer. even with this decline, oil prices are back around levels of only six months ago and are still one - quarter higher than a year ago. with both supply of and demand for commodities highly inelastic in the short term, inventories remaining tight and emerging - market growth prospects more uncertain, we can expect continued volatility in commodity prices. let me turn now to the renewed weakness in the u. s. economy. weakness in the u. s. economy as the effects of the u. s. government's spring fiscal stimulus package wear off, a fall in u. s. domestic demand seems likely. household credit growth has slowed sharply and will likely slow further. indeed, credit conditions faced by u. s. households have tightened despite the cumulative 3. 25 - percentage - point reduction in policy interest rates. the most recent survey | 1 |
thus promoting greater cross border investment. and let me give you a less direct, but nonetheless important example of a regulatory convergence initiative, from my perspective as chairman of the basel committee on banking supervision. as you may well be aware, at the end of the nineties, we embarked on a review of the so - called β basel accord β, an agreement reached back in 1988 to determine minimum regulatory capital requirements for international banks. the result of this review, the new β basel ii β framework, will, like its predecessor, be applied not only in the thirteen countries which are members of the committee, but in many other countries of the world, including the 25 countries of the european union β in fact, in probably more than 100 countries in total. and basel ii is much more than a capital requirements regime. it is a major shift in regulatory philosophy. first, although it still sets minimum capital requirements, these are based on a menu of approaches with built - in economic incentives to encourage banks to develop and use more sophisticated risk measurement and management systems which can be recognised for supervisory purposes. second, banks are encouraged to conduct their own assessments of their overall risk profile in order to determine whether they need additional capital buffers and / or other risk mitigants. supervisors will evaluate these assessments and both parties will engage in dialogue on the basis of their findings. thirdly, the new regime sets out requirements for increased transparency and disclosure by institutions to the markets. this is intended to leverage the ability of markets to provide discipline to banks to ensure that they are not holding unrealistically low levels of capital. in sum, basel ii will have wide - ranging effects, both on banks and on supervisors, across many countries. many aspects of the supervisory process which are currently subject to different requirements in different countries will be captured within a common international framework for the first time. this will not only help banks that operate on an international basis to establish more convergent information bases across the countries in which they are present. it will also facilitate the exchange of information among supervisors, because we will be speaking a more common language. and, more directly, the transparency requirements will, in themselves, lead to the availability of more, and more comparable, data for market participants and users. both these initiatives are international in nature. however, as i noted earlier in my intervention, information demands also come from a range of sources including at the domestic level, and it is certainly worth looking to see what can be done at this | prompt detection of errors and deviations from targets, allowing banks to implement corrective measures at an early stage. increased awareness of the risks and early reaction to problems is likely to lead to a smoother adjustment to new conditions or to the correction of mistakes, making decisions less abrupt and time - lags perhaps shorter. this early reaction will be supported by the supervisory second pillar and again by the transparency of the third, which will also reduce the temptation of supervisory forbearance. let me add a few words on transparency. history has also taught us that some of the worst financial crises were ultimately unleashed by sudden bank crises, during which an upsurge of collective panic led individuals to withdraw their funding to banks. a vast amount of analysis and research on these issues has underlined the role of information asymmetries in financial intermediation. indeed, it is no overstatement to say that the presence of asymmetric information between lenders and borrowers in financial markets can explain much of their inherent instability. higher transparency in the information provided by banks on their balance - sheet and risk position, along the lines of that set out in pillar 3, must undoubtedly alleviate such asymmetries, thus reducing the likelihood of an episode of profound disintermediation and, by fostering the public β s confidence in the banking system, easing the recovery of the financial pulse in the event of a downturn. before moving to my next point, let me sum up some of the ideas expressed by quoting alan greenspan, who recently said : β perhaps more critically, better risk management and the associated quantification have the real potential for reducing the wide attitudinal swings that are associated with the historical cyclical pattern in bank credit β¦ β in a more general conclusion, i think that while the objectives of regulatory policies are different from those of monetary policy, the former should always be aware of the macro implications of their micro policies and the latter can clearly benefit from effective regulations that help ensure a safe and efficient financial system. 4. procyclicality and the link between basel ii and monetary policy so far, i have highlighted key features of basel ii which, in my opinion, will unambiguously tend to make the current terrain in which monetary policy operates a safer place. yet in the course of the work conducted by the committee and, especially, after the release of several consultative documents, there has also been lively and enriching discussion about several potentially negative | 0.5 |
. estonia has shown a remarkable capacity to take difficult political decisions when they are needed. this, i believe, was widely recognized and respected, and helped pave the way for estonia to join the monetary union. it also bodes well for estonia β s future in emu. boom and bust my third observation regards another factor that also bodes well for estonia as part of the euro area : the recent boom and bust episode in this country. estonia went through a very classical cycle of low interest rates, easy credit, and unrealistic expectations, which eventually built into a substantial overheating of the economy, and finally a spectacular bust in 2008 β 2009. some countries experienced this as part of the monetary union, while estonia experienced it all by herself. i am optimistic that the experience will prove to be a vaccination against future financial excesses. the finnish depression in the early 1990s resulted in suffering and economic hardship for many, but it also re - established a more cautious economic attitude that resulted in stronger balance sheets, and ultimately a stronger economy. finland received a vaccination against financial excesses that has lasted well over a decade. i am optimistic that estonia will benefit from a similar vaccination, and will emerge from the recession as a stronger economy. only the beginning my fourth observation is that this is only the beginning. a lot is going on inside the euro area and the eurosystem. economic policy coordination is being given much greater traction than before. in particular, the crisis has shown that a group of countries with a common currency and highly interconnected banking sectors have a great deal of interest in each others β public finances. how each country chooses to allocate its public expenditure remains mostly its own business. but how a country finances its public expenditure must be a matter of common interest to a much greater degree than we were willing to acknowledge in the past. enhanced economic governance, including the european semester, creates a framework for ensuring that budgetary policies take into account the common european interest. i trust estonia will be a like - minded partner for all of us who will ensure that this framework will work as intended. i am also looking forward to working with the governor of eesti pank on the european systemic risk board that will be established as of the beginning of next year. we have high expectations for this new body. the financial crisis showed that there is a considerable gap between microprudential supervision and monetary policy. we need stronger policy instruments to tackle fluctuations in | in the finnish economy. had the global investment boom, which β asymmetrically β strongly favoured finnish exporters, lasted two more years in the latter half of the decade, we would probably have seen wage inflation accelerate and a house price bubble emerge in finland, too. the bottom line the bottom line of these remarks is that membership in the monetary union has had a stabilizing effect on the finnish economy over the past 12 years. however, membership in itself does not guarantee stability and growth. what economic policy could and should do, both inside and outside the monetary union, is to prevent the emergence of excessive indebtedness in both the public and the private sector, and the development of asset price bubbles. on both sides of the gulf of finland, we know from experience that this is not an easy task. | 1 |
and the petroleum sector held an increasingly important position from the 1970s. the expansion of the petroleum sector and the use of petroleum revenues contributed to maintaining high growth in norway, while other countries experienced a slowdown. are there lessons to be learned from the pitfalls of projecting or trend - extending economic variables? lessons to learn first, one lesson to learn is that it very difficult to predict developments in the real economy. if we were to extend the historical growth trend today to predict the future level of income, we would probably also be considerably wide of the mark. today, we know nothing about the technological innovations that might appear in the future. but we do know that there will be new processes and products and that the industry structure will change in directions that cannot be foreseen now. nor can we exclude the possibility that norway may enter a lengthy period of stagnation, for example when the petroleum sector is scaled back. another lesson is that price stability is not self - generating. in the event of substantial disturbances and an unsuccessful economic policy, the economy may lose its nominal anchor. as a result, inflation may accelerate or be too low or negative, and production may become very unstable. as the country β s central bank, we take our work to safeguard price stability very seriously and we will continue to work towards this end. we set the key rate from month to month while keeping in mind the three - year horizon, but the objective is to generate confidence in stability in the value of the krone in the long term. those of us who are still alive at the turn of the next century, will see if we achieved this objective. | been considerably off the mark. looking back, it is also easy to understand why. in 1905, prices had remained approximately unchanged for several decades. the krone β s precursor, the speciedaler, and then the krone itself had been pegged to silver and gold standards since 1842. these systems provided a fixed nominal anchor for the economy and for prices. this was also the case for several of our trading partners. from 1875, norway was also a member of the scandinavian currency union. a more detailed description will be provided by professor lars jonung. economists of the time could not, based on historical evidence, predict that national and international monetary systems would be facing substantial disturbances that would push up the price level considerably and lead to extensive instability. with the first world war, the gold standard was suspended and the money supply and price level rose sharply. the deflationary policy of the 1920s brought the price level down, but probably also contributed to instability. the price level rose again during the second world war, when the occupying powers used the printing press to finance a substantial portion of their expenditure. the economic policy of the 1970s and 1980s contributed to high inflation. so, how well would economists in 1905 have predicted the norwegian level of real income in 2005? they would have been off the mark here too. they were not in a position to predict that the growth rate in the norwegian and global economies would rise as a result of considerable technological progress, restructuring and higher productivity. on the other hand, they could to some extent have predicted our current industry structure based on their economic history. from 1865 to 1900, primary industries β share of total gdp fell from about 34 per cent to 22 per cent. in the same period, manufacturing, other goods production and service industries accounted for an increasing share of total gdp. in 1900, about 24 per cent of gdp was generated by manufacturing and other goods production. if the economists of the time had projected developments in these three industries, they would have estimated that primary industries β share of total gdp would fall to below 5 per cent. manufacturing and other goods production would increase its share to 30 per cent and service industries to 66 per cent. value - added in primary industries fell somewhat more than economists in 1905 would have projected and service industries increased somewhat less. they would have been less accurate in their projections for developments in manufacturing. although manufacturing β s share of total gdp increased up to the beginning of the 1950s, growth in private and public services gradually bypassed manufacturing, | 1 |
##ation tranches is challenging. one solution is to use credit ratings but the shortcomings of that approach were exposed during the crisis. another is to use a regulatory formula capturing dimensions of risk such as the credit quality of the underlying pool, tranche seniority and maturity. in our view, including a differentiation based on stc in that capital calculation helps to capture other important dimensions of risk related to structure, transparency and governance. because one of our objectives is to broaden the investor base, it is important that the stc designation makes things simpler for investors, particularly non - banks. for example, they should be able to place greater reliance on it when conducting their own due diligence on matters covered by the stc criteria, such as risk retention. investors would thus be in a position to concentrate with more confidence on other, existing due diligence requirements, such as in relation to the creditworthiness of the underlying assets and cash flows characteristics. the implementation process for the stc designation is therefore important. in our view, the primary obligation should be on the originator to attest compliance with the criteria. but this needs to be in the context of a regulatory regime with effective supervisory oversight and sanctions. we must also be careful not to label all non - stc transactions as β bad β. there should be a continuing place in the market for many transactions that do not qualify for the stc designation, including synthetic transactions, managed portfolios and pools that do not meet the granularity requirements. turning to capital requirements, looking at historical losses on securitisation tranches, we think the calibration of bank capital requirements that the basel committee published in december is broadly right. but there is a case for some lowering of capital requirements for stc transactions on the grounds of lower structure risk. a stronger argument can be made that solvency 2 standardised capital requirements for eu insurers are still too high, especially at longer maturities β although it should be noted that these will not apply to insurers using internal models. for banks and insurers, part of the issue with securitisation capital requirements is the comparison with covered bonds, which tend to be treated favourably in eu regulation. issuers looking to raise secured funding may therefore see covered bonds as a more cost effective alternative to securitisation. covered bonds have a legitimate role in the market as a source of stable long - term funding. but securitisation has the | , 1700 - 1850, penguin. north, d ( 1990 ), institutions, institutional change and economic performance, cambridge university press. north, d ( 1991 ), β institutions β, journal of economic perspectives, vol. 5, no. 1, pp. 97 - 112. pinker, s ( 2018 ), enlightenment now : the case for reason, science, humanism, and progress, allen lane. romer, p ( 1990 ), β endogenous technological change β, journal of political economy, vol. 98, no. 5, part 2, pp. s71 - s102. productivity leadership growth ( 2017 ), β how good is your business really? raising our ambitions for business performance β, available at bethebusiness. com rachel, l and smith, t ( 2015 ), β secular drivers of the global real interest rate β, bank of england staff working paper, no. 571. rosling, h ( 2018 ), factfulness : ten reasons we β re wrong about the world and why things are better than you think, sceptre. schneider, p ( 2018 ), β the uk β s productivity puzzle is in the top tail of the distribution β, bank underground. all speeches are available online at www. bankofengland. co. uk / speeches schumpeter, j ( 1942 ), capitalism, socialism and democracy, harper & brothers. schwab, k ( 2017 ), the fourth industrial revolution, portfolio penguin. solow, r ( 1956 ), β a contribution to the theory of economic growth, the quarterly journal of economics, vol. 70, no. 1, pp. 65 - 94. standing, g ( 2017 ), basic income : and how we can make it happen, pelican. stiglitz, j, sen, a and fitoussi, j - p ( 2009 ), report by the commission on the measurement of economic performance and social progress. smith, a ( 1776 ), the wealth of nations, w. strahan and t. cadell. summers, l ( 2013 ), speech at imf fourteenth annual research conference in honor of stanley fischer. susskind, r and susskind, d ( 2015 ), the future of the professions : how technology will transform the work of human experts, oxford university press. swinney, p ( 2018 ), β the wrong tail β, centre for cities. universities uk | 0.5 |
, sound debt markets dominated by public issues are in place, banks could proceed with such financing, especially at the shorter end. it is very satisfying to see some serious effort to improve financing of priority sector - a less fashionable, but more legitimate area for banks. governance aspects covered in the third section are somewhat tricky to be handled for several reasons, but some of the distinguished speakers seem to have made telling points such as the need for arms - length to be maintained by owners with the board, and the fact that best corporate governance exists when ownership is widely distributed. i wonder government is treated as a single owner for this purpose!. there appears to be some broad consensus on reform in this area. first, effective corporate governance arises out of responsible and vigilant simultaneous actions by the managers, the board of directors and the shareholders of a company. second, the essence of corporate governance relates to a system in which the interests of the whole gamut of stakeholders of an organisation are recognised and conflicts among them are sought to be reconciled. third, indian banks will have to enhance the transparency of their operations and make greater disclosures to the public to attain international standards of corporate governance. fourth, one may expect to see governance rating of institutions along the lines of credit rating. some issues relating to cooperative banks, especially urban cooperative banks have been discussed, particularly on regulatory matters relating to access to capital funds from the capital market, lending rate stipulations, evolution of a credit rating system, giving a level - playing field with commercial banks, etc. a significant point raised though perhaps not debated extensively relates to the conflicts of interests among various stake holders. it is heartening to note that a paradigm shift in banking recognises the need for resolving the complexities of cooperative banks, especially urban cooperative banks, regional rural banks and perhaps local area banks. critical to appreciating these issues is perhaps the appropriate framework of corporate governance for institutions, which are under the cooperative fold at their current stage of legal and regulatory framework. it is also interesting to note that public sector banks have made legitimate points about the level - playing field and the need to consider public sector banks fully owned by the government and others where there is shareholding by public. the external constraints imposed on them, the restrictions on internal consolidation due to work practices need to be addressed in any debate on paradigm shift, while the distinction between fully - owned and others is critical to issues relating to corporate governance. the broader issue of the case for or against | policy of april 2001 had expressed the rbi β s intentions to divest its holdings in state bank of india, nabard and national housing bank through transfer to government. the rbi has also sent proposals to the government to transfer its loan portfolio in respect of idbi, idfc, etc. i understand that you have had lively discussions on international standards and codes. as you are aware, a standing committee on international standards and codes was set up to benchmark indian practices against international standards. the standing committee had set up ten advisory groups in key areas of the financial sector. the groups have completed their reports, which are available on the rbi website. i would like to draw your attention to two reports which have a direct bearing on the banking system β advisory group on banking supervision ( chairman : shri. m. s. verma ) and advisory group on corporate governance ( chairman : dr. r. h. patil ). the group on corporate governance emphasized the strengthening the rights of shareholders in banks and financial institutions, appointment of risk management committees, withdrawal of special status of government directors, withdrawal of rbi directors and improvement in regard to disclosure of information. the group on banking supervision recommended on issues such as independence of supervisor, capital adequacy, management of credit risk, connected lending, functioning of board of directors etc. currently, the standing committee is in the process of consolidating the reports of the ten advisory groups and identifying the legal, procedural and policy changes required in implementing the recommendations. a number of recommendations would need amendments to the banking regulation act, companies act, rbi act, etc. following the finance minister β s budget speech last year, the rbi had already indicated a number of legal changes that would be required to give more flexibility to monetary policy. in the financial markets, the government securities bill is at the final stages of consideration. a working group in the rbi has already proposed a draft bill on securitisation, to government. an important issue in regard to banks β operational area relates to the sharing of credit information. currently, banks are sharing information on an informal basis. however, the rbi has been collecting and disseminating information on the list of suit filed defaulters, including wilful defaulters. formalising the system of sharing information would require amendment to secrecy laws. in order to overcome this aspect in the short run, pending legislative amendment, the rbi has constituted a working group to operationalise the process of collection and dissemination of data on credit information by | 1 |
macroeconomic stability helped contain india β s external vulnerabilities, a close monitoring of external sector is required, given the sharp movements in global crude oil prices and global financial market volatility. these are the two global shocks that have implications for our cad and financial flows. another challenge that indian companies may face pertains to developments around brexit. indian companies and policy makers need to suitably weigh all opportunities and challenges, and accordingly re - strategise to respond appropriately. 21. let me conclude by saying that at the rbi, we are committed to play our role as the monetary authority for maintaining mandated price stability objective while keeping in mind the objective of growth ; and as the regulator and supervisor of the banking sector and payment systems. we will take necessary steps to maintain financial stability and to facilitate enabling conditions for sustainable and robust growth. 22. in october 2018, when i had absolutely no clue that i would be landing up in the reserve bank in december 2018, i had tweeted, β central banks across countries have a very critical role at the current juncture. the challenge is to try and read the situation and take decisive steps in pursuit of their multiple responsibilities. β as governor of the reserve bank of india, it would be my endeavour to act according to these principles. thank you. 1 financial stability report, december 2018. 5 / 5 bis central bankers'speeches | as a going concern. audit being the first external line of defence, its failure in supervised entities will adversely impact timely identification of major issues and risks. 17. the responsibility of risk management primarily rests with the supervised entities themselves ; however, audit too has a critical role to play at the systemic level by examining the appropriateness of existing frameworks for plugging the control gaps and providing assurance to the board and decision makers. audit failures and their impact on the entity / system 18. without generalising, it may be said that problems usually arise when the independence of auditors itself is compromised or the auditors lack competence in performing their role. compromising the independence of auditors could lead to moral hazard. as such, auditors are subjected to greater scrutiny and regulation so as to increase the reliability of their work. 19. one of the important roles of audit is to check the so called smart accounting practices, if any, followed by management to overstate profits or understate expenses / liabilities. let me give a few examples of such smart accounting practices that we have observed. 1. ind - as has been implemented for all listed companies ( other than banks ) in india including non - banking financial companies ( nbfcs ) having net worth of more than βΉ250 crore. indas is a principle - based standard as against the previous accounting standards, which were more prescriptive. within ind - as, ind - as 109 with expected credit loss approach allows the 3 / 6 bis central bankers'speeches management to exercise discretion and judgement in determining the provisioning requirement for their financial assets. such flexibility and forward - looking nature of assessment, however, poses the β model risk β, i. e., the model may rely on incorrect assumptions and may be far away from representing the real - life scenarios. this has been observed in several cases. hence, auditors are expected to test the models used by the entities, challenge the management and validate the model outputs. 2. of late, several instances of related party transactions without following β arms - length β principle and established transfer pricing mechanism have been observed. there have been instances of diversion of funds and / or transfer of profits to connected parties through various means β intra - group loans on favourable terms, over or under invoicing of transactions, asset transfers without fair valuation, etc. auditors need to identify and thoroughly scrutinise related or connected party transactions to ensure that there is no undue transfer of income | 0.5 |
identical, but they are comparable. the ruling prices that we observe in daily commerce cannot be explained by established economic theory, even though theory may be employed to rationalize them after the fact. that becomes clear whenever there are abrupt changes in the prices at which trades take place, in circumstances where nothing fundamental has been altered. the markets for property and financial assets provide the most striking examples. with no extraordinary change in demand or supply, and with little increase in cost, market prices from time to time spiral upwards, only to come crashing down eventually. that was the case with the housing boom in the us and europe in the mid - 2000s. the rapid upward spiral in prices from around 2003 cannot be explained with reference to changes in the demand and supply of housing ; bis central bankers β speeches prices developed a momentum of their own. naturally, the price spiral did come to have an effect on demand and supply ; more and more property developers vied to construct new homes, which in turn spurred frenetic activity in building supplies, furnishings, transport and related services. at the same time, as the price of housing soared beyond the reach of ordinary folk, many over - reached themselves, and many more were pushed out of the home buyers β market. with supply going up and demand falling, the twain could never meet, and the famous intersection point with which is the enduring symbol of market economics became unattainable. in these circumstances, the market can never find the fair price. another circumstance in which the inadequacy of economists β pretensions about determining fair value may be seen, is in the market for entirely new products and services. if i am not mistaken, amazon. com, the internet retailer, made losses for most of the first decade of its existence. yet its share price kept on rising throughout. for all of this time amazon was funding its deficit with additional capital. as it turned out, amazon β s business model was successful and the investors who waited out the company β s long incubation period have benefitted from an appreciation in the value of their holdings, but the majority of similar ventures went belly up, resulting in the collapse of the dotcom bubble. a third illustration of the difference between economic theory and how prices are in fact determined, comes from the world of automobiles. the world β s leading manufacturers, toyota, general motors, volkswagen, all sell some models that are virtually identical in markets all around the world. but the landed price of a corro | to month, nor does the supply, which, in the short term, will be taken from inventories which have already been priced. bis central bankers β speeches economists are understandably reluctant to accept the fact that their fundamental contributions to determining fair values have limited practical application. most economists still believe that supply prices and demand by informed customers do conflate to produce a fair price, in spite of all the evidence to the contrary. this is not the place to discuss the very many studies that purport to find support for the conventional view and why there is such dissonance with everyday experience, nor is this the audience for such intricacies. whatever may be their merit, it is clear that we need a way of arriving at fair values in trade that may be applied to our everyday transactions. accountants, lawyers and others have attempted to fill the vacuum left by the economists. however, their definitions all come back to use of the market mechanism. their guidelines are tantamount to saying that any trade that is accepted by agents on both sides of the market may be said to be a fair trade. that is a tautology. we want to know which market price is fair value : is it the price i paid for my house just days before the bottom fell out of the market? i should think not. but neither is it the upset price at which the auctioneer disposes of my former property after the lender has repossessed. somewhere in between the fair value lies, but the market cannot tell us what it is. is there no way of determining what is a fair trade? the answer to that question is nuanced. in cases where today β s offer price is not much different from the price i paid the last time i bought a similar item, the markets work perfectly well. everyone accepts that the price is fair if it accords with their expectations, and our expectations are formed on the basis of previous experience. the market does work, for known products with which everyone is familiar, and for modest price variation. the market cannot provide a fair estimate of value when the product is unknown, and when prices vary sharply over time. for new or unfamiliar products there is no reference price to use as a point of departure. typically such a price appears in due course, after a small number of dominant firms arrive at an understanding among themselves on the range of values at which the product will be offered. the problematic cases occur when there is an abrupt change in the value at | 1 |
ratings should be changed, the authorities β responsiveness to risk strengthened and arrangements for dealing with stress in the financial system implemented. other international bodies and institutions that have responded to the financial turbulences include the basel committee on banking supervision which just announced that it will take a number of steps to bolster the resilience of the banking system to financial shocks. moreover, the imf is sharpening its analysis of the financial sector and macro - financial linkages. it is welcome that the fund places greater focus on financial sector analysis in article ivs and continues its emphasis on financial sector assessment programmes. in this context, i would highlight that all 27 member states of the european union have either already completed an fsap or confirmed their future participation. it is welcome that a number of countries, including some systemically relevant ones, have expressed their intention to undergo an fsap exercise. at the eu level, the council of european ministers of finance ( ecofin ) has coordinated work aimed to strengthen supervisory and financial stability arrangements. this relates to the introduction of a european mandate for national supervisors, the clarification and strengthening of the functioning of the committees of supervisors at the level of the 27 eu member states and the wider use of colleges of supervisors to re - enforce the supervision of cross - border banking groups. moreover, a memorandum of understanding on cross - border cooperation in financial crisis situations between all relevant authorities in the eu, that is supervisory authorities, central banks and finance ministries, has been signed. in sum, a number of significant initiatives are underway at the various levels of governance of the global financial system to respond to the challenges of globalisation. to ensure that the responses by the bodies and forums in charge of global economic and financial stability are effective, it is of course crucial that they collaborate closely and complement each others β efforts. this should also be the case as regards the interaction between the fsf and the imf. conclusion the phenomenon of globalisation entails many important changes to the global macroeconomic, financial landscape. associated with this, it entails many policy challenges β both in terms of domestic macroeconomic policies and the international financial architecture. at the domestic level, a key challenge for monetary policy is to actively monitor changes in the inflation process, while continuing to solidly anchor inflation expectations. the strong relative price movements associated with globalisation make a firm focus on price stability is as essential as ever. at the same time, such a sound monetary policy framework can lay the foundations for foster | push forward, in our view, is that of crossborder supervisory coordination, particularly better information sharing between home - host supervisors should be warranted. this is particularly important as the current crisis shows that there is a need for home supervisor of global financial conglomerate and banks to recognizing that global bank β s local operations may be systemically important for the host economies. in closing, i would like to share with you what i believe are the key changes in our financial landscape, resulting from this global crisis. first, bank business model would likely become more conservative, placing less reliance on wholesale financing and use of leverage, while focusing more on risk management and higher liquidity buffer. consumers themselves would be more risk averse and prefer to stick with simple transactions and products. as mentioned already, regulatory framework would be strengthened, especially the use of macroprudential oversight that focuses on system - wide stability. as such, closer supervision of systemically important financial institutions, including non - banks, would be required. finally, the microprudential oversight would also be strengthened to rectify previously identified shortcomings, particularly the basel ii framework, corporate governance, and incentive misalignment. though it looks as if we could be in the process of creating a β new world order β, given what we have done so far in strengthening our financial sector resilience, i believe that this transition would be a smooth one and add further strength to our financial system. needless to say, a strong financial system is the backbone of sustainable economic growth in the longterm. thank you for your attention. | 0 |
yves mersch : keynote speech euro finance week keynote speech by mr yves mersch, member of the executive board of the european central bank, at the 18th euro finance week 2015, frankfurt am main, 18 november 2015. * * * ladies and gentlemen, it is my pleasure to welcome you to the euro finance week and to today β s three conferences. depending on which conference you will be attending, you will be focusing on target2securities, payments or the digital revolution in banking. however, clearly, all three of these topics are very closely related and are all big issues right now in europe and for the eurosystem. this morning, i would just briefly like to mention two big initiatives in europe for which each of these three topics are highly relevant : the capital markets union and the eurosystem β s vision for 2020. initiative 1 : cmu the capital markets union, or cmu, will boost private risk - sharing across borders, making public risk - sharing less necessary and giving greater protection to taxpayers. the ecb and the eurosystem fully support the development of a european capital markets union and welcome the action plan published by the commission on 30 september. in this action plan, the commission has detailed the concrete steps needed to achieve the goal of cmu. of course, one ingredient that is essential for capital to flow quickly and efficiently around europe is a strong market infrastructure. this is where the eurosystem has already laid the foundations for the capital markets union with the development of target2 and, most recently target2 - securities, or t2s. target2 is the long - established interbank payment system processing cross - border payments in real time. t2s is europe β s new single securities settlement platform. it went live on 22 june of this year. t2s moves us closer to the goal of cmu because it enables banks to hold a centralised pool of collateral, making it easier to move capital around to where it needs to be. the post - trade harmonisation agenda that accompanied the development of t2s has also removed many of the barriers to efficient cross - border clearing and settlement β with many of the remaining ones having been taken up under the commission β s action plan. the financial crisis hit the financing of smes particularly hard. this is why the ecb and the commission are fully behind measures that make it easier for the european sme sector to gain access to financing. in addition to the cmu proposal, other | providers. we are expecting the euro payments council to deliver its proposal for the design of a sepa credit transfer scheme for instant payments by next week. although the scheme will not be legally binding, we expect that payment service providers that want to offer instant payments in euro based on credit transfer will adhere to the new scheme. there should be no national solutions protecting specific market actors. regarding the clearing layer, the question that has to be tackled is what kind of infrastructure will provide a viable solution for pan - european instant payments throughout the single euro payments area. on the one hand, we might want to avoid the emergence of a monopoly ; on the other, interoperability between clearing infrastructures for instant payments could prove very challenging. with regard to the settlement layer, the eurosystem will enhance target2 services in the field of instant payments. while following this three - layer approach for instant payments, we are fully aware that distributed ledger technologies, of which blockchain is probably the bestknown example, have the potential to have a profound impact on both the payments and the post - trade industry. can they make our industry more efficient? this will be discussed in some of today β s panel sessions and i am looking forward to hearing your views. coming back to the three main pillars of our vision, the third aspect is the harmonisation of collateralisation techniques and procedures. collateral management has become increasingly important since the financial crisis. the eurosystem will look to harmonise and optimise its own internal procedures to make assets available for banks for intraday credit operations in target2 and for monetary policy operations. if the harmonisation agenda is successful, we will consider the business case for a common eurosystem collateral management system to ensure that our service keeps up with technological change. exploring synergies between target2 and t2s. developing a pan - european instant payments solution. harmonising collateralisation techniques and procedures. these are our three key objectives for the immediate future. we have seen the great value of working together with the market to develop solutions. as we now work towards making this vision a reality, we will do so in close collaboration with the market, as we did with t2s, benefitting bis central bankers β speeches from its unique viewpoint and enabling us to ensure europe β s market infrastructure is tailored to meet the needs of the market. conclusion in conclusion, i have mentioned two big initiatives β the capital markets union and our vision for 2020. we have achieved much | 1 |
, significant in their own right, can cause distortions in monetary policy, render monetary policy tools less effective, and put at risk the integrity of the payments system. in an integrated international financial system, it is increasingly difficult to contain a banking crisis within a country β s borders. finally, we must not forget the human consequences of a financial and broader economic crisis, which disproportionately fall on those least able to weather the storm. clearly we need to learn what we can from recent history and take steps now to make domestic and international financial systems more resilient. crises are opportunities for implementing change, and in the us and internationally, significant reforms traditionally have been born of crisis. to effect meaningful and appropriate reform, however, we must fully understand cause and effect and the broader trends of international financial intermediation. today, i would like to share with you my perspective on these issues based on us and international experience, with special emphasis on the need for additional preventive measures. importance of sound banking systems over the long run, a nation must be able to mobilize domestic savings and other sources of funds needed to finance investment and other productive expenditures. this requires the development of an effective banking system that transfers surplus funds of households and businesses to borrowers and investors. fair and impartial allocation of credit accommodates the economic development that results in improved national living standards. notwithstanding broad changes in the intermediation process which have reduced the role of banks in favor of the capital markets, banks retain a critical role in direct intermediation and as managers of financial risk. sound financial institutions, and banks particularly, remain integral to a sound economy. effective financial intermediation is particularly important in the context of most emerging market countries given the relative scarcity of savings, a relatively underbanked population, and large - scale investment needs. the banking sector in emerging market countries also tends to be more concentrated and represents a larger share of the domestic financial system, suggesting that problems there will have an amplified effect on the economy and on the fiscal costs associated with bank rescues. causes of banking system problems banking system crises have many and complex causes, both macro and microeconomic. macroeconomic causes include exogenous shocks, sustained or sharp declines in real growth, accelerating inflation, deterioration in the terms of trade, and changes in the policy regime. macroeconomic shocks also typically expose underlying microeconomic deficiencies in risk management practices and internal controls at financial institutions such as weak underwriting standards, | in the third quarter of 2010. 1 this inflow of new foreclosures exceeded the outflow due to completed foreclosures and properties sold through short sales and deeds in lieu. as a result, the foreclosure pipeline increased to 1. 9 million mortgages β double the level from a year earlier ( chart 6 ). efforts to modify mortgages have not managed to prevent the foreclosure pipeline from increasing. as a consequence, distressed sales are expected to grow even further over the coming year. the combination of declining house prices and increasing delays in the foreclosure process will put upward pressure on default rates as well as losses on defaulted mortgages. corelogic estimates that in the third quarter of 2010 there were 10. 8 million borrowers in negative equity where the balance on the mortgage exceeds the current value of the property. they estimated that there were an additional 2. 4 million borrowers estimated to be in β near negative equity β where the borrower has less than 5 percent equity remaining. declining house prices will push these near negative equity borrowers into negative equity. this increases the risk that these borrowers will default on their mortgages either out of necessity β say as the result of a job loss β or out of choice, which is called strategic default as borrowers determine that there is little economic advantage to keep paying the mortgage. longer delays in the foreclosure process further increase the incentive for a borrower to strategically default by extending the period of time that they can live β rent free β in the house. in addition, declining house prices increase the expected losses on those mortgages that do default. problems in housing markets can impact economic growth. housing directly effects growth through incentives for builders to build new houses. housing starts will likely remain depressed as long as house prices are declining. falling house prices can also negatively impact consumption growth to the extent that homeowners increase their savings in an effort to offset declines in their housing wealth. the degree to which housing markets deteriorate over 2011 and the impact that this will have on overall growth is hard to predict with any accuracy. the most likely outcome is that the economy will continue to improve as the year progresses despite the ongoing drag from housing. however, the protracted process of resolving the overhang of negative equity resulting from the overvaluation of housing during the boom will remain a headwind restraining economic growth for several years to come. let me conclude with an observation regarding the housing outlook for | 0.5 |
the infrastructure requirements of a growing indian economy. it is worth highlighting that outstanding bank credit to the infrastructure sector, which stood at rs. 72. 43 billion in 1999 β 2000, has increased steadily to rs. 7860. 45 bn in 2012 β 13, a compounded annual bis central bankers β speeches growth rate ( cagr ) of 43. 41 per cent over the last thirteen years ( table 1 ) against an overall cagr of bank finance to all industries at 20. 38 per cent during the same period. the share of bank finance to infrastructure in gross bank credit has increased from 1. 63 per cent in 2001 to 13. 37 per cent in 2013. between march 2008 and 2013 alone, banks β exposure to infrastructure has grown by more than 3 times. this apart, credit has also flown into infrastructure sector via nbfcs, mutual funds and capital markets, the source of bulk of which is bank finance. it may not, therefore, be correct to argue that lack of finance from banks has constrained the development of the infrastructure sector. 9. in fact, recognizing the importance of infrastructural development in the country, rbi has provided certain concessions / relaxations in lending to infrastructure sector, such as, enhancement in single / group borrower limits, permission to issue guarantees favoring other lending institutions in respect of infrastructure projects, asset classification benefits under restructuring guidelines and permission to extend finance for funding promoter β s equity, subject to certain conditions. in order to encourage lending by banks to the infrastructure sector, banks are permitted to finance spvs registered under the companies act, set up for financing infrastructure projects, after ensuring that these loans / investments are not used for financing the budget of state governments. 1 rbi, in a recent circular ( march 18, 2013 ), has allowed the debts due to the lenders in case of public - private partnership ( ppp ) projects to be considered as secured to the extent assured by the project authority in terms of the concession agreement, subject to certain conditions. impaired assets in infrastructure sector 10. the evidence, thus, clearly suggests that banks have been substantially financing infrastructure projects in the country notwithstanding the inadequate commercialization of projects due to regulatory, political and legal constraints and total absence or insufficiency of user charges in many sectors. of course, this has not been without a fair share of pain for them. the npas and the restructured assets in this segment have increased quite substantially of late. the gross npas and restructured | india dated securities 4, the mutual funds held 0. 9 per cent as at end december 2010, which dropped to 0. 2 per cent as at end march 2011. the average holding of government securities by the mutual funds during the last two years remained at 0. 6 per cent as against 38. 7 per cent by the banks, 22. 4 per cent by insurance companies, 8. 9 per cent by pds, 6. 7 per cent by pfs, 3. 1 per cent by corporate entities. during the current calendar year till end of may, the average share of mutual funds in the secondary g - sec market remained at 5. 8 per cent of the total traded volume. one possible reason for the lower level of participation of mutual funds in the g - sec market is lack of investor interest in the gilt - oriented mutual funds due to significant interest rate risks. iii. future role and regulatory issues there is a need for mutual funds, especially gilt funds, to complement the role of pds in promoting retail holding in government securities. mutual funds are supposed to tap retail investors, who in turn, to the extent that they have long horizons, provide stability to the market. they also benefit small investors by providing them access to risk - free gilt edged securities. the mutual funds are allowed to participate in the interest rate swap ( irs ) market for the purpose of hedging their own balance sheet risks. however, their participation has remained quite muted. the irs market, although very liquid, suffers from a low customer base of around 1 per cent. the mutual funds may increase the use of irs for hedging their interest rate risk which would help in broadening and deepening of the irs market. source : amfi monthly β may 2011. source : amfi monthly β may 2011. source : nsdl. rs. 23. 3 lakh crore as on december 31, 2010 ; rs. 23. 5 lakh crore as on march 31, 2011. bis central bankers β speeches mutual funds are also allowed by sebi to trade on interest rate futures ( irf ). irf contracts on 10 - year notional coupon bonds were launched on nse in august 2009. the product witnessed significant activity during the initial period, but liquidity tapered off subsequently. rbi has already issued guidelines for futures contracts on 91 - day t - bills, which are expected to be introduced shortly. rbi is also considering introduction of irf contracts on 2 - year | 0.5 |
christine lagarde : imfc statement statement by ms christine lagarde, president of the european central bank, at the forty - ninth meeting of the international monetary and financial committee, imf spring meetings, washington dc, 19 april 2024. * * * introduction since our last meeting in october, the global growth outlook has improved somewhat, reflecting revised growth prospects across both advanced and emerging market economies. the disinflationary process has continued amid falling energy prices, the normalisation of supply conditions and tight monetary policy. while the global economy has weathered the tightening of monetary policy well, growth prospects remain subpar by historical standards. risks to the global outlook are broadly balanced for both economic activity and inflation, though rising geopolitical tensions pose an upside risk to inflation and a downside risk to growth. the governing council in april kept the three key ecb interest rates unchanged at their september 2023 levels. it considers that these policy interest rates are at levels that are making a substantial contribution to the ongoing disinflation process. the governing council's future decisions will ensure that its policy rates will stay sufficiently restrictive for as long as necessary. it will continue to follow a data - dependent and meeting - bymeeting approach to determining its interest rate decisions, based on the same three criteria that guided its decisions during the earlier tightening phase and the current holding phase : the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission. if the governing council's updated assessment of these criteria were to further increase its confidence that inflation is converging to its 2 % medium - term target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction. at the same time, the governing council is not pre - committing to a particular rate path. in march the governing council concluded the review of the operational framework for implementing monetary policy, which will help us steer short - term market rates in line with our policy stance as the eurosystem balance sheet normalises. the new framework clarifies how the ecb will implement monetary policy in the future. this year we also celebrated the 25th anniversary of the euro. this is an important reminder that there is strength in unity as we look ahead to future challenges. economic activity over the past year, economic activity in the euro area has broadly stagnated, as slower global demand and the impact of tighter financing conditions have weighed on growth. real gdp was flat in the final quarter of 202 | ##130 billion. we have taken care that our actions are never a replacement for the political decision - making process. that people are turning to the central bank on issues that demand a political rather than technical response reveals a serious weakness in the institutional functioning of the euro area. this weakness fuels excessive expectations concerning the ecb. what is the nature of this dysfunction? if proof were needed, the summit of 12 july provided an example : the 19 government leaders of the euro area were shut away for 17 hours to discuss the details of measures expected of a country that makes up less than 2 % of the region β s gdp. the decision - making mechanism at the heart of the monetary union does not work well. it is based on an intergovernmental principle that is no longer appropriate. each of the leaders considers public opinion in his or bis central bankers β speeches her own country, and his or her own country alone. as a result, the compromises reached are unlikely to be the best outcome for the euro area as a whole, but instead represent the greatest common denominator between the member countries. further, they are the result of never - ending negotiations that increase uncertainty. the five months of negotiation on greece have come at a significant economic and financial cost. there is an urgent need to abandon this intergovernmental process in favour of a process of shared decision - making based on votes and democratic legitimacy. so, in short, you are calling for a form of economic governance at the heart of the euro area, which implies further transfers of sovereignty. do member countries really want this? one thing is certain : if this issue is not addressed, starting today, the monetary union will face the same type of crisis again and again. the greek crisis has let the genie out of the bottle regarding countries leaving the euro area, and it will not be easy to put it back in again. how to proceed? by understanding that replacing the intergovernmental process with shared decision - making will not diminish the sovereignty of member countries. on the contrary, it will provide more room for the political dimension by ensuring shared responsibility that will enhance mutual trust. today the ecb functions on the following principle : the governing council has a discussion, it then votes if necessary, before moving on to something else. and that works! take as an example the implementation of the european fiscal framework, which has become complex and opaque. if there were european fiscal instruments that were discussed within a β ministry of finance | 0.5 |
lim hng kiang : what β s next for hedge funds? keynote address by mr lim hng kiang, minister for trade and industry and deputy chairman of the monetary authority of singapore, at the skybridge alternative ( salt ) conference, marina bay sands, 17 october 2012. * * * mr anthony scaramucci, managing partner, skybridge capital distinguished guests, ladies and gentlemen. a very good morning to all of you. i am very pleased to join you at the inaugural asian leg of the salt conference. global outlook as we move into the last quarter of 2012, the world economic outlook remains uncertain. advanced economies continue to encounter headwinds as deleveraging, fiscal consolidation and a still - weak financial system act as a drag on growth. with us and europe facing economic difficulties, asia will not be immune to a global slowdown given its heavy reliance on trade. this can be seen by asia β s slowing growth in the last two quarters as weak demand in the g3, especially the eurozone, exerted a sharp drag on exports from the region. 1 the imf has recently revised its growth estimates downwards. global growth is now expected to be 3. 3 % in 2012 and 3. 6 % in 2013. 2 however, this is dependent on the assumption that there will be sufficient policy action to ease financial conditions globally and that recent policy easing moves in emerging market economies will gain traction. overall, global growth is expected to remain muted for an extended period. impact of macro conditions on the global hedge fund industry the macro economic environment has left global institutions, including hedge funds, grappling with historically low interest rates, volatile financial markets, and an environment that has grown averse to risk taking. as hedge funds cope with a more demanding operating and economic environment, the industry will have to deal with two key challenges. firstly, soft returns amidst the volatile environment. the average hedge fund returns across strategies was negative 4. 6 % in 2011, with most of the losses occurring in 3q 2011 when global equities declined by around 17 %. 3 whilst hedge fund performance this year - to - date as at end - august 2012 was up 3. 8 % 3, the outlook remains uncertain and i think hedge funds may struggle to provide consistent returns over time. secondly, a more challenging fund - raising environment. business and compliance costs have increased due to more stringent manager selection criteria by investors and enhanced global regulatory standards. as a result, funding gestation periods | six years, a historically unprecedented occurrence in the united states. moreover, assuming that the fomc follows the plans that we outlined in june 2011 for winding down the federal reserve β s balance sheet, any initial bis central bankers β speeches sales of our securities holdings presumably would not begin until 2015, sometime after the first increase in the target federal funds rate. the effects of monetary policy on savers this extended period of depressed levels of economic activity and low interest rates will continue to have important implications for household income flows. in particular, critics of the federal reserve β s accommodative monetary policy are correct that the low level of interest rates represents a strain on households who rely on income from interest - bearing assets ; indeed, the flow of interest income that households earn on their savings has declined about one - fourth since the recession began. however, i would also emphasize that many households are benefiting from the low level of interest rates, and some critics of the federal reserve β s accommodative monetary policy seem to minimize this point. purchases of motor vehicles and other household durables can be financed more cheaply, and in many cases, households have been able to refinance their mortgages into lower - rate loans, freeing up income for other uses. in addition, interest - bearing assets represent only a modest portion of overall household assets. according to the federal reserve β s survey of consumer finances, less than 7 percent of total household assets are directly held in transaction accounts, certificates of deposit, savings bonds, and bonds. 1 instead, the bulk of household wealth is held in stocks, retirement accounts, business equity, and real estate. for these other types of assets, rates of return depend primarily on the strength of the economy and how fast the economy is growing. thus, these returns should be supported, over time, by the accommodative monetary policy that we have in place. moreover, the federal reserve aims to keep inflation low and stable over time, which limits the risk to investors that high inflation will undermine the value of their savings. i also want to specifically address the argument raised by critics that an extended period of low interest rates will discourage households from saving and, as a result, diminish the longer - run economic growth prospects of the u. s. economy. currently, households have a number of reasons to save in addition to their desire to earn interest. for instance, they need to be prepared for unexpected expenses and to rebuild the retirement nest | 0 |
subject to the same level of supervisory control as other financial institutions. any breach of standards, practices or application by islamic banks will not only be an obstacle to their services and products, but it will also serve as a hindrance to accepting their services and products by international financial markets. consolidating a bank β s financial data with those of all its subsidiaries and branches is another principle that must be applicable to all banks, and such principle is necessary for ensuring consolidated and comprehensive supervision by the supervisory authorities in the bank β s home country. central banks'governors in islamic countries, members of the islamic development bank realized the importance of such consolidation 25 years ago when a technical committee was formed, including a number of governors and specialists, of which i was honored to be the chairman, to consider the needs of shari'a compliant banking services. the most important recommendation was that islamic banks must be subject to the same supervisory rules and requirements as those that govern conventional banks, with the necessary flexibility, taking into account their specific work methods and products so as not to isolate these banks from global financial markets. encouraging islamic banking institutions to integrate into global markets will push them forward to compete with all other financial institutions, stimulating them to innovate to meet the needs of corporate and individual customers, expand their scope and base of work, and not to be tied to a specified category of customers or specific markets. this will help them adapt with the requirements of the global financial system, provide them with necessary instruments, helping them develop and reinforce their structures, and facilitate their spread. dear brothers banking business, in all its types and forms, is not free from risks that pose a challenge to banks and supervisory authorities. in this context, islamic banks, like their conventional counterparts, are financial institutions providing services to depositors and investors, on the one hand, and offer financing to companies, public sector and individuals, on the other. therefore, they are subject to many risks that are similar to those confronted by conventional banks. in addition, shari'a compliant banking has its own risks. in principle, there is a range of various activities through which islamic banks can work in different ways that enable them to provide funds. these activities are adapted to meet the principles governing islamic banking business, the most important of which is the principle of risk sharing. therefore, there is an urgent need to identify, measure, manage, monitor and control such potential risks and mitigate them within the capacity and capital adequacy of | hamad al - sayari : islamic banking prudential standards speech by his excellency hamad al - sayari, governor of the saudi arabian monetary agency, to the β symposium on islamic banking prudential standards β, institute of banking, riyadh, 15 january 2007. * * * ladies and gentlemen, it gives me a great pleasure to address this honorable and distinguished attendance at this important symposium on β islamic banking prudential standards β organized by the institute of banking ( iob ) in cooperation with the islamic financial services board ( ifsb ). the issue of shari β a ( islamic law ) compliant banking is increasingly drawing attention of those concerned with financial stability, including international financial institutions such as the imf, world bank ( wb ), development banks, basel committee on banking supervision as well as supervisory authorities in the countries where islamic banks operate. this is the result of rapid growth in the volume and scope of islamic services offered in many countries. those entities have shown a great interest in the growth and expansion of finance business compliant with the principle of avoiding interest and its impact and implications with respect to world markets and the global economic system. currently, shari β a compliant banking transactions have spread in most countries of the world through banks that totally comply with shari β a or through shari β a compliant windows offering all services, investment and commercial activities, leasing, investment funds and joint liability products. the kingdom has been a forerunner country in supporting and encouraging saudi banks to offer such products required by the saudi market. all saudi banks now provide a range of products that are compliant with shari β a requirements and with financial engineering specifications of the highest levels under the supervision of well - reputed shari β a committees and top class financial professionals. in the context of supporting such efforts, sama β s iob has offered many programs, courses and symposia in the area of developing, marketing and supervising shari β a compliant products. the number of bankers benefiting from those programs stood at 6, 300 who participated in 374 programs during the last seven years. these endeavors have considerably helped in developing islamic banking in saudi arabia without undermining compliance with islamic shari β a or the technical flexibility needed by an emerging and dynamic market. dear audience, it is very important to mention that the industry of islamic financial services should be completely integrated into the global financial markets while maintaining at the same time its distinguished nature and unique services. the industry should also be | 1 |
down immediately. in the event, the hong kong government and the clearing banks underpinned the clearing house. this episode warrants more study than it has received. had it been london, chicago or new york, it would have entered the folklore of policy memory. as with banks, public policy has to have two components. first, minimum standards to ensure that ccps do not fail. iosco / cpss are currently consulting on updated standards. ( my earlier remarks go to that. ) but second, a clear ex ante framework is needed for limiting disorder if, nevertheless, a ccp does in fact fail. i shall therefore close with a few preliminary thoughts on frameworks for handling the failure of a ccp. as with any business activity, if an institution is insolvent or otherwise cannot pay its debts, it has to stop trading, close and go into liquidation. that can be a disastrous course for a major financial institution at the very heart of important capital markets. policy in this general area revolves around building regimes that avoid taxpayer solvency support but are less disruptive than orthodox corporate liquidation. in the banking sphere, where a great deal of work is underway internationally, this is known as β resolution β. in the case of a distressed ccp, it is most likely that it would have been brought down by the failure of a very large clearing member and so would have unmatched positions as well as continuing matched positions. for the surviving clearing members, they would suddenly find themselves having unmatched positions, with continuing obligations to clients but a non - performing ccp on the other side. two strategies come to mind, which i am airing for debate. the first would be β recapitalising β the ccp so that it can carry on. the second would be to aim to bring off a more or less smooth unwinding of the ccp β s book of transactions. on the former route, in the banking sphere the basic strategy is to develop regimes for bondholders to share in the losses after the equity is wiped out ; a distressed bank gets β recapitalised β in some way through a reconstruction of its liabilities. but ccps do not issue debt, so there is not obviously an economic equivalent of recapitalisation by way of haircutting the debt claims of bondholders. recapitalisation would seem to entail an injection of new outside capital. that should not come from the public sector. so the only options are | below. the importance of the symmetry of the target is not well understood, but in the working of the committee it is hugely important. as central bankers, we would obviously like to do β the prudent thing β. and if the 2. 5 % target had been set as a ceiling, then it would be clearer, at times of doubt, or when the decision was finely balanced, what the right action to take on interest rates would be. but since the target is set at 2. 5 % on a symmetrical basis, the concept of β prudence β cannot be applied in the same way. the result is that we worry as much about being below the target as we do about being above it. and i believe this makes good economic sense : the problems of severe deflation are at least as great as severe inflation. the particular indexed measure of inflation the chancellor has chosen is rpix, that is the headline rpi number after excluding - this is the x bit - mortgage interest payments. some believe that we should move to the harmonised index of consumer prices ( hicp ), widely used in europe and, accordingly, making comparison with euroland inflation easier. hicp inflation in this country has been running consistently below rpix by about 1 %. this reflects differences in the construction of the index, in particular the treatment of depreciation of property costs. some have argued - most recently the engineering employers β federation - that if we moved to hicp, then interest rates could immediately be lowered. but this does not follow. if we moved to a different calculation of inflation, it would seem natural to revise the target at the same time. a 2. 5 % target for hicp would mean that we are targeting a higher level of inflation than we are at present. in any event, my view is that, as we seek to disseminate the benefits of low and stable inflation to as wide an audience as possible, consistency of the existing index and level is an advantage. critics of the process often argue that the mpc should have a second target ; most commonly industrialists argue that this should be an exchange rate target, seeking stability for sterling against our major trading partners. i well understand the difficulties that, in particular, exporters face given the volatile movements in exchange rates ; and the frustration is compounded by the difficulty in explaining such movements purely in terms of economic fundamentals. nevertheless it should be recognised that the recent historical experience of the uk in | 0.5 |
bank of zambia cyber security in the financial services sector workshop speech by dr. denny h. kalyalya governor β bank of zambia monday, 6th may 2019 intercontinental hotel, lusaka, zambia cyber security in the financial services sector workshop, speech by dr. denny h. kalyalya, governor β bank of zambia β 6 may 2019 chief executives of financial institutions in zambia, representatives from mefmi, members of staff from bank of zambia and other financial institutions distinguished resource persons, dear participants, ladies and gentlemen. i am honoured to welcome you all to this important workshop on β cyber security in the financial services sector β, which is being jointly conducted by the macroeconomic and financial management institute of eastern and southern africa ( mefmi ) and the bank of zambia. this workshop aims to discuss financial sector vulnerabilities arising from cyber threats and risks and to develop the necessary skills and tools to make the sector resilient. let me take this opportunity to extend a special welcome to our facilitator dr. rukanda. i am sure the delegates will greatly benefit from your experience and vast knowledge on the subject. ladies and gentlemen, as you are all aware, information and communication technology ( ict ) have over the years permeated all aspects of our lives and in particular, have become the mainstay of the world β s financial sector infrastructure. while these ever emerging technologies such as digital transformation, artificial intelligence, internet of things, cloud computing, enterprise mobility and mobile banking, have brought about efficiency and increased innovations, they have also exposed the financial services sector to cybercrime. some notable incidents of 1 | page cybercrime include, the attack on the central bank of bangladesh, russian retail bank and seven banks in the united kingdom. the financial services sector is a key target by criminals because it is the custodian of large amount of funds in the economy. for this same reason, the financial services sector has to also deal with other types of risks, which among others include, fraud, extortion, money laundering, illicit financial flows, market manipulation, data theft, and currency attacks. with statistics showing an increase of cyber - attacks in the financial sector, the importance of ensuring that our institutions are cyber resilient cannot be over - emphasized. ladies and gentlemen, the financial services sector has to see cybersecurity for what it is, a large scale operational risk deserving the utmost attention and thus develop the necessary systems and cultures throughout | can hardly be over - emphasised. this is even more pronounced given the recent electricity outages experienced across the country and floods that have ravaged some parts of zambia. chairperson, it is also pleasing to note that, in the recent past, there has been recognition of the need to adopt economic and structural reforms in most african countries and some benefits are already evident in this regard. inflation rates have been falling in most countries and they have registered appreciable expansion in economic activities with gdp growth rates averaging at about 5 % in 2007. in addition, most countries have become more democratic in political circles, giving more say to the public on the running of governments and their institutions. distinguished participants, allow me now to turn to the subject we are gathered here for, that is, β central bank governance β. good corporate governance is generally acknowledged as important in economic management. in this regard, central bank governance is arguably defined by a number of key - concepts or pillars, which together should form the basis of an effective legal framework governing a central bank and on which central bank governance should rest, that is, operational independence, democratic accountability and transparency. despite its common usage, it is not always very clear what central bank transparency amounts to. generally, two definitions of transparency can be distinguished in the policyoriented literature. firstly, central bank transparency is referred to as the activities of the central bank in providing information. thus, in this case, transparency has been defined as the degree to which information on policy actions is available. however, a somewhat broader approach to transparency includes the public β s understanding of the decisions taken by the monetary authorities and the reasoning behind it. ladies and gentlemen, the mere fact that a central bank has to conduct monetary policy in a transparent manner at best results in the availability of the information necessary in order to judge the bank β s performance. discussions of this information are not only done by the government but also most importantly, the public at large. the latter β s perception of what the central bank does and how it is done may have an impact on the central bank performance. furthermore, mr. chairman, our contribution therefore should set out to develop the pillars on which central bank governance must rest. these include operational independence, accountability and indeed transparency which are complementary. yet, certain tensions between these elements of governance cannot be ignored and have to be observed when establishing a code of good governance. with respect to operational independence, there seems to be consensus among academics and central bankers that central banks must | 0.5 |
to prevent a deflationary spiral under the condition of the zero bound on the nominal interest rate. japan's economy resumed its recovery process after a pause in growth triggered by the it sector - related inventory stock adjustment. the bursting of the mini - bubble in the digital electronics sector was associated with the downward cyclical phase of the liquid crystal and silicon cycle initiated in spring 2004. subsequently, a non - it sector - related inventory stock adjustment due to the deceleration of exports, notably for china, curtailed industrial production activity and the growth rate. currently, the inventory stock adjustment process is almost over. in addition, domestic private final demand in the first half of 2005 was sufficiently strong to register growth above the potential growth rate ( about 1 percent ). on the lack of an upper limit, there is some similarity to the lack of a lower limit for the numerical definition of price stability below 2 percent during the initial stage of monetary operations by the european central bank. 1 / 5 price level indeterminacy under the zero bound on the nominal interest rate under the bank of japan's quantitative easing policy, not only the uncollateralized overnight call rate but also the rate of longer maturity of at least one year has virtually reached zero. it is well known that monetary policy aimed at fixing the market interest rate faces difficulties in controlling the money supply and the inflation rate. the difficulties are augmented under the zero interest rates, because the association between the money supply and the price level becomes much looser than normal. therefore, it is all the more important for the central bank to provide the price stability anchor to the market. 3 moreover, the zero bound on the nominal interest rate erodes the market mechanism in the financial market as well as market discipline, thereby distorting the allocation of funds on the market. in the past several months, we encountered a difficulty in achieving the bank reserve target due to undersubscription to our offers in open market operations, and allowed a temporary deviation from the lower limit of the reserve target in early june, end - july, and early august. the intention was to maintain the bank reserve target in the face of diminishing demand for excess reserves by banks. in other words, the measure was designed to solve the trade - off between strict implementation of the commitment and flexibility. it may be noted that the additional flotation of government bonds to frontload the rollover of existing government bonds concentrated in fiscal 2008 has made it more difficult to | implies that the monetary policy effect becomes more expansionary at the point close to the exit, the bank of japan's current policy is in line with the spirit inherent in the price level target policy. the role of fiscal policy let me conclude my remarks by referring to the role of fiscal policy to extricate japan from deflation. we observe that the government announced the fiscal policy target to achieve a primary budget deficit of zero in about ten years, and the automatic stabilizer effect dominated fiscal policy management after 2001 under the koizumi administration. the coordination between monetary and fiscal policy becomes more important, if the economy were to fall into deflationary equilibrium ( or the friedmanian equilibrium ), where the size of deflation rate is equal to the natural interest rate. on fiscal policy, we can identify the two different types ; namely, the ricardian and the non - ricardian. if the present value of government debt in the future becomes zero regardless of changes in the path of prices, it is classified as a ricardian policy. this implies that we should have some safety margin on the final numerical objective ( aside from the bias inherent in the price index ), given the likely negative macroeconomic shock to the lower natural interest rate of japan's economy over the future which is conducive to the zero bound on the nominal interest rate. this issue may be related to issues such as the discretion versus rule - based policymaking, or the risk management approach under uncertainty versus rule - based policymaking. it seems sensible to adopt the risk management approach under the knightian uncertainty ( greenspan [ 2004 ] ). chairman greenspan is critical of the " too inflexible " management of rule - based monetary policy. yet " activist " rule - based policymaking seems to possess sufficient flexibility in uncertain circumstances. for instance, the bayesian decision process under the risk management approach involves a learning process. learnability plays an important role in ruleoriented monetary policy to secure stability of the equilibrium. rule - based monetary policy has flexibility to implement a systematic revision of a contingent plan and prescribes the updating process in a " timeless manner, " while discretionary policy revises a contingency plan period by period. in any case, there may arise no conflict or inconsistency between the risk management approach and the provision of the price stability anchor to market participants. 4 / 5 as long as the fiscal rule aiming at reducing the primary budget deficit over the | 1 |
. 60, n. 2 - 3, pp. 285 - 331. jensen, m. and r. ruback ( 1983 ), β the market for corporate control : the scientific evidence β, journal of financial economics, vol. 11. jimenez, g., s. ongena, j. l. peydro - alcalde and j. saurina ( 2007 ), hazardous times for monetary policy : what do twenty - three million bank loans say about the effects of monetary policy on credit risk?, cepr discussion paper n. 6514. karceski, j., s. ongena and d. c. smith ( 2005 ), β the impact of bank consolidation on commercial borrower welfare β, the journal of finance, vol. 60, n. 4, pp. 2043 - 2082. penas, m. f. and h. unal ( 2004 ), β gains in bank mergers : evidence from the bond markets β, journal of financial economics, vol. 74, pp. 149 - 180. piloff, s. j. ( 1996 ), β performance changes and shareholder wealth creation associated with mergers of publicly traded banking institutions β, journal of money, credit and banking, vol. 28, n. 3 ( 1 ). roll, r. ( 1986 ), β the hubris hypothesis of corporate takeovers β, the journal of business, vol. 59. ryan, s. j. ( 1999 ), finding value in bank mergers, intervention at the federal reserve bank of chicago conference on the structure and competition in the banking sector. sapienza, p. ( 2002 ), β the effects of banking mergers on loan contracts β, the journal of finance, vol. 57, n. 1, pp. 329 - 368. stein, j. ( 2002 ), β information production and capital allocation : decentralized versus hierarchical firms β, the journal of finance, vol. 57, n. 5, pp. 1891 - 1921. | markets are mainly local. therefore, m & as involving banks with large market shares might cause adverse price changes, harming consumers. second, m & as might distract some participants from small business lending, which relies on soft information at local level, to less custom - made products that are more easily manageable within large organisations, as i will elaborate on a little later. third, depending on the type of business and geography, bank m & as could harm bank customers by reducing competition. therefore, since bank m & as affect not only banks themselves but also their customers, quantifying the efficiency gains becomes difficult. an important first step towards analysing some potential externalities to the bank customers is to assess the value created for bank shareholders and depositors. this is what i am going to do now. later on, i will analyse the impact of bank m & as on the financing of small firms and on entrepreneurship. focarelli, panetta, and salleo ( 2002 ). jensen and ruback ( 1983 ). see amel, barnes, panetta and salleo ( 2004 ). 4. creating value for shareholders the main message from the academic literature is that banking consolidation is beneficial up to a relatively small size, but there is little evidence that mergers yield economies of scope or gains in managerial efficiency. 7 however, value creation from bank mergers and acquisitions has improved over time, possibly because such activities are complex and because lessons have been learnt. 8 moreover, most of the estimated value gains from bank mergers stem from cutting costs by eliminating overlaps and consolidating backroom operations. 9 in addition, mergers that focus both on activity and geography enhance shareholder value. 10 with respect to risk, there is evidence that m & as reduce bank risk. the evidence indicates that the primary determinants in bank risk reduction comes from diversification gains, gains associated with achieving too - big - to - fail status, and, to a lesser degree, synergy gains. 11 5. implications of mergers and acquisitions for small and medium - sized enterprises now let me turn to some of the social benefits and costs stemming from banking consolidation, in particular with respect to the financing of small firms and entrepreneurship. banking consolidation through bank m & as implies a reduction in the number of banks and an increase in bank size. this can have repercussions on the access to credit for small and new firms since bank m & as change bank efficiency and competition, but it also changes the way | 1 |
an exact figure for potential growth. we have instead chosen to work with an interval of 2 to 2. 5 per cent, which has emerged gradually as we have endeavoured to refine our analyses and improve our knowledge. the interval indicates that we have been influenced by the strong growth figures during the latter part of the 1990s, but that we have been cautious in stipulating to any great degree our assessments of some form of " new economy ". a further reason for not specifying potential growth in more detail than this is that new information is received continuously and this affects our assessment. as i mentioned earlier, the national accounts have recently been revised and the new results indicate a strong growth in both gdp and productivity in sweden during the period 1993 - 2002. such revisions show that there is considerable uncertainty in the statistics and that it is important not to overreact to the most recent figures. when we make assessments of inflation in connection with monetary policy decisions we normally look two years ahead. in this context we also calculate potential growth with the aid of more detailed data. this includes labour market data, for instance, to assess labour force developments with reference to developments in the working population, people in regular education and labour market policy training and the number of people on sick leave or early retirement pensions. a digression on demography allow me, before i finish, to comment further on demographic developments. one factor that we, like many other countries, will need to grapple is the adverse demographic development that will take place in few years'time. this will entail the percentage of elderly people in the population increasing significantly and resulting in a considerable reduction in labour force participation. large demands will be made on public finances and the labour supply and growth trends will be subdued. my last slide shows the growth in actual hours worked during the period 1981 - 2001, together with a calculation for growth during the period 2002 - 2050 ( figure 10 ). the calculated growth in working hours is based on statistics sweden's forecast of the swedish population up to 2050 and fixes other determining parameters at the 2002 level. the average increase in working hours amounted to approximately 0. 4 per cent during the period 1981 - 2001. the calculated series'average increase 2002 - 2050 stops at a modest 0. 01 per cent ; in practice almost no increase at all. conclusion i shall conclude with a summary. a high long - term growth rate is one of the most important objectives of economic policy. it becomes easier to | confident that their knowledge and experience would be immensely helpful to the participants in understanding and appreciating the practical implications behind these changes both from a supervisor β s perspective as well as from the standpoint of the supervised institutions. to conclude, let me say that we all face enormous resource and capacity constraints in coping with existing responsibilities, let alone undertaking these new challenges. hence, the value of coming together to share our experiences and plan regional training programs for our member countries is very important. through these meetings, we can learn and maintain strong networking relationship which should enhance our efforts in capacity building in this innovative and challenging area of financial supervision. ladies and gentlemen, it gives me much pleasure to declare this regional seminar for financial supervisors open and i wish you all an enjoyable and fruitful week of discussions. thank you for your attention and may god bless you all. soifua. | 0 |
has been implemented β without neglecting the central bank β s balance, which is now showing positive results β through various mechanisms that comprise the issuance of bills and notes, swap operations, the collection of liquidity assistance provided to banks during the crisis, and the minimum requirement policy. in this way, we are able to control the growth of the means of payment which is, for the first time since the end of the crisis, below nominal gdp growth, reflecting the prudential bias in our approach. in turn, credit should focus on facilitating consumption and investment decisions by the community. on the one hand, we have set strict guidelines to reduce financial system exposure to the national, provincial and municipal public sectors and, on the other, we have created market incentives for the recovery of credit to the private sector from a set of specific measures. therefore, in the past two years, the share of credit to the government in the system β s total assets was significantly reduced, and bank actions are focused today on credit to households and businesses. there is a widespread expansion in all credit lines to the private sector and arrears hit a historical low that is currently below the average for the region. all this must be articulated through policy coordination as a sine qua non during the transitional phase. the most successful stories are those of countries that understood how important it was to reconcile aims with instruments in a stage such as this one, where it is the combination of fundamental economic policy tools that will allow us to achieve a gradual and lasting decrease of the inflation rate against a backdrop of sound growth and social inclusion. | and italy, were telling us that we did not need this surveillance framework for fiscal policies. we had to fight very hard to preserve it. today, this episode obviously seems totally bis central bankers β speeches outlandish, bearing in mind what has happened since. some, moreover, said that the stability and growth pact itself was β stupid β. we always said that the careful monitoring of fiscal policies was essential, as were healthy policies. this remains true today. however, one should add another pillar of governance, particularly within the euro area, in the form of monitoring competitiveness indicators, and unit production costs especially ; the changes to these must also be tracked extremely carefully. for six years at least, we have been telling all european governments to monitor very closely changes to competitiveness indicators and imbalances within the euro area. we emphasise the three pillars necessary for european governance, all three of which must be improved substantially : supervision of fiscal policies, supervision of competitiveness indicators, and structural reforms. the central banks across the whole of the eurosystem β the ecb and the national central banks, i. e. the banque de france in france β s case, for instance β have a very clear message for governments : europe β s governance must be improved decisively, and governments are not going far enough. we expect a great deal from the dialogue with parliament in order to push governments towards taking a decisive step. bis central bankers β speeches | 0 |
the saying was : β tu felix austria, nube ", or β thou happy austria, marry "? but it did not mean the end of war. even though many small states coalesced to form larger nations in the 19th century ( for example germany and italy ), that did not mean the end of war, but the start of more or less β holy alliances? that were continuously shifting. thus larger nations tried to grow even bigger by grabbing up smaller nation states, and we had at least one war per generation on this continent. after world war ii we tried another way. as a consequence, larger states were to give up their sovereignty in two key areas, which used to be important for the war industry, coal and steel. they thus vowed to renounce war and yielded a disproportionately large share of decision - making in common affairs to smaller countries. above and beyond that a referee was appointed, a european centralized executive, even though its power was to be limited. as a consequence we now have inside the european union a totally new situation in which for the first time in centuries, in europe, one generation has been able to accumulate wealth and transfer it to the next generation, so creating a very strong sentiment of support in most countries of the continent and a quest for yet more progress in this sense which is still present in the agenda that europe is pursuing right now. of course the question could be asked whether this equilibrium of power can still be maintained in an enlarged union, since the union at the outset was not designed for such a large number of countries, and especially since many of the new countries belong to the category of small member states. further, they have only recently recovered their sovereignty and might be rather reluctant to yield it again so soon to a super - power. don β t forget that the latest new member countries represent less in economic terms than previous enlargements from 6 to 9 or 9 to 12. all the new countries have also been very closely associated with the history of β core europe ". this question will of course be even more valid for future enlargements. but the divergences in europe are not only due to the different histories of the countries of the continent, but also because different paths for development were taken by different nations, which brought about different policy approaches. in this respect the role of ideology is prominent. in most countries history shaped the understanding that each people has of the role and rights of the individual versus the | u. s. mortgage - related assets created prior to september 17, 2008. in addition, a $ 50bn u. s. state guarantee became necessary to stop institutional investors withdrawing funds from u. s. money markets funds. hedge funds and money market funds are facing intense redemption pressures and several emerging markets are experiencing financial difficulties and calls for imf support are suddenly back on the agenda. interest rates have been further cut in several countries and deposit guarantees increased. in fine, leaders from 15 nations committed to a coordinated effort to bolster financial systems with rescue packages totaling nearly 1. 9tn euros and central banks offered unlimited dollar funding to banks in short - and medium - term maturities at fixed rates and longer maturities. financial stability and liquidity, and the evolution of the supervision paradigm it is noteworthy that there is neither a widely agreed definition of financial stability nor of liquidity. definitions of financial stability and liquidity vary significantly in academic papers and among policy makers. definitions are more than amusing conceptual constructs ; they are useful tools to discuss the evolution of financial frameworks and the role of central banks in financial stability. i suggest as definition of financial stability a dynamic one : i view financial stability as a range of states in which the financial system facilitates the performance of the monetary economy, and is able to dissipate financial imbalances originated either endogenously or as a result of adverse unanticipated events. the key elements of the definition are that financial stability is best viewed as a process and as such, it is uncertain, it has intertemporal and evolutionary features. in addition, this process occurs in a monetary economy, one based on fiat money, where resources and risks are mobilized efficiently. finally, the process has self - equilibrating mechanisms that preclude that arising imbalances trigger a crisis. β liquidity is an elusive concept β. that is the first sentence of the banque de france β s february 2008 financial stability review. as with financial stability, i suggest as working definition of liquidity a dynamic one : i view liquidity as the ability of market participants to take risks on each other as they seek to fund asset purchases and meet obligations, both over normal and stressful environments. as it was the case with the definition of financial stability, this definition of liquidity stresses its dynamic aspects. the endogeneity of liquidity indicates that it is best viewed as the outcome of confidence among market participants on the risk distribution | 0.5 |
transition process as one which entails multiple and carefully sequenced steps, beginning with the stabilisation of the jibar to secure the transition period. this is followed by the establishment of new rates and foundations for new markets, and then by the adoption of those rates before full transition takes place. thus far, the work of the mpg has largely focused on strengthening the current jibar framework in line with the first step, as well as on finding new alternatives. this work has now been completed and the project is proceeding to the next phase which entails thinking about the most suitable transition approach to be adopted by south africa. as its work is advancing, the mpg intends to keep all stakeholders informed of its progress and the next steps, and this is why we are here today. thus, the purpose of today β s mpg forum is twofold : page 3 of 4 first, to report on and inform stakeholders of key decisions, considerations and recommendations made by the mpg in relation to the reform of the jibar and the choice of an alternative overnight reference rate for south africa ; and second, to outline the envisioned transition process to an overnight rate as a key reference rate for the south african financial market. as we engage in this conversation, i wish to reiterate the position the sarb has taken regarding the future of the jibar. earlier, i alluded to deficiencies in the current jibar framework, which have led to the sarb taking a decision to reform the jibar. the unsecured reference rate work stream and later the jibar task team have done commendable work in this regard, to ensure that the jibar framework is strengthened to enhance its robustness. however, changes to the jibar framework should not be understood as implying that the jibar will continue indefinitely. the sarb, as the benchmark administrator of the jibar, has decided that the jibar will cease at some future point. the enhanced framework will remain in place for a limited time, after which south africa will transition to alternative reference rates. in the new interest rate dispensation, we expect that the key reference rate will be an overnight near risk - free rate, which may or may not co - exist alongside a risk - based term rate. at this point i would like to hand over to my colleagues to share with you the decisions that have been taken thus far, their motivations as well as the trade - offs we have had to manage leading up to | speeches | 0 |
in the aftermath of the crisis. fifth, our framework is designed to avoid spiral dynamics between house prices and credit volumes. since the mortgage measures were initially flagged in late 2014, there has been a sharp moderation in expectations for annual gains in house prices, since it is widely understood that persistently - high rates of increase in house prices are not likely in a system in which measures place ceilings on lti and ltv ratios. moreover, our macroprudential regulations can be tightened if there is emerging evidence of elevated risks in the mortgage market. finally, it is important to appreciate that many factors influence the dynamics of house prices. while rising incomes typically might support some gain in house prices, the prospect of future expansion in housing supply and tightening in the global funding conditions for lenders are significant factors that may place downward pressure on house prices over the medium term. the range of uncertainty about the future path for house prices is an important risk factor that motivates the need for ceilings on lti and ltv ratios. these refinements will improve the design of the framework and will take effect from january 1, 2017. looking to the future, the revised framework should require adjustments only if there are material 3 / 4 bis central bankers'speeches changes to the macro - financial environment that require a tightening or loosening of these measures. it is important to appreciate that saving a deposit for a house is a basic requirement that ensures better long - term outcomes both for the borrower and the lender, in terms of more affordable mortgages and lower credit risk. everybody gains from the prudent borrowing and lending patterns that are essential for a stable financial system : our mortgage measures are designed to deliver this objective. 4 / 4 bis central bankers'speeches | philip r lane : the european financial system after brexit address by mr philip r lane, governor of the central bank of ireland, at reuters newsmaker event, london, 28 october 2016. * * * good morning! i can think of no better location to speak about the implications of brexit for the european financial system than here in canary wharf. before i turn to my main topic, let me briefly mention a few points in relation to the near - term implications of brexit. first, while the economic and market reaction to brexit has been relatively orderly so far in the uk and the rest of the eu ( in part due to the monetary accommodation provided by the bank of england and the easing of yields across europe ), the transition towards the phase of active uk - eu negotiations that will begin in spring 2017 may trigger a more substantial re - assessment of post - brexit economic prospects. in particular, if the momentum in the negotiations is in the direction of a more severe form of brexit, this may damage consumer and investor confidence. while the effects might be qualitatively similar in both the uk and the wider eu, it is likely that the impact will be asymmetric, in view of the relative size of the uk and eu economies. second, the large movement in the sterling - euro exchange rate represents an important stabilising mechanism by which the equilibrium real exchange rate depreciation associated with the downward shift in the relative economic prospects for the uk is partly attained through a step adjustment in the currency. it also shifts the financial terms of trade, with uk owners of foreigncurrency assets enjoying a valuation gain. while incumbent foreign holders of sterling assets have suffered a valuation loss, the decline in sterling may entice new foreign investors attracted by the decline in the relative price of uk assets. finally, in relation to the exchange rate, it is important to keep in mind that the recent depreciation of sterling against the euro is in the wake of a sustained appreciation phase between early 2013 and the middle of 2015. third, the extensive linkages between the uk and ireland mean that irish economic performance is especially sensitive to shifts in uk output levels and the sterling - euro exchange rate. accordingly, the central bank of ireland has adjusted its 2017 growth forecast from 4. 2 percent to 3. 6 percent. the scale of this revision shows the material impact of brexit on the irish economy ; at the same time, the irish economy is | 0.5 |
public for the first time in a separate section of the regular report on nbs activities. we are taking part in this gathering because of our profound conviction that today β s topic is essential for the quality of transition in serbia. please note that we are more than willing to give our modest contribution to all other actions and ideas! thank you for your attention! | ewart s williams : financial literacy in barbados remarks by mr ewart s williams, governor of the central bank of trinidad and tobago, at the national financial literacy programme booklet launch, port - of - spain, 27 october 2009. * * * on january 30, 2010 the national financial literacy programme will be officially three years old. there is no doubt that we have come a long way over 36 short months. we had a tentative beginning because financial literacy in the caribbean was largely uncharted territory. however, if it is true that imitation is the greatest form of flattery, we should indeed be delighted since our lead has now been adopted throughout the region. sometime last week jamaica launched a nationwide financial literacy programme. also, and very significantly, the imf, through its regional training agency ( cartac ) has begun to market financial literacy throughout the region. particularly, following the recent global financial crisis, it is being increasingly acknowledged that financial literacy can play a critical role in economic management both in advanced and in developing countries. teaching people how to save, spend, invest, borrow and manage their finances wisely, improves an individual financial well - being and quality of life. financially secure families are better able to contribute to the economic and social development of their communities. in the three years of its existence our national financial literacy programme has made impressive strides. our schools β programme has led the way. as at the end of the 2009 school year our primary schools programme had been conducted in 485 schools reaching 29, 600 students. judging from the responses of the children as well as their parents and the principals, the programme has shown instant benefits. parents of kids who participated in the programme indicated in a questionnaire that their children were more mindful of how they spent their allowance but also of the manner in which the household budget was utilized. our secondary schools programme is now to be incorporated into the schools β curriculum, thanks to the support of the ministry of education. we are particularly grateful to the one hundred and twenty - three ( 123 ) teachers who gave up two weeks of their summer vacation to attend training sessions organized by the central bank. from the inception of the programme, the push for linking financial literacy and small business development came from the office of finance and enterprise development, in the tobago house of assembly which had an active small business development programme. further, impetus to the linkage was provided by the rapid increase in small business activity throughout the country and the obvious gaps in basic business information available to aspiring | 0 |
, management of the banking sector liquidity has become an important part in the pbc β s monetary policy conduct. instruments such as open market operations and reserve requirement ratio have been adopted to sterilize the growth of rmb supply as a result of foreign exchange purchase, and to absorb excessive liquidity in the banking system. nevertheless, the root cause of the liquidity problem has not been solved. the rmb equivalent to foreign exchange purchase has become the major source of base money supply while central bank lending to financial institutions accounts for a smaller share. this undermines the independence of monetary policy and makes money supply a more endogenous factor. in recent years, though cpi has remained basically stable at a fairly low level, broad price levels such as ppi and asset prices such as housing prices have increased significantly. moreover, the issuance of central bank bills and the frequent adjustments of reserve requirement ratio in the banking system have also affected the operational behaviour of commercial banks and even the efficiency of the financial system. the sterilization cost for the central bank has also been on a rise. iii. a more flexible exchange regime helps enhance the effectiveness of monetary policy according to the argument of impossible trinity, capital and financial account convertibility, independent monetary policy and exchange rate stability cannot be achieved at the same time. it is feasible for a small and open economy to pursue exchange rate objectives at the expense of monetary policy independence. the hong kong sar is such an example by adopting a currency board system, where the hong kong dollar is strictly pegged to the u. s. dollar and the hong kong monetary authority follows the federal reserve in its adjustment of hong kong dollar interest rates. as for singapore, exchange rate instruments, rather than interest rates, are used more frequently in macroeconomic management, as exchange rate is taken as the intermediate monetary policy target. china is not a small economy. with a population of 1. 3 billion, china cannot afford to lose monetary policy independence and subject itself to economic policies of other countries. adopting a more flexible exchange rate regime serves china β s long - term interests as the benefits of long - term price stability and economic restructuring far exceed the cost in reorganizing certain industries and removing outdated capacities. at present, a more flexible exchange rate regime will help curb inflation and asset bubbles. when domestic inflationary pressures are heightened, a stronger domestic currency will help bring down the price of imports. the role played by exchange rate in easing imported inflationary pressures is particularly important for | is introduced? and what part does emu play in this context? one important factor in the process of industrialisation in the late nineteenth century, when sweden was transformed from poor country into a wealthy nation with almost the world β s highest growth rate, was the contemporary development of the financial system. banks were established and financial know - how grew when interest controls had been abolished. as a result, inventions could be exploited and investment in the nascent industries could be financed. a mounting body of research findings published in the 1990s indicates that economic growth in various countries is appreciably affected by how the financial system works : the more highly - developed the financial system, the greater the stimulus to economic growth. an accessible banking system and efficient financial markets contribute to the development of investment and thereby to the economy β s growth trend. one conceivable reason why the us economy is being transformed more rapidly than is the case with sweden and, even more so, the european community, is the efficiency with which the us financial system works. corporate financing may well be facilitated by the breadth and liquidity of diverse financial markets. with the rapid development of information technology, moreover, a new type of company has emerged. it differs from the traditional pattern in that its operations involve highly mobile human capital. the financing of these companies accordingly imposes different requirements in markets for risk capital and loans. the us markets for risk capital appear to be more highly developed and more focused on the financing of high - risk projects than seems to be the case in europe, where bank loans predominate and a larger proportion of financing goes to reliable, established firms. with the advent of the euro, the financial system in europe may become more developed and, like its counterpart across the atlantic, offer more alternative forms of financing. with a single currency in the euro area, the capital markets will gradually become more liquid and thereby more efficient. there will probably be more corporate financing with bonds and equity, forms of financing that are less common at present in europe than in the united states. signs of this are already evident. there is reason to make a deeper analysis of the financial system β s contribution to the changes that are needed in the swedish economy. the introduction of a single currency may come to play a more important part in this transformation in that it influences the development of europe β s financial system. this is an argument in the discussion about emu that i have not encountered hitherto. conclusion sweden has already come a long way | 0 |
a few moments setting out how these institutions the survey in 2013 was coordinated by the rba, while the 2014 survey was coordinated by the centre for international finance and regulation. the 2013 survey results are summarised in ballantyne a, m garner and m wright ( 2013 ) β developments in renminbi internationalisation β, rba bulletin, june, pp 65 β 74. the 2014 survey results are summarised in centre for international finance and regulation ( 2014 ), β internationalisation of the renminbi : pathways, implications and opportunities β, research report, march. bis central bankers β speeches operate. in essence, their key function is to facilitate cross - border payments and receipts of rmb for trade - related purposes on behalf of other financial institutions in the local market. of course, australian importers and exporters are already able to make and receive crossborder rmb payments through a number of existing channels. for example, australianbased banks can facilitate cross - border rmb trade transactions through correspondent banking relationships with banks in mainland china, or through rmb clearing β services β that are offered by australian - based chinese banks via their mainland chinese head offices. similarly, these transactions can also be effected through other offshore rmb centres, such as hong kong. in fact, the differences between an official rmb clearing bank and the channels that are already available are quite subtle, though still important. in essence, official rmb clearing banks are afforded more direct access to china β s onshore rmb and foreign exchange markets than other offshore institutions. more specifically, official clearing banks have direct access to china β s interbank rmb payments system and receive a quota to transact in china β s onshore foreign exchange market. these changes also entail more direct access to rmb liquidity from the pbc. while an official rmb clearing bank would not directly increase the range or type of rmb transactions that are permitted to take place between chinese and australian entities, it would improve the efficiency of cross - border rmb transactions, for example by potentially reducing payment delays and / or reducing transaction costs. and, over time, the presence of an official clearing bank could encourage local financial institutions to offer a broader range of rmb products to the local market than is currently available. given the way in which the chinese authorities have chosen to liberalise trading in the rmb, these clearing banks are playing an important practical and symbolic role. indeed, the establishment of a clearing | bank in australia would help ensure that we are well positioned to participate in the next stages in the process of rmb internationalisation. ultimately, though, if china does follow the general path travelled by a number of other countries, these clearing banks are likely to become less significant. in other currencies, alternative arrangements exist for the clearing of cross - border flows, with financial institutions managing the liquidity and risk issues without access to an official clearing bank. if this eventually turns out to be the case for the chinese currency as well, then there is likely to be a reduced need for these official clearing banks. in the meantime, they are an important stepping stone on the path to a more internationally integrated chinese currency. finally, a fifth step that we hope to take soon is to obtain a quota for australian - based financial institutions to invest in mainland china under the renminbi qualified foreign institutional investors ( or rqfii ) scheme. following the granting of a rqfii quota to a specific jurisdiction, financial institutions operating within that jurisdiction can apply to the chinese authorities to obtain an individual investment quota. approved institutions can then invest their own quota in selected mainland chinese bonds and equities using rmb obtained in the offshore market. in this way, the rqfii scheme can be thought of as representing both a partial relaxation of controls on inward portfolio investment to mainland china and as a means of developing the offshore rmb market. 3 an rqfii quota would therefore represent an important next step in facilitating cross - border rmb - denominated investment transactions the rqfii scheme exists alongside two other schemes that allow approved institutions to invest foreign currency in selected mainland chinese securities : namely, the qualified foreign institutional investors ( or qfii ) scheme and a scheme that is commonly referred to as the china interbank bond market ( or cibm ) scheme. a number of australian - domiciled institutions have already received quotas under the qfii scheme, while the rba β s acquisition of rmb reserves was facilitated under the cibm scheme. the qfii and cibm programs differ in a number of respects, including : the types of mainland securities that can be purchased ; the types of investors that are eligible to apply ; and the mechanisms that are available to convert foreign currency into rmb. bis central bankers β speeches between our two economies. and, as australia has a relatively large and sophisticated private funds management sector, there is significant potential for growth in this area. so, | 1 |
of education is vital to improving the capacity of our citizens to manage the challenges that come from global competition, rapid technological change, and the greater share of the risk they now bear for saving for retirement. the average american with a college degree earns twice as much as his neighbor without a college education, which is about twice the premium that existed 40 years ago. improving access to educational opportunity for all our citizens, regardless of race or the economic fortune of their parents, is critical to the credibility of the american ideal of equality of economic opportunity. as larry summers has noted, in our country today, a student whose parents are among the richest quartile of american is six times more likely than one from the poorest quartile to graduate with a b. a. within five years of leaving high school. and improving the capacity of our present and future tax payers to make informed judgments about economic policy is important to improving the quality of policy decisions by our elected officials, national and locally. this is vital in an era where we face tremendous challenges in bringing our commitments and resources closer to balance. improving educational achievement, access to educational opportunity, and the level of public sophistication on economic issues are critical challenges with high returns to progress. this is why we will continue to invest in educational programs and why we are pleased to work closely with organizations as effective as the naf in this noble cause. 1 / 2 i take some comfort in the fact that, when naf students think of the federal reserve bank of new york, they know we have an important role in monetary policy and financial stability. they know we sit on a large amount of the gold and dollar reserves of the world. but what they think is really cool is the fed challenge, and how they can win a place in the national competition. my wife said to me this morning that the fed challenge sounds considerably more fun and exciting than the real thing. i applaud all of you who contribute to this effort. and i thank the naf for its tribute to the new york fed. 2 / 2 | ##toare theagree blueprint serve the foundation forcan our global this isbythe house we're going to live in for a long time. let's build it to last. reviewing our privacy statement. 1 alternative reference rates committee, arrc commends decisions outlining the definitive endgame for libor, march 5, 2021. 2 alternative reference rates committee, progress report : the transition from u. s. dollar libor, march 31, 2021. 3 john c. williams, 901 days, remarks at securities industry and financial markets association ( sifma ), new york, july 15, 2019. 4 forum on ongoing innovation in reference rates for commercial lending, presentation materials, federal reserve bank of new york, new york, november 18, 2020. 5 alternative reference rates committee, arrc identifies market indicators to support a recommendation of a forward - looking sofr term rate, may 6, 2021. 6 alternative reference rates committee, second report, march 2018. 7 john c. williams, 537 days : time is still ticking, remarks at libor : entering the endgame, webinar, july 13, 2020. see also : financial stability board, reforming major interest rate benchmarks, november 20, 2020 ; and bank of england financial policy committee, interim financial stability report, may 2020. 8 alternative reference rates committee, the arrc selects a broad repo rate as its preferred alternative reference rate, june 22, 2017. 9 john c. williams, 537 days : time is still ticking, remarks at libor : entering the endgame, webinar, july 13, 2020. see also : federal reserve bank of new york, iosco compliance, as of may 2021. 10 alternative reference rates committee, best practices for completing transition from libor, as of september 3, 2020. 11 treasury market practice group financial benchmarks, as of may 2021. by continuing to use our site, you agree to our terms of use and privacy statement. you can learn more about how we use cookies by reviewing our privacy statement. | 0.5 |
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