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undertakings. ladies and gentlemen, with these few words, i thank you for your attention and i hope that you will find the event insightful. 2 / 3 bis - central bankers'speeches thank you. 3 / 3 bis - central bankers'speeches | population and housing census in seychelles. this is in line with the 7th statistical commission recommendation for a transition from manual to digital systems and use of improved methods and new technologies to increase the reliability and accessibility of census products and other statistics in a timely manner. i would also like to extend our gratitude to our external partners, namely the united nations fund for population ( unfpa ) and the african centre for statistics of the united nations economic commission for africa ( uneca ). albeit not being present today, both partners provided guidance and technical support remotely through virtual sessions with staff of the nbs, as well as through physical presence on the ground during the pilot testing phase in the anse aux pins district in november 2021 and during the main census period in april this year. through the support and training provided modernisation, transformation and real - time monitoring of the field work operations were made possible. without their continuous support with the digitisation and testing of the tool, this first - ever digital census would not have been possible. our sincere appreciation is also being extended to our local stakeholders who provided offices in the various regions across the islands that served as a base and point of contact for the regional supervisors and their respective field teams throughout the census period. on behalf of nbs, i wish to thank the ministry of local government and community affairs, and the district administrators for their cooperation and support, and for making available facilities at the da offices. sincere appreciation also goes to the nbs staff and the volunteers who went door - todoor, sometimes to the same house on a number of occasions, to ensure that the maximum proportion of the population was covered. we would not have completed this census exercise without them. today's event is proof of the advantages that a digital census brings in efficiency and timeliness, as the provisional results are being released in record time compared to previous censuses conducted manually, when it took many months and even years before provisional and final results became available. while the detailed and broad thematic report of population and housing census 2022 will be published in the next few months, given the time required to fully analyse the data from various modules that were in the questionnaire which you responded to when your households were visited, today's event will provide a snapshot of the key results and findings. in conclusion, i can comfortably say that the census exercise was completed successfully, and the challenges faced during this exercise will be documented as lessons learnt that will inform future censuses and other digital data collection | 1 |
christian kettel thomsen : danish economy, financial risks and cash speech by mr christian kettel thomsen, governor of the national bank of denmark, at the annual meeting of finance denmark, copenhagen, 4 december 2023. * * * check against delivery as new governor in danmarks nationalbank, there are many things i will be doing for the first time. one of them is to give this annual speech. i've really been looking for - ward to this. another new task was when i recently signed a 50 - krone banknote. in terms of denomination, i may have had higher ambitions for my first signature. nevertheless, it was a reminder for me of the important role that cash still has, and will continue to have, in our society. i will return to this later on in my speech today. but first a few reflections on the danish economy and the financial sector. the developments in the past four years really show how quickly the eco - nomic situation can change. but if we look at economic activity in denmark right now, danmarks na - tionalbank's assessment is that we're heading for a soft landing. especially considering that the modest economic growth we're currently experiencing stems from large danish companies having increased their production abroad, i. e. outside the borders of denmark. disregarding danish companies'production abroad, danish gdp has ac - tually been stagnant since early 2022. and inflation also seems to be heading for a soft landing. it has fallen very significantly – initially because energy prices have dropped from the very high levels seen last year. but even though inflation has decreased a lot, we're still not there yet. we thus expect inflation to rise again early next year and to end at three per cent for the year as a whole. 1 / 6 bis - central bankers'speeches what we're seeing now is that where inflationary pressures used to come from the outside – including in the form of high energy and food prices – the pressures have now started to shift to being driven by domestic con - ditions, especially pay increases. here, we expect that the effects of the higher pay increases from the col - lective agreements concluded in spring are now beginning to make themselves felt, and they will contribute to keeping up price increases for some time to come. we also expect a slight decline in employment over the coming years, but employment in denmark will remain very high. to get inflation under control, the | s competitiveness by 20 per cent since 2000 should be viewed in that light. the fall in competitiveness was particularly strong in connection with the overheating of the danish economy in 2006 – 08, but a large part of the excess wage increase has been made up for in recent years, as wage inflation has been lower here than in competitor countries. in fact, denmark ’ s industrial production, which is to a large extent driven by exports, has risen more strongly than sweden ’ s since it dived in response to the financial crisis in the autumn of 2008. the reason why growth in gdp has, nevertheless, been lower than in sweden is bis central bankers ’ speeches weaker domestic demand as a result of the strong downturn in the danish housing market after the overheating, with a resultant loss of wealth and negative implications for private consumption. in general, it does not make sense to speak of “ structurally weak competitiveness ”. weak competitiveness is temporary, not permanent. after a while it will strengthen as a result of developments in wages and exchange rates. with the fixed - exchange - rate policy, denmark has deselected the latter option. over a period of time, extensive structural reforms have been introduced in denmark. these include reforms of pensions, taxation and unemployment benefits, to mention but a few examples. the reforms help to secure the future foundations of the danish economy and are also an element of credible economic policy. but in the short term they may initially have increased uncertainty in the population, thereby extending the recession slightly. however, this is not an argument for not taking action. obviously, we cannot talk about credible economic policy without mentioning the fixedexchange - rate policy. over the last 30 years, considerable credibility has been built up around this policy and no - one seriously questions it. when the financial crisis peaked in the autumn of 2008, the krone – like other small currencies – came under very strong pressure. combined with a number of crisis measures, the high degree of credibility helped to ensure that denmark weathered the crisis. thanks to the favourable balances and strong confidence in the danish economy, we have benefitted from the historically low interest rates in the wake of the financial crisis. this has buoyed up private - sector demand and hence also production and employment in recent years. both short - and long - term interest rates have fallen considerably since end - 2008. this is a concrete example of “ credibility counts ”, which is the theme of the auditors | 0.5 |
not drop more during the economic upswing in the 1990s suggests that the labour market is not functioning satisfactorily. one example of rigidities in the labour market is that unemployment has remained around 8 per cent in the construction sector, even though it is one of the few sectors where activity has risen and labour shortages have begun to appear. another sign that the unemployment problems are structural in nature is the large differences across regions and occupational categories. in spite of a single monetary policy for the whole of the swedish economy, unemployment figures in some regions are twice as high as in others, while the proportion of people receiving benefit from their unemployment fund is twice as high in some occupational categories as in others. these differences seem to last over long periods, indicating that the problems are partly due to low mobility in the labour market. in addition, the need for labour market mobility is growing as a result of structural change. the previously typical cyclical pattern, where jobs are shed during a slump and then are recreated when the economy turns around, no longer generally holds true in all industries. jobs that are lost in a slowdown are being replaced, especially in manufacturing, by increased productivity and information technology. growth is leading to new jobs but in different places than before. that means that more people have to change workplace or sector, and results in the need for considerable adaptability. more jobs have to be created in, for example, the services sector, perhaps in completely new companies. the structural change that occurred when farmers and forestry workers went into manufacturing was relatively easy. now the change often entails manufacturing workers having to go into the services sector, a transition that may be more difficult. to the extent that the weak growth in employment is due to structural change in the swedish economy, from manufacturing jobs to services, there is reason to discuss how the functioning of the labour market can be improved and how the driving forces for new business creation can be strengthened. several proposals have been put forward in the public debate – among other things, there have been calls for a tax deduction to subsidise certain domestic services, as well as calls for a reduction in compensation levels to increase people ’ s willingness to take lower - paid jobs. other solutions being discussed are lower income taxes for low - income and middle - income employees, a reduction in employers ’ contributions and a cut in payroll taxes. these are important political issues, but issues that we at the riksbank do not have any obvious reason to take a stance | william c dudley : remarks at the cpmi ’ s 25th anniversary conference remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the committee on payments and market infrastructure ’ s 25th anniversary conference, bank for international settlements, basel, 30 june 2015. * * * we have three distinguished panelists in this opening session – claudio borio, the head of the monetary and economic department at the bank for international settlements ( bis ), william coen, the secretary general of the basel committee on banking supervision ( bcbs ) and masa kono, who is currently the vice - minister of international affairs at the japan financial services agency and who earlier chaired the international organization of securities commissions ( iosco ) during the development of the principles for financial market infrastructures ( pfmi ). they will offer their thoughts on how the role of the committee on payments and market infrastructure ( cpmi ) has changed and is likely to continue to evolve in its task of setting and helping implement global financial, operational and risk standards for the world ’ s key financial market infrastructures ( fmi ). before i turn to our panelists, let me offer some brief comments on the evolution of the cpmi. as i see it, there have been three broad complementary trends that have been important in influencing the evolution of the cpmi and have contributed to its increased importance over time. as always, what i have to say represents my own views and not necessarily those of the federal open market committee or the federal reserve system. 1 the first trend has been the development of a global financial system. this has increased financial system interdependencies and, hence, the importance of harmonizing standards across national regulatory regimes. it also has made it more important to avoid regulatory arbitrage and race to the bottom types of behavior that could weaken the resiliency and robustness of the global financial market infrastructure. the second trend is the increasing importance of fmis within the financial system. as trading across a more complex array of instruments and products proliferates, and as more trades are centrally cleared, well - managed fmis play an increasingly important role within the financial system. the third trend stems directly from the first two. with the global financial system becoming more prominent and fmis playing a bigger role within this global financial system, it has become ever more essential that major fmis operate safely. when run well, they mitigate risk. but, run poorly, they | 0 |
of his choice. • third, the statistician may tend to over - generalise facts and make wrong conclusions. • fourth, the samples used may be biased. • fifth, the causality outlined may be fallacious. • sixth, the data may have been manipulated in order to show a result favourable to some interested party. • seventh, data may be dredged or mined in order to find a correlation that would not be there. how to gain credibility for statistics? all these instances of the misuse of statistics make the statistics less reliable and suspicious. the governmental statistical agencies throughout the globe are criticised by public on this ground. once the organisations lose credibility regarding the compilation of statistics, it would be very hard to regain trust and confidence of users. the statistical bureaus run by former soviet union and its satellite states have been subject to this criticism. the way to avoid this criticism is to adopt global best practices with regard to compilation and dissemination of statistics. it requires countries to adopt a code of ethics and practices when it comes to dissemination of information. many member countries of the international monetary fund have adopted such a code in the form of signing for following the principles of outlined in a general data dissemination system and, at a more stringent level, a special data dissemination system. the central bank of sri lanka is a signatory to the imf ’ s general data dissemination system. the final message in summary, if statisticians are desirous of supporting economic development, they should necessarily produce and supply statistics to meet the requirements of the market. it is essential that they produce such statistics as a readily usable product that could be sold in the market at a price. it is now time in sri lanka for the private statistics - producers to enter the vast market of information. the universities in this sense are in an advantageous position, because they have the best human talents with them. it is unfortunate that they sit idly on this vast wealth of resources. it is time that universities in sri lanka reorient themselves to gain advantage from the market resources and become financially self supporting. in addition, the universities should train their statistics students to become entrepreneurs of statistics rather than becoming employees of agencies that may plan to hire statisticians. | w a wijewardena : central bank – why “ economic and price stability ”? speech by mr w a wijewardena, deputy governor of the central bank of sri lanka, at the association of professional bankers, colombo, 23 march 2007. * * * an amendment effected to the monetary law act in 2002 requires the central bank of sri lanka to pursue “ economic and price stability ” as one of the two core objectives of the bank. this is somewhat a departure from the central banks in the rest of the world which have been mandated to attain only “ price stability ”. hence, it may be puzzling to many whether the central bank of sri lanka has been given an additional objective to attain. it is, therefore, timely to identify the precise meaning of this phrase “ economic and price stability ” in the context of a central bank. the amendment to the monetary law came as a part of the modernization program which the bank commenced in 2000. one of the essential ingredients of that program was to update the monetary law to be on par with the emerging global best practices. up to that time, the central bank had been entrusted with a multitude of objectives : attaining price stability, participating in economic development, preserving the external value of rupee, protecting banks from collapse and maintaining the financial system stability etc. these objectives were not very clear and were often in conflict with each other. they also posed difficulties in monitoring the progress or assessing the success. many critiques had pointed out, and the technical staff in the bank had experienced, that the bank could not succeed in its main task of taming inflation and bringing about price stability, if it was saddled with other tasks that would go against its main objective. hence, there emerged a general consensus that the central bank should do only what it can do effectively and not otherwise. that consensus required the central bank to pursue a single objective, viz., the attainment of price stability. following this consensus that emerged through the consultative process involved in the modernization, the technical staff of the bank proposed an amendment to the monetary law by mandating the bank with the task of attaining two core objectives. they were the attainment of both “ price stability ” and “ financial system stability ”. when the draft law was submitted to the then governor, mr. a. s jayawardena, for clearance, he had changed the “ price stability ” to “ economic and price stability ”. the puzzled and bewildered technical staff flocked into his room seeking a | 0.5 |
of the issues and challenges faced by this market and the approach to be adopted to address them in order to enable the market to reach its potential. the task before us is to improve liquidity, enhance transparency, provide safe and sound market infrastructure, enable appropriate institutional structure, such as, robust bankruptcy framework, etc. the regulators have taken proactive steps and provided the market with tools of risk management. efforts are on to enable wider participation the market and create scope for market making. the regulators, like reserve bank, have always followed a consultative approach and welcomed suggestions from the stakeholders. it is also expected that the market participants need to be more active and participate in corporate bond market and make use of risk management tools / financial products. this would enable growth of the corporate bond market and cater to the needs of the real economy and the financial sector. i am sure that the panellists of the next session would deliberate on some of the issues raised above and other related issues and provide useful and implementable suggestions to meet the challenges of developing a more vibrant corporate bond market in india. i once again thank ficci for giving me this opportunity to share my thoughts on such a topical subject. bis central bankers ’ speeches | directly or indirectly. improving liquidity low liquidity is an issue that needs to be addressed urgently. several reports have suggested consolidation of the corporate bond issues through reissues to promote liquidity. we need to make a beginning in this area by involving psus and large corporate with significant volumes of bonds outstanding in devising a suitable scheme of consolidation of their issues. there are suggestions to the effect that in respect of regular issuers that there could be restriction on the number of securities they can issue in a year so that reissues would become necessity. market making banks and pds have played the role of market making in the g - sec with reasonable success and we need to explore the possibility of replicating the experience in the corporate debt market as well, albeit with the realisation that primary dealers would be exposed to greater credit risk if they carry a sufficiently large inventory of corporate bonds that is needed for market making. moreover their limitation to increase exposure to corporate bonds with the context of growing issuance size of government bonds has to be kept in view. some suggestions to incentivise pds for market making are, however, being discussed with the stakeholders. further, there is a need for a debate on creation of a separate agency / institution to promote market making in corporate bonds, on the lines of institutions established to promote government securities market. credit derivatives in the context of development of the corporate bond market and promoting infrastructure funding, cds has been introduced with all safeguard, such as, not allowing naked cds for the users, mandating position limits for the market makers, compulsory reporting of transactions to the trade repository in ccil, etc. and high expectations. cds could provide an avenue for participants to mitigate credit risk and enable effective redistribution of credit risk within the system. with the necessary infrastructure that included trade repository, documentation, publication of cds curve for valuation, standardisation of contracts, etc. in place, participants were permitted to enter into cds with effect from december 1, 2011. though the guidelines were framed after detailed discussions with the market participants, only few trades have taken place since the launch of the product. some of the reasons being attributed are difficulty in signing separate credit support annex ( csa for india ), nonavailability of netting benefits and posting of collateral on daily basis. bothe sebi and irda are likely to permit their regulated entities to participate in cds as users soon. these are not major operational issues and should not deter market participants from undertaking trades. stringent capital ad | 1 |
= 100 s. a., 2019 / q1 = 100 s. a., 2019 / q1 = 100 nondurable goods < 40. 5 > services < 50. 7 > cy 14 cy durable goods < 8. 9 > 23 24 19 23 24 notes : 1. in the left panel, figures exclude inbound tourism consumption and include outbound tourism consumption, and are based on bank staff calculations. 2. in the right panel, figures in angle brackets show the weights in the cai. figures are based on bank staff calculations. 3. in the right panel, " nondurable goods " includes goods classified as semi - durable goods in the sna. sources : bank of japan ; etc. chart 5 consumption developments based on credit card spending chg. from baseline, % - 10 - 20 - 30 total retail ( excluding energy ) services ( excluding energy ) energy - 40 - 50 - 60 cy 20 notes : 1. figures are from the reference series in jcb consumption now, which take into account changes in the number of consumers. the baseline is the average for the corresponding half of the month for fiscal 2016 through fiscal 2018. 2. figures for the total and for services exclude telecommunications, and figures for energy consist of those for fuel, electricity, gas, heat supply, and water. figures are based on bank staff calculations. source : nowcast inc. / jcb, co., ltd., " jcb consumption now. " chart 6 exports total real exports real exports by region s. a., cy 2020 = 100 united states < 20. 1 > eu < 10. 3 > cy 23 24 19 china < 17. 6 > nies, asean, etc. < 34. 4 > other economies < 17. 6 > 23 24 notes : 1. figures are based on bank staff calculations. 2. figures for 2024 / q2 are those for april. 3. in the right panel, figures in angle brackets show the share of each country or region in japan's total exports in 2023. figures for the eu exclude those for the united kingdom for the entire period. sources : ministry of finance ; bank of japan. chart 7 developments in business fixed investment plans y / y % chg. fy 2024 average ( fy 2004 - 2022 ) - 3 - 6 - 9 mar. fy 2020 fy 2021 fy 2022 fy 2023 june sept. cy 09 s. a., 2019 / | rate of increase in the cpi ( all items less fresh food, excluding the direct effects of the consumption tax hikes ) was 1. 3 percent for fiscal 2014, 1. 9 percent for fiscal 2015, and 2. 1 percent for fiscal 2016. b. overseas economies i would now like to give an overview of overseas economies. these are expected to moderately increase their growth rates as advanced economies continue to see firm recovery and its positive effects gradually spread to emerging economies. according to the projections for global economic growth released by the international monetary fund ( imf ) in april 2014 in its world economic outlook, global growth is projected to strengthen to 3. 6 percent in 2014 and then to 3. 9 percent in 2015, rising at a moderate pace to reach a rate exceeding its long - term average. looking at respective major countries and regions, in the united states, real gdp for the january - march quarter of 2014 decreased from the previous quarter, mainly due to the effects of the unusually severe winter weather, but has returned to a moderate recovery trend. as for the outlook, the pace of recovery is expected to gradually rise, led mainly by private demand – such as firm private consumption – as accommodative financial conditions are expected to be maintained and fiscal drag is likely to weaken. the euro area economy is recovering moderately, registering positive growth for four consecutive quarters. although faced with structural problems such as excess debt, it is expected to continue recovering moderately, supported in part by improvement in household and business sentiment. regarding risks to the economy, close attention needs to be paid to a possible prolonged disinflationary trend and the effects of the situation in ukraine and russia. the chinese economy continues to see stable growth, although it has been growing at a somewhat reduced pace, mainly in real estate - related areas. the chinese authorities have taken the stance of continuing to pay consideration to economic activity while progressing with structural reforms, and already have taken some policy measures to underpin economic activity. in addition, external demand is expected to continue improving moderately, mainly in advanced economies, and thus the chinese economy is likely to continue to see stable growth, albeit at a slightly slower pace. meanwhile, some of the other emerging and commodity - exporting economies remain weak in a situation where they are facing issues regarding, for example, current account balance and inflation rates. these economies will likely continue to lack growth momentum for the time being, but are expected to gradually increase their growth rates due to positive effects of the recovery | 0.5 |
mario draghi : interview with der spiegel interview with mr mario draghi, president of the european central bank, and der spiegel, published on 30 december 2013. * * * spiegel : mr draghi, do you know andrea nahles? draghi : i have heard the name before but i don ’ t know her personally. spiegel : ms nahles is the new german labour minister and boss of jorg asmussen, your former colleague in the executive board of the ecb. that he gives up this prestigious job has caused great surprise in germany. did you chase him out? draghi : jorg and i had an excellent personal and professional relationship. i consider it as a great loss for us that he is returning to the government. of course we did not agree on every occasion. spiegel : asmussen is the third german central banker to give up his job prematurely, after bundesbank boss axel weber and the former ecb executive board member jurgen stark. why aren ’ t the germans happy at the ecb? draghi : you can ’ t compare these cases. jorg has made it clear that it was only family reasons which prompted him to go back to berlin. i have no reason to doubt that. spiegel : in any case, weber and stark resigned because of your policy, which led to your famous remark in london a year and a half ago about doing “ everything necessary ” to save the euro. that means, in an emergency, buying up the government bonds of the crisis - ridden countries and taking on risks amounting to billions for which in the end german taxpayers above all would be liable. can you understand that many german citizens are at odds with this? draghi : weber and stark resigned before my arrival at the ecb. but the truth is that conditions in the euro area have improved considerably since then. consider the latest developments : crisis - ridden countries such as ireland and portugal are exiting the bailout programme, the risk premia for loans to crisis - hit countries in southern europe are declining, and investors from all over the world are once again investing in europe. in other words, most of the financial - economic data are turning in the right direction. spiegel : are you saying the euro crisis is over? draghi : no, but the fears felt by some sectors of the public in germany have not been confirmed. what haven ’ t we been accused of? when we offered european banks | macroeconomic stabilisation through the pursuit of price stability. we do not and should not play an active role in the functions of allocation and distribution4. at the same time, our operational framework has always included elements of what goodfriend qualifies as credit policy. the ecb manages liquidity and steers money market rates by lending to banks in temporary credit operations against a broad range of collateral. furthermore, we have always remunerated reserves. does the fact that our operations entail some credit risk on the balance sheet of the central bank imply a violation of our ordoliberal principles? does it imply that the ecb policy interferes with credit allocation? my answer is no. the risks we take onto our balance sheet in the context of our operations are controlled, and they are accepted only insofar as they are strictly necessary for the pursuit of price stability. this is entirely consistent with the concept of monetary dominance, which stipulates that fiscal considerations cannot stand in the way of the achievement of price stability. indeed, ecb credit is backed by adequate collateral, which implies that the amount of residual risk borne by the central bank is buffered. there are two layers of protection. the first is founded on the ecb ’ s recourse to the borrowing institutions and the full credit and guarantee represented by their balance sheets. the second – when the first is exhausted – is given by the appropriation of the collateral posted as backing of the loan. if a counterparty defaults, the underlying collateral assets allow for the recovery of the amount lent. the use of risk control measures such as valuation haircuts and variable margins further mitigate the exposure to credit risk. the same risk control principle applies in the context of the omt programme, through limitations on the maturity of eligible securities ( one to three years ) and through the strict conditionality for a country to be eligible for the programme. another aspect of our operations is that they are designed precisely with the goal of achieving neutrality in credit allocation. having said that, the objective of monetary policy being stabilisation does not imply that it cannot contribute to efficiency and equity, and indeed stable prices are a precondition of both ( see b. coeure, monetary policy in a fragmented world ”, speech at oesterreichische nationalbank, vienna, 10 june 2013. bis central bankers ’ speeches the ecb ’ s policy framework was designed with a view to allowing the participation of a broad range | 0.5 |
of banks, credit portfolio to private sector grew steadily and rapidly over 2023, presently standing at 14 %. growth in lending was characterised by certain positive features : i ) new loans were broadlybased by sector ; ii ) it was concentrated in our national currency ; iii ) it showed an increasing orientation towards investment financing, and did not jeopardise the overall quality of credit portfolio. all the three features have continued and further strengthened during 2024. inflation and expectations on inflation, as a result of this reaction, stay already close to our 3 % target, while forecasts for the future are positive. banking supervision and financial stability the increase in interest rates and higher uncertainties experienced over the past two years in albania and worldwide, have created a challenging environment to banking activity and financial stability. nevertheless, our banking system and financial stability in albania appear solid. in particular, the albanian banking sector closed 2023 with a 3 / 6 bis - central bankers'speeches positive financial result, a high liquidity and capitalisation level, and a further improved credit quality. our analyses show that systemic risks to banking sector remain contained. in particular, two important achievements were recorded by the albanian financial sector last year. first, the removal of albania from fatf'list of jurisdictions under increased monitoring, regarding the development of infrastructure for anti - money laundering and counter - terrorism financing, known as " grey list ", constitutes the pivotal point of the reforms undertaken by the albanian institutions, including the bank of albania, to fulfil the necessary criteria. albania taken off fatf grey list marks an important achievement for our country, the economy and the reputation of albania, as it is a demonstration of trust by the international community on the albania's dedication against money laundering and combating terrorist financing. second, upon the delisting from the " grey list ", the bank of albania has started the procedures to receive the equivalence status of our supervision and regulatory framework with the european union standards. our preliminary assessments suggest a level of convergence of approximately 90 % with these standards. therefore, we have submitted the official request to the european banking authority ( eba ), and we are expecting to start our discussions on the equivalence assessment process for albania. this equivalence assessment will enable the increase of lending to economy from the european commercial banks that conduct their activity in albania. the resilience, sustainability and flexibility of the financial system against the recent challenges reflect a supervision, which is both meticulous and efficient, as well | here i take into account either the facilitating of procedures or the increased safety for using these securities as collateral and for encouraging the interbank and lending market. 4. the last but not the least is to increase the possibility of commercial banks to be more present into the market, making it more liquid and solvent. how we think this process will be realized : 1. the ministry of finance and the bank of albania must review the regulatory basis that covers the part of treasury bills issuance and more concretely the agreement concluded by them “ on issuance of treasury bills in the form of registration ”. 2. the bank of albania must review the regulation “ on the secondary and retail treasury bill market in albania ”. 3. the commission of securities must review that part of the regulatory basis which is related to the licensing process of the securities register. 4. the commercial banks should proceed with the commission of securities, with the purpose to ensure the licence for maintaining the register of individual ’ s securities. 5. the bank of albania will prepare, after the completion of this process, the strategic plan of the movement of individuals from its windows to the windows of commercial banks. the time available to the bank of albania will also be used for testing the stance of “ individual ” investors in advance. in this framework, we would also like to inform you that the bank of albania is working for considering, at the shortest time possible, the possibility of increasing the participation amount of individuals, through the bank of albania, in the primary treasury bill market, as well as the application of a commission on new operations they will carry out with it. the new level and commission will affect only the individuals that would like to use the bank of albania to participate in the primary market. thanking you again for your attention, i would like to pass on to the discussions about the steps we deem to make. at the end of this meeting, i propose we come out with a concrete plan of actions for a successful implementation of this process. | 0.5 |
comes to analysing the situation. the discussion on thursday was focused more on whether it was advisable to wait for more data before reacting. but i don ’ t see any substantive differences at this point in time. q : draghi has called on governments to go for fiscal expansion and reforms – it sounded almost like a desperate plea. a : mario draghi ’ s speech at jackson hole in august and the conclusions of the governing council last thursday reflect the seriousness of the situation. the euro area faces risks to its economic growth on such a scale that it ’ s necessary to use all available tools to support the economy. and that means using the instruments on the demand side and the supply side. on the demand side, you have monetary policy. and what the ecb has announced shows that we are committed to taking steps and that we have instruments we are ready to use. you have also fiscal policy, in those countries that have space to expand it. but what matters bis central bankers ’ speeches most are the structural reforms, because without them no supply or demand measure will have an effect. q : is that message aimed at france and italy? a : we are not asking anything from anyone in particular. there is nothing of a give and take here. the ecb is independent and does not enter into this kind of bargaining. we do what we think we have to do and we expect others to do their job. we are just highlighting the conditions for it to be effective. for example, in our view, the countries that want flexibility in applying the stability pact should announce reforms beforehand, because flexibility is useless if it isn ’ t backed by reforms. fiscal policy should be used to support aggregate demand – but within the framework of the stability pact, and that ’ s an important “ but ”. the pact creates confidence. and stretching it or infringing it until it is no longer credible would undermine confidence and, in the end, be counterproductive for growth. in other words, flexibility without damaging the credibility of the rules. q : germany does not seem to share this need for fiscal stimulus. a : our measures will be much more effective if we see structural reforms and a fiscal position appropriate for the euro area. this should be discussed and evaluated at the euro area level. it is normal for the ecb to say this because it monitors the situation across the euro area and is interested in its stability and growth. q : its measures have flooded the market with liquidity. | acknowledges, is that these recommendations are too rarely followed. it would be preferable if countries took them seriously and felt collectively committed. in the case of spain, my personal view is that much remains to be done to support the young people and help find jobs. they are the future. q : would you be in favour of the binding agreements proposed by angela merkel? a : binding agreements are one way of achieving this. however, in my view, it is better to stay within the community framework. it should be a multilateral discussion and not a bilateral one between the commission and each member state. there should be shared sovereignty as far as structural reforms are concerned, because there is a common interest. q : the stress tests are nearing completion. can we expect many failures and are there likely to be any surprises? a : we are checking the results, which will be available in the second half of october, so i cannot make any comments on them at present. q : will the tests be credible after what happened with portugal ’ s banco espirito santo ( bes )? it collapsed despite the fact that the ecb and the rest of the troika had been supervising lisbon for the past three years. a : in the bes case, it appears that information was being kept from the supervisor, which was the banco de portugal and not the ecb. the ecb, the european commission and the imf were in lisbon to analyse financial stability and macroeconomic outcomes. the ecb had neither the instruments nor the mandate to supervise banks, as this was the role of the national supervisor. i do accept, however, that the bes case has served as a reminder that there are risks beneath the surface in the european banking sector, and i am convinced that bis central bankers ’ speeches the single supervisory mechanism will be able to examine the financial health of the institutions in depth. q : could something similar to the bes case happen in other countries? a : this is always a possibility. risks are inherent in banking activities. the only solution is a robust management framework within each bank and on a european level, coupled with instruments such as the single supervisory mechanism or the single resolution mechanism, which will be available in case of crisis. q : some analysts are comparing the situation in the euro area to that in japan. a : i would imagine that they are referring to the situation in japan in the 1990s, rather than to present - day japan. at that time, japan | 1 |
inflationary tendencies. it is sometimes argued, for example, that one of the forces behind today ’ s improved economic performance in the united states is the rapid advances in computer technology and telecommunications ; this has led to more efficient processes for production and distribution and thereby paved the way for higher productivity growth. productivity in the united states does appear to have been rising more strongly. some observers consider that the potential annual growth rate may have moved up from 2 % to up to 3 %, perhaps even more. in sweden, too, there are many indications that the growth of labour productivity in the 1990s has been higher than in the 1980s. the upward shift may perhaps amount to half of a percentage point. it is this that has prompted the common, but not entirely certain, estimate that the swedish economy can now sustain an annual growth rate between 2 and 2. 5 %. but swedish statistics do not yet confirm that productivity and thereby potential growth have increased fairly appreciably, as has been the case in the united states. in time, however, the pace of developments in computerisation and telecommunications will probably also have a major impact on production and distribution systems in sweden. sweden is well to the fore in the use of the internet. still, it is not yet clear when these developments will exert a more general effect on growth. a point worth noting is that the upward shift in us productivity growth occurred fairly late in the business cycle. the swedish economy has not reached that stage. over a normal cycle, without any impulses from an improvement in potential growth, statistics show that productivity gains tend to slacken towards the end of the upward phase. that was the case in sweden, for example, in the late 1980s. now that low inflation has been established, it is conceivable that the swedish economy functions differently, so that productivity growth might also be better here in the coming years. the example of the united kingdom, however, suggests otherwise. activity there has been relatively stronger than in most other european countries but clear signs of better productivity growth are still not discernible. if there is no direct evidence that it is appreciably higher productivity that lies behind the decreased inflation propensity in sweden in the 1990 ’ s, where should we look for an explanation? i want to discuss two possibilities : the inflation process as such and the level of unutilised resources. at the same time i shall consider their significance for future inflation. has the inflation process changed? perhaps the most | of events has to be prevented by the riksbank, which the riksdag ( sweden ’ s parliament ) has made accountable for maintaining price stability. so sooner or later the level of the repo rate will have to be normalised in order to counter an acceleration of inflation in an upward cyclical phase. this is something that the riksbank is discussing, as was evident from the published minute of the executive board meeting on 12 august. in the present circumstances what we have to do is decide when – not whether – the time has come to initiate the shift towards a less expansionary monetary stance. as regards the timing of this type of monetary policy measure, it is generally true to say that if the riksbank waits too long before making a necessary repo rate adjustment, when the increase does come it may have to be larger than otherwise in order to arrest the overheating and inflationary tendencies. that could introduce undue instability into output and employment. a higher repo rate does not necessarily impede the continuation of a favourable economic trend ; it may even be required for a good and sustained development of employment and growth, as is illustrated by how the federal reserve has acted in the united states. a judicious series of increases in the federal funds rate seems to have contributed to the longest post - war period of growth in the united states. since it was raised by degrees from 3 % from 1994 to 1995, the american instrumental rate has moved between 4. 5 and 6 %. having said this, it must be realised that there is no simple answer to the question of what constitutes a judicious timing or magnitude of a repo rate increase. one alternative, of course, is to act early and make a small increase even though indications of growing inflationary pressure have not actually shown up. such a line can be seen as insuring against the adverse consequences an acceleration of inflation might entail. in my opinion, however, there are other aspects that it is important to analyse and incorporate in the assessment. lower inflation propensity? one reason for greater circumspection today in monetary policy is that the trade - off between growth and inflation may have changed. during the 1990s the paths of inflation and real economic activity in many countries, sweden included, have not followed the pattern that their earlier relationship suggests. this has started a discussion, in the united states and elsewhere, of whether macroeconomic structures have changed so that higher growth is now feasible without | 1 |
norwegian business cycle diverged from that of trading partners. in the period 1975 - 1978 and 1982 - 1988, wage growth was markedly higher than wage growth among trading partners. as a result, competitiveness deteriorated sharply in internationally exposed industries, which in both cases led to a cyclical downturn with low real wage growth and high unemployment, also in sheltered industries. this is a mechanism that will occur again. public sector employees also have to pay for the imbalances. real wage growth for teachers and health sector employees was negative both at the end of the 1970s and the end of the 1980s. around the mid - 1990s these groups also benefited from stable economic growth with low inflation. annual real wage growth averaged around 3 per cent between 1996 and 1998. developments in recent years are similar to those which caused the imbalances in wage formation in the 1970s and 1980s. wage increases in this year ’ s settlement were high. wage settlements in internationally exposed sectors did not set the trend for wages. wage increases in these sectors were around 5 per cent, while they were appreciably higher in a number of sheltered industries. in the education sector, wage growth is nearing 8 per cent this year. adjusted for inflation, this is the highest level of wage growth in any single year since the early 1960s. the central and local government sectors, including the education sector, employ 1 / 3 of all employees in norway. in 2002, wage growth for these three groups combined was 6. 3 per cent. this is close to 1 percentage point higher than the average for the remaining two - thirds. in rural areas, where local government employment is an alternative to working in agriculture, the fisheries, local service production or small - scale industry, the public sector, with its nationwide agreements, is a wage trendsetter. high wage growth in the public sector will thus determine wage growth in other local sheltered enterprises. many of these industries may pass on higher labour costs to customers. wage growth in the public sector may therefore be an important source of higher inflation. public enterprises can only pass on higher labour costs to customers to a limited extent. on the other hand, the rise in costs can intensify pressures to increase central government allocations. many will probably expect the central government to pick up the bill when labour costs rise sharply. the central government budget for 2002 adhered closely to the fiscal guideline. growth in public spending from last year to this year is estimated at 7 per cent. this is considerably higher than | remarkable effect. the other winner i am equally happy to announce is richard priestley, also professor at bi. priestley has published several papers on exchange rate regimes, many on the relationship between the establishment of the euro and equity pricing across the region. the scope of his bonus - winning paper is even more global. it is titled “ the world business cycle and expected returns ”, which has been accepted for publication in the premier european finance journal : the review of finance. in this paper, priestley and co - author ilan cooper use a novel and interesting measure of the business variable, namely the ratio of capital to output. this ratio is a good predictor of return on financial indices, both equity and bond returns and credit spreads, across time and across markets. the paper by cooper and priestley demonstrate neatly a central element of modern financial economics : expected returns on financial securities vary over time, and tend to move with the business cycle. this fact is highly relevant for a long - term investor such as the fund, and is one of this conference ’ s central topics. since its inception in 1998, the mandate of the fund has prescribed a strategic fixed equity share ; at 40 percent in the initial years, increased to 60 percent some years ago. bis central bankers ’ speeches a fixed share may sound trivial. it is not. the average portfolio of all investors cannot be rebalanced. as the risk premium varies over time, equity values swing. equities are more volatile than bonds, and the equity share of the combined market portfolio of bonds and equities fluctuates substantially. rebalancing as we do implies taking on more risk just when risk is already perceived to be high. when the value of equities fall more than that of bonds, rebalancing means that we would sell bonds and buy equities. to develop a robust rebalancing strategy, we must understand why there are other, also highly competitive investors, who take the other side of these trades. we also need to understand our own edge, the comparative advantage – or disadvantage – of the size, time horizon, and governance structure of the fund. these issues are all intimately linked to questions on the research frontier of financial economics. so far, the rebalancing strategy has served the fund well. from 1998 to 2011, around 0. 5 percentage point – a considerable portion – of the total annual return can be attributed to rebalancing. we believe rebala | 0.5 |
safe. apra has, however, noted a trend to riskier lending practices, and over the past couple of years has been seeking to temper these through its supervisory activities. there are also broader concerns with the macroeconomic risks associated with excessive speculative activity, since this activity can amplify the property price cycle and increase risks to households. our discussions with apra and other agencies on these matters are ongoing, and there will be more to say about them in due course. for now, my colleague and i will be happy to take any questions that you might have. bis central bankers ’ speeches | financial stability harder. lower growth and limited policy space leave smaller room for maneuver. nature of inflation dynamic itself is also changing with inflation increasingly driven by supply - side factors outside of the central bank's control, such as geopolitical tension and supply chain reconfiguration. for example, in thailand, oil and food price movements account for approximately 65 % of overall price changes during the past 2 - 3 years. and we will continue to face persistent supply - side price pressures going forward as countries form stimulus strategies around concerns regarding geopolitical tension and supply chain reconfiguration. secular trends such as digitalization and technological advancements and green transition will likely lead to large - scale adjustments in relative prices as well. this comes at the time when the public has higher expectation, not just to deliver on traditional issues but also new emerging ones, while the tools that central banks can use are quite limited and constrained. [ solution 1 ] to deal with this challenge, we need to first ensure robust policy framework and to ramp up our efforts in policy coordination at many levels. both missions are of first order importance if we are to maintain credibility and public trust that allows us to work on other very challenging emerging areas. let me lay this out in a three - step approach : step 1 : monetary policy needs to prioritize domestic conditions while policy mix needs to be tailored to country - specific contexts. moreover, policy decisions should be made with a risk management mindset, to preserve policy optionality. monetary policy must look through the noise and, as suggested in this year bis annual economic review, the focus should be on robustness to broad range of scenarios, awareness of any longerterm costs or side effects, and sufficient safety margins or room for maneuver. step 2 : macro - financial policy coordination is a critical step in ensuring that we use our limited policy space in an effective manner. in the case of thailand, higher legacy 3 / 7 bis - central bankers'speeches household debt post - pandemic requires good coordination of monetary policy with other complementary tools such as targeted financial policies to address heavy debt burden in specific segments and other macroprudential measures to ensure better new lending practice. we should be mindful that trust in the central bank applies to all domain of central banking. any gaps or pain points on the banking side, such as a rise in fraud cases or even it outage that disrupts financial services, will have repercussions on central bank credibility and trust | 0 |
stanley fischer : israel ’ s economy and the challenges facing its banking system address by professor stanley fischer, governor of the bank of israel, at the agm of the association of banks in israel, tel aviv, 23 november 2006. * * * mr president of the association of banks in israel and chairman of bank leumi, eitan raff ; executive director, association of banks in israel, freddy wieder ; my banker colleagues and colleagues from the bank of israel ; ladies and gentlemen : may i start by thanking the association of banks in israel for inviting me and giving me the opportunity to speak before you today. i would like to relate first to the current state of israel ’ s economy, in which the banking system plays an important role, both as an active, influential participant and as an entity affected by economic developments. i will then address the challenges facing the new supervisor of banks and israel ’ s banking system. the economic situation israel ’ s economy today is doing very well, even after the war in the north. although activity slowed during the war - reflected by a negative rate of growth in the third quarter - the latest indicators point to a relatively rapid recovery of economic activity after the war. the economy has enjoyed three years of rapid growth. in the light of the national accounts data of the third quarter published recently by the central bureau of statistics, the bank of israel assesses that gdp will grow by 4. 8 percent in 2006. this is a high rate of growth by international standards, and reflects a rise in investment and in exports, a surplus in the balance of payments, a very high rate of foreign investment, increased productivity and an improvement in employment - and all this despite the war ’ s adverse impact on growth. budget data show that tax revenues have revived. the government ’ s budget deficit in 2006 is expected to be about 1. 8 percent of gdp. inflation in israel is low, and in 2006 is expected to be below the target, mainly due to the fall in oil prices and the appreciation of the shekel. in accordance with the bank of israel ’ s flexible inflation targeting approach, our intention is to bring inflation back gradually to within the target range of 1 – 3 percent a year. ten - year interest rates in israel are below 6 percent a year, and this is important to everyone who has to take a mortgage. the markets are robust and stable. three main factors account for the economy ’ s success and its ability to withstand the negative impact of the war | on the back of effective disease containment measures including vaccination programmes ; continuing adaptation of economic activity to the covid - 19 environment, accommodative monetary policy and supportive financial conditions. domestic inflation was above the objective range of 3 – 6 percent for most of 2021, with average inflation increasing from 1. 9 percent in 2020 to 6. 7 percent in 2021, largely because of the increase in levies and taxes as well as administered prices during the year and associated secondround effects. demand conditions and as, indicated by a negative output gap ( the difference between actual and potential output for the economy ), were modest and non - inflationary. indeed, the recent labour force survey results by statistics botswana, which reports an unemployment rate of 26 percent, affirms the below - trend output growth. furthermore, government expenditure increased marginally by 0. 1 percent in the first eleven months of 2021 compared to a decrease of 0. 8 percent in the prior year. within this, public sector personal emoluments rose by 4. 4 percent. the other main driver of demand, growth in commercial bank credit, increased from 4. 5 percent in 2020 to 5. 1 percent in 2021, as both demand and supply improved due to increased economic activity and prospects. lending to businesses increased by 2. 7 percent in 2021, following a 0. 5 percent decrease in 2020. for households, annual credit growth decelerated from 7. 3 percent in 2020 to 6. 4 percent in 2021, reflecting lower rates of increase in personal and motor vehicle loans. global monetary policy implementation in 2021 honourable minister, ladies and gentlemen, monetary policy implementation in 2021 was generally accommodative at the global level, characterised by maintenance of relatively low policy rates, following the aggressive reduction of interest rates in 2020 in response to the covid - 19 pandemic. however, some central banks, particularly in emerging market economies, increased their policy rates in 2021 responding to the rising inflationary pressures. moreover, some central banks in the advanced economies signalled that they would tighten policy rates, going forward, to control inflation and, in some cases, taper the asset purchase programmes introduced in 2020 to support the financial sector. closer to home, the south african reserve bank increased the repo rate by 25 basis points to 3. 75 percent in 2021 and, by another 25 basis points to 4 percent in january this year, to counter perceived upside risks to the inflation outlook. domestic monetary policy implementation in | 0 |
reasons to remain confident with regard to growth prospects. on the external side, euro area export growth should benefit further from the expansion of the global economy. considering these factors together, the growth dynamic in the euro area can be expected to be maintained in the coming years. forecasts by international and private organisations currently project euro area real gdp growth in the coming one to two years to be somewhat lower than this year ’ s more than 3 %, but to remain at around 3 %. the exchange rate of the euro has remained a cause for concern. the depreciation of the euro during 1999 and 2000 has added to upward pressures on consumer prices in the euro area. the exchange rate of the euro has now remained out of line with economic fundamentals for a prolonged period of time. the g7 expressed concern about the global repercussions of the current level of the euro exchange rate. in order to support the euro, concerted interventions by all g7 members, on the initiative of the ecb, took place on 22 september, and the eurosystem intervened several times in november. recent harmonised index of consumer prices ( hicp ) inflation rates have been higher than could have been expected only a few months ago. current inflation reflects the unexpected sharp rise in oil prices in recent months. notwithstanding a possible decline in oil prices, annual hicp inflation rates are likely to remain above 2 % for some time to come. it needs to be recognised that current upward pressures on consumer prices can be alleviated most smoothly if economic agents see them for what they are, namely one - off or temporary price increases resulting from external factors. in this respect, when forming their expectations, economic agents should count on the commitment of the governing council of the ecb to maintaining price stability, defined as hicp inflation below 2 %, in the medium term. monetary policy will not accommodate inflationary tendencies in the euro area. it will be critical to ensure that the temporary upward pressure on hicp inflation is not followed by more lasting upward pressure from domestic factors. the interest rate measures taken by the ecb over the past few months were aimed at containing the emergence of inflation expectations and convincing the social partners, as well as the public at large, that price stability in the euro area will be maintained. by ensuring that wages continue to grow at a moderate pace in 2001 and, may i add, beyond next year, wage - setters would facilitate the ecb ’ s task of maintaining price stability. they would | ##s, where cash withdrawal is not permitted as of now. however, we are considering the cash withdrawal from such wallets subject to certain legal / statutory clearances. however, mobile banking has not picked up in a big way due to constraints of mobile numbers registration, user authentication, user interface etc. 24. reserve bank had recently set up a technical committee on mobile banking ( chairman : shri b. sambamurthy ) to examine the operational as well as technical issues and challenges faced presently by banks in leveraging upon mobile density and advancements in mobile technology to meet the objectives of financial inclusion. in india, despite high mobile density, it is also a reality that most of these handsets are basic ones and many of these connections belong to the category of prepaid subscription base. these constraints cannot be lost sight of if mobile technology has to be harnessed as the medium to deliver basic financial services to large masses. 25. this committee has recommended interalia, the need for a standardised and simplified procedure for registration / authentication of customers for mobile banking services, a cohesive awareness programme to be put in place, adoption of common application platform across all banks to be delivered to the customers independent of the handset being used along with use of sms and ussd technology for providing necessary level of security ( through encryption ) for such transactions. 26. in this context, inter - regulatory cooperation has also been underscored through the issuance of necessary guidelines by the telecom regulatory authority of india which has prescribed the optimum service parameters as also ceiling on transactional cost for extension of the ussd services by telecom operators to the banks and their agents. the efforts already taken by npci for a common ussd gateway for banks can now be taken forward towards fruition. here is a great opportunity for very important stakeholders – banks and telecom service providers – to come together to deliver the mobile banking services in a seamless and secure manner to their customers. let me make a suggestion. to start with, for mass application of the handheld devices for payment of bills, why not we integrate gas booking for residences with mobile technology for payment. this would eliminate payment of bis central bankers ’ speeches cash to the dealers, which is a great carry risk. there could be many more such applications but gas payments could be a significant step to inculcate the mobile payment culture. 27. in the context of mobile banking, the following questions still remain without satisfactory answers : ( a ) given the recent developments and the enabling conditions | 0 |
##p, i. e. 0. 5 % of annual gdp, to achieve a structural public balance in equilibrium. in this regard, if the ratio between the total tax take and gdp is taken as reference, it stood at approximately 35 % last year, around 6 pp lower than that recorded in the euro area as a whole ( decreasing to around 3 pp when the arithmetic mean of the various countries is considered ). spain is particularly notable for its low level of consumption taxation, in international comparisons, and for a low revenueraising capacity in respect of environmental taxes. specifically, the simulation presented on the slide assumes that potential economic growth will stand at slightly above 1 %, the gdp deflator will converge towards 2 % from the mid - 2020s, and average interest rates on debt will rise only moderately from their present levels. moreover, it should be emphasised that debt reductions would be greater under alternative scenarios in which the potential economic growth rate rises, highlighting the importance of pursuing policies in this respect, which i will now go on to discuss. 11 ( ii ) policies to foster long - term growth in the strategies to reduce public debt in the medium and long term, the role played by policies to promote sustained growth in activity and employment must be at least as important as that of the multi - year budget plans. at the start of my testimony, i stressed that the key objective of economic policy at the current stage of the crisis must be to ensure the most favourable conditions possible for when the economy emerges from lockdown. however, more persistent adverse effects on certain sectors after the pandemic has been brought under control cannot be ruled out, although it is undoubtedly too early to anticipate how extensive they will be, or which activities will bear the brunt of the impact. further, certain tentative indications suggest that, in the long term, demand could fall in some sectors, such as retail trade, and increase in others, such as logistics, technology, and it systems. in view of this possibility, it would seem advisable to make the relevant preparations through arrangements to ease cross - sectoral and cross - company reallocation and to strengthen the lifelong learning of workers, especially considering that a priori the cross - sector transferability of knowledge between potential losers and potential winners does not appear to be particularly feasible. 12 for illustrative purposes, if, as a result of implementing structural reforms, potential growth were to rise by 0. 5 pp per annum, the debt ratio under | that, unlike permanent employees, temporary workers can scarcely count on any protection once their contract expires, unless exceptional measures are deployed that are tantamount to such protection. beyond considerations of fairness, the high proportion of temporary employment in our labour market makes for a high procyclicality of employment, which tends to exacerbate the depth of recessions, in addition to generating negative effects on productivity, which i shall refer to later. higher labour turnover and the high rate of part - time employment chiefly affect the young. this group is particularly vulnerable in these circumstances, since it has fewer buffers to withstand unexpected declines in income, and the public insurance mechanisms available to them are limited compared with other groups. moreover, the young had still not recouped their levels of income and wealth prior to the financial crisis. set against the high uncertainty mentioned, preparing macroeconomic projections with the usual methodologies is an enormously difficult task. this is why the banco de espana opted, in its publication on 20 april, to prepare several alternative scenarios using different analytical tools. 2 in any of the scenarios considered, confinement would translate into a very severe contraction in spanish gdp in 2020, all the greater the longer the period during which it is necessary to retain the restrictions on economic activity, and with greater risks that the see banco de espana ( 2020 ), “ reference macroeconomic scenarios for the spanish economy after covid - 19 ”, analytical articles, economic bulletin, 2 / 2020. liquidity problems many economic agents are currently facing will lead to situations of insolvency. looking ahead to next year, these scenarios outline a recovery in activity and employment which, nonetheless, would be insufficient for gdp to attain its pre - covid - 19 trend level. specifically, in the two scenarios recently published by the banco de espana that seem most realistic at present, having ruled out the third which projected a shorter and more moderate recession, gdp is expected to fall by 9. 5 % and 12. 4 %, respectively, in 2020 ( and post subsequent increases of 6. 1 % and 8. 5 % in 2021 ). 3 the figures in the first of these scenarios do not differ significantly from those reported by other national and supranational institutions, public and private alike. thus, for example, the spanish government, the international monetary fund ( imf ) and the european commission have recently projected declines in our economy of 9. 2 %, 8 % and 9. 4 % for | 1 |
secretary of state ordered the governor - general in council to prepare a “ comprehensive and coordinated scheme of statistical survey ” for each of the twelve great provinces of the then british india and dr. w. w. hunter was appointed as director - general of statistics in india in 1869, who can perhaps be regarded as the original precursor to the chief statistician of india today. the statistical account of bengal ( the present bangladesh, west bengal, bihar and orissa ) was published in 20 volumes. for each district there were details on topographical data, ethnic pisions and creeds, agricultural situation, commerce, working of district administration and finally the sanitary and health aspects. although censuses of calcutta were undertaken in the year 1822 and in 1847, the operation of a decennial census for the whole country started in 1881 and is continuing ever since. the report on the census of british india taken in 1881 was published in three volumes. the need for timely and accurate collection of agricultural data was felt by the indian famine commission and agricultural departments were organised in various provinces which resulted in the publication of “ agricultural statistics of british india ” in 1886. to scrutinise and summarise the data collected by the agricultural departments, a statistical bureau was formed at the centre in 1895 to coordinate the agricultural, foreign trade, prices, wages and industrial statistics. during 1905, a separate body directorate general of commercial intelligence and statistics ( dgci & s ) was constituted to collect / publish commercial and trade statistics and to help trade and business. the first issue of indian trade journal was released in 1906 and first price statistics based on a survey was released in 1910. the economic enquiry committee set up in 1925 under the chairmanship of dr. visweswarayya and more importantly the bowley - robertson committee set up later in 1934, were mainly responsible for the government ’ s decision to set up an inter - departmental committee with the economic adviser to the government of india as the chairman. the inter - departmental committee recommended the formation of a central statistical office for coordination, institution of a statistical cadre, establishment of state bureaus at state head quarters and maintenance of important statistics for the entire country. architect of modern statistical methods in the indian subcontinent the developments in statistics that took place between 1930 and 1960 are quite remarkable and in some sense unique. no other discipline in india recorded such growth and development during the same period in india. there were several important ingredients. in statistics, unlike other disciplines, india was not a | ##s food and energy prices rose to 6. 3 percent as of may. put differently, there is the risk that the deterioration in pricing behavior might spread to other sectors of the economy. this situation necessitates a measured, gradual and predictable phase of monetary tightening. the measured and gradual nature of monetary tightening is important in face of an already moderating economic growth while having a monetary tightening that is predictable is important to prevent undesired fluctuations in financial markets. dear guests, i would like to stress once more. macro - economic stability is one of the key inputs of sustainable economic growth. macro - economic stability cannot co - exist with high inflation. countries that concede higher inflation for the pursuit of economic growth in the short - term are bound to be deprived of both in the medium - term. policies to attain price stability will entail a cost in the short - term. we need to pay this cost to achieve price stability and ensure sustainable and high growth rates. if we hesitate today and step back from our ultimate target of price stability, we will still face similar problems in the near future, but possibly in worse circumstances. in conclusion, disinflation in turkey is an on - going process. the disinflation process was disrupted over the past two years due to the extraordinary effects of supply side shocks and inflation targets were overshot considerably. in this environment, the central bank of turkey has made necessary assessments and reacted accordingly. within the framework of the monetary policy adopted recently, the target has been revised. this is our response to the question of to what extent the central bank of turkey may allow for supply side shocks. monetary tightening consistent with the target constitutes the second pillar of this policy. if we foresee any deviation of inflation outlook from the target, the necessary policy action will be taken without any hesitation or delay. as you remember, i started my speech with the words of charles stamp, former governor of the bank of england : “ it is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities. ” the central bank of the republic of turkey will not dodge its responsibilities. in this environment of massive global challenges, we perceive the new inflation targets as attainable. all the existing monetary policy tools in hand will be utilized decisively and without any hesitation in order to attain these targets. while concluding my speech, i would like to extend my thanks to the turkish economic association and the international economic association, and all other institutions and individuals who | 0 |
message received and understood − speech by dave ramsden given remotely at a conference by the lietuvos bankas and the bank for international settlements ( bis ) on the “ future of central banking ” published on 29 september 2022 speech introduction thank you very much for the invitation to join this panel today and i am very sorry i can ’ t be with you in vilnius. real - time market developments kept me here in london, but i ’ m grateful to the organisers from the central bank of lithuania and from the bis for allowing me to contribute virtually to the bank ’ s 100th birthday conference. i really welcome the focus of this panel on data since having access to fast, accurate, appropriately structured data is critical in equipping central banks with the knowledge they need to function in order to meet their objectives. the bank of england ’ s mission to deliver monetary and financial stability is a broad and deep one. we need a similarly broad pool of data of varying depths to fulfil our mission. in 15 minutes i cannot hope to do justice to the variety of data we need to get a clear picture of the economy, the financial system as a whole and the firms we regulate in order to frame action. last year the bank and pra published our data strategy, joint with the fsa, setting out how we will transform our collection and use of data to fulfil our responsibilities as a supervisor and regulator [ 1 ]. in my time today i will focus on my bank responsibilities for payments and give a real - life example of why having real - time data matters and also point to how we could make payments data even more useful through the message that communicates the data. i will conclude with a brief recap on uk financial market developments this week and highlight the use we are making of real - time data to respond to those developments to meet our objective for financial stability. use of real - time payments data the covid - 19 pandemic continues to impact on us in many ways and to change how we do things. in the context of today ’ s panel the pandemic acted as a catalyst for extending use of the bank ’ s payments data. right from its start in march 2020 we knew that the pandemic and the necessary response to it would have very serious but also very different impacts on different sectors of the economy. but it was much less easy to be confident of the scale of those differential impacts and over what time frame. extracting a signal from an understand | and to decide on the operational capabilities and instruments which that role requires. holding meetings and issuing communiques is not enough. as a central banker, i naturally focus more on the imf, and i shall do that today. but the lessons are general. it is worth noting the scale of the challenge. the specific commitments made at the end of the second world war are no longer relevant. the shared experience of the great depression, protectionism and two world wars has faded. and the majority of current nation states were not “ present at the creation ”. the world has certainly changed since 1945, and it is the nature of those changes which underpins the case for reform. the world today is different from that at the creation of the post - war settlement in two important respects. first, despite the increasing integration of the world economy, which might appear to reduce the effect of national policies, the nation state has in fact flourished since 1945. the collapse of ideology and empire, and the triumph of the ideas of a liberal market economy, have been accompanied by an extraordinary expansion in the number of countries in the world. in 1946 there were fewer than 80 countries. now there are 192 members of the un. much of that increase represents the division of empires, such as the former soviet union, into new states, as well as growing ethnic separation. most of these new countries were not “ present at the creation ” and see no reason why they should acquiesce in governance arrangements made in their absence. and the economic weight of countries has changed greatly since the post - war international institutions were set up. in 1950, asian countries accounted for a sixth of world gdp measured at purchasing power parity. now they account for more than a third. second, the world economy is very different today than when the imf, the world bank, and the other international economic institutions were set up. at the end of the second world war, the international monetary system was built around fixed exchange rates and controls on capital flows. the rules of the game were simple. countries were supposed to balance their current account. when “ imbalances ” arose, they were under an obligation to correct them. in practice, however, the obligations on creditor and debtor countries did not prove to be symmetric. over time the advantages of capital flows, particularly in the private sector, became apparent, and in a world without capital controls, it is possible to maintain independent monetary policies only by allowing exchange rates to float. | 0.5 |
to be determined by market forces. it is therefore all the more important that this market process functions as efficiently as possible. and this is where the regulators come in. it is our job to make sure that the regulatory treatment of debt does not give rise to incentives that endanger financial stability. and it is our job to make sure that, if things still go wrong, the financial sector can still deliver its important services to the real economy. as the financial crisis and the euro - area sovereign debt crisis have shown, there is ample room for improvement here. in particular, we need to ensure that all actors bear the responsibility for their respective decisions. to me, three issues are of special relevance in this regard : the question of bail - in vs. bail - out, the regulatory treatment of sovereign debt, and the tax preference of debt over equity. 2. bail - in vs. bail - out let me start with a question that has been debated heatedly since the crisis broke out : the issue of bail - in vs. bail - out. the financial sector is unique in that a malfunctioning of this sector impairs the functioning of all other sectors of the economy. and the crisis has served as a stark reminder that a malfunctioning cannot be ruled out. some form of protection is therefore called for – otherwise, innocent bystanders in the real economy will inevitably get hurt. depending on the kind of malfunctioning, the central bank might be able to provide the protection. if the issue is a temporary dry - up of liquidity, it can act as a lender of last resort and supply the necessary funding – on an interim basis. but if the issue is one of solvency, then the central bank has no role to play, as taxpayers ’ money might be ultimately at stake. rather, it is then for politicians to decide whether to let a bank fail or not. providing insurance in the form of a bail - out comes with obvious moral hazard problems. if banks know that they are too big to fail, they are tempted to make the most of this insurance and take on excessive risks, at the expense of society at large. as the bank of england ’ s chief economist andy haldane put it : “ only in banking do control rights and incentive wrongs combine so uncomfortably. ” instead of the public providing cost - free insurance for banks, the onus is on banks to insure themselves against failure. only then are risk and reward | ", and the banks are perfectly aware of this. sound local structures with working risk management frameworks are indispensable. this does not preclude a certain shifting of sub - risks to specialised risk hubs in london which ensure group - wide risk management. it is clear that decisions cannot be made exclusively from london. what makes this approach all the more important is that, in a crisis, eu - based units will have to be able to act, or be resolved, independently. we will try to take as pragmatic an approach as possible in our preparations. thus, for instance, we are willing to provisionally recognise models approved by uk supervisors in order to ensure a smooth transition. on - site inspections by our banking supervisors, however, will then gradually ensue. the labour market for specialists is an aspect of brexit that thus far has received little attention. this represents a dormant, and not very tangible, risk – as demand for experienced staff will encounter limited supply. these specialists ’ current employers will have to reckon with intensified competition for able brains. this must not be permitted to develop into a risk to the stability of our financial centre. the bundesbank – along with the ssm – will increase its staff in order to maintain the high quality with which it supervises the growing banking market. for us – precisely under the constraints of the public sector – this will represent a challenge. our executive board has already taken the appropriate decisions, which we are now in the process of implementing. all in all – as our talks with the affected institutions, amongst other things, have shown us – i see banks and supervisors alike as being on the right track in terms of shaping brexit - induced change without any major frictions or risks to financial stability. another sign of this is that brexit is not a sudden shock for which there was no time for preparation or response. ever since the uk prime minister declared in the middle of last year that " brexit means brexit, " it has been clear that the united kingdom will leave the eu and that this will entail far - reaching implications for the economy in general and the financial markets in particular. if nothing else, the principle of commercial prudence impels us to prepare for the least - favourable outcome – a hard brexit. all things considered, i am convinced that, while brexit will continue to impair the efficiency of the financial industry, it will, in the process | 0.5 |
loss ” model that is currently in place was that it did not reflect the need for earlier recognition of loan losses. under this model, the bank would usually start to provide for the related credit losses only once those losses actually materialised. from a financial stability perspective, and i hope we can all agree, this is too late and is highly pro - cyclical. in my view one of the key lessons from the crisis is that consideration should also be given to the losses that are inherent to specific assets and are expected to arise over the lifetime of these assets. these two examples point to another striking feature of the current financial reporting regime, namely that traditional performance measures mainly based on accounting figures relating to net income are inadequate in periods of high volatility. therefore let me now turn to potential remedies. first of all, let me be clear on one thing : there is no way back to full historical cost accounting. in some cases, for example trading book items, fair value information may indeed be useful. there are however a set of possible measures which may help address the described shortcomings and to – at least partially – reconcile the needs of investors and prudential regulators. first, adjustment measures should be put in place at regulatory level to prevent the depletion of regulatory capital via distributions during upturns. a concrete example would be the introduction of a non - distributable economic cycle reserve along the lines of what was proposed by adair turner in the so - called “ turner review ” ( march 2009 ). second, we should move from the current “ incurred loss impairment model ” to an “ expected loss impairment model ”. in this context, the ecb welcomes the iasb proposal for a new impairment methodology that is based on the concept of “ expected losses ”, which would contribute to mitigating pro - cyclicality. given that the work in this field is on - going, the ecb urges the iasb to continue working together with the basel committee on banking supervision with a view to developing an operational solution to a more forward - looking provisioning approach. “ evaluating the impact of fair value accounting on financial institutions : implications for accounting standards setting and bank supervision ”, federal reserve bank of boston, december 2011. bis central bankers ’ speeches third, to better reflect actual risks in the performance measures for banks, my proposal would be to introduce more sustainable risk - adjusted performance indicators. a concrete example might be the use of a broader performance measurement framework | as proposed in the september 2010 eu banking structures report. such broader performance measures would incorporate more forward - looking information, encompass more aspects of the performance than just profitability and therefore could be less prone to manipulation from the markets relative to a pure market - oriented indicator such as return on equity. moreover, it provides investors with relevant risk - based information that is useful and relevant for investors. in this context, a bis paper already proposed in 2005 the usefulness of complementing the current accounting reporting framework with risk information. 2 ladies and gentlemen, not just for the aforementioned reasons do central banks have an interest in ifrss. there is an additional reason. in particular, an increasing number of central banks around the globe either comply fully with ifrss or apply an adjusted version of ifrss. issues like ( a ) volatility in the profit and loss account from the use of fair value accounting, ( b ) poor interaction of accounting rules with profit distribution rules and the resulting impact on the financial strength of central banks, as well as ( c ) the extensive disclosure requirements that might not be in line with policy objectives become relevant in this context. i would like to emphasise that the ecb has been a strong supporter of the objectives and work of the iasb since its inception and i personally believe that the iasb has significantly progressed in a relatively short period. the iasb has recognised the widening stakeholder interest in the development of accounting standards, and i appreciate that it has actively engaged with central banks, supervisors and financial stability experts in developing what should eventually be a single set of globally accepted, high quality accounting standards. finally on this point i am delighted that mr hans hoogervorst, chair of the iasb, has agreed to join us today to share with us his vision on the future of ifrss, and i am delighted that mrs flores, chair of the european financial reporting advisory group is also here with us to present europe ’ s view regarding ifrs developments on financial instruments. the second part of this conference deals with the sensitive issue of the financial strength of central banks. this issue has become more relevant over the last years as, due to non - standard operations, balance sheet risks, and in particular credit risk, have increased for a number of central banks. a lot has been written by central bank experts in the past decade on central bank independence and the link with the central bank ’ s financial strength, sometimes with conflicting views. a number of studies have | 1 |
, higher nominal wages would not lead to improvements in real purchasing power, but undermine job creation and fuel inflationary pressures. against this background, the ecb ’ s governing council considers that, features enforcing wage rigidities and leading to nonoptimal wage setting – in particular indexation of nominal wages to the consumer price index – should be avoided. this is particularly accurate in this period where the euro area economy is currently in a juncture which is dominated by exogenous price shocks and uncertainty about the outlook of the real economy. headline inflation which has been pushed up by external pressures on energy and food prices, is today significantly above 2 % in the euro area and even higher in spain. we must absolutely avoid the second round effects, namely that these price developments lead to futures increases of prices and wages and thereby prolong the period of high inflation and disanchor inflation expectations. finally, as regards labour supply, further reforms in income tax and benefit systems would help to increase people ’ s incentives to work. reducing disincentives to work, such as high marginal tax rates, high unemployment benefits, and encouraging people to work longer as it has been done in spain, 8 can stimulate the labour supply and employment of all workers, but particularly those with a generally more tenuous attachment to the labour market, such as women and older workers. furthermore, facilitating the use of flexible forms of work, such as part - time and temporary arrangements, may also contribute to the incorporation of certain segments ( e. g. the young, females ) into the labour market, hence increasing labour supply. 9 in this respect, the experience of some eu member states is telling. for instance, ireland and the netherlands – both euro area countries – as well as denmark, whose currency has been pegged to the euro within the erm since the beginning – have achieved success in reducing unemployment and stimulating job creation, despite significantly different economic conditions. 10 in december 2007 the unemployment rate in these countries was close or below 4. 5 %, while their overall employment rate was well above the euro area average. to achieve such remarkable success, these countries reformed their tax and benefit systems by reducing, for example, the tax wedge on labour income and by enforcing job search rules more strictly and a better monitoring of eligibility for unemployment benefits. they also increased the flexibility of their labour markets. what all these countries also have also in common is that they have significantly reduced product market regulation. this leads to the second prerequisite | recovery and resolution planning, set up a common toolbox of supervisory and resolution measures, and also establish some principles for cross - border cooperation. all this already looks like a huge step forward from the status quo, where national regimes are lacking the necessary resolution powers, and not harmonised with each other, either. moreover, we should not forget that in the single market major banks operate in more than a dozen countries via branches and subsidiaries. when fortis was broken up in 2008, only three countries were involved directly in its crisis management, but cooperation still proved to be difficult. that is why i strongly believe that the eu needs to make progress towards a truly integrated resolution regime that adequately mirrors the cross - border nature of its banking sector. first, let me mention that bank levies have been already imposed in several eu countries. although they are undeniably a burden on the financial sector, i believe collecting ex ante funds for resolution is ultimately beneficial for all parties, if the financial system becomes safer in the long run. but having purely national financing arrangements would again present the practical and political challenges of coordination and eventually sharing burdens among several countries. a superior option would be to collect levies directly at eu level. should this prove politically unfeasible, we would still at least need to have rules on how the national financing arrangements should together contribute to the overall resolution costs. pooling resources in a single pan - eu resolution fund would bring a number of positive elements into the resolution framework of cross - border banking crises : it would reduce the amount that would be subject to burden - sharing ; it would increase risk diversification and additionally provide the right incentives for cooperation. in any case, precise and transparent procedures and balanced decision - making mechanisms relating to the activation and use of the funds will be necessary to make it acceptable for member states. second, i also think that a pan - european financing arrangement is the pre - condition for an even more ambitious step forward, namely the establishment of a single european resolution authority. why would we need such a body? we have already learnt from past experience that crisis management and resolution calls for incredibly quick decisions. this typically means taking over a bank on a weekend and opening it for customers on the monday, for example in the form of a bridge bank. considering all the legal and technical complexities of such a move in a cross - border context, the only efficient way to do this is to have a single authority taking the lead and relying on national resolution authorities | 0.5 |
impede the effective operation of markets, causing severe systemic disruptions and financial instability. financial market infrastructures went largely unnoticed until the global financial crisis broke, and although they performed well through the crisis, it was only then that an appreciation was found for the true importance of such infrastructures, reflecting the fundamental role they play in ensuring financial stability. with this in mind, in april 2012, the committee on payment and settlement systems at the bank for international settlements ( cpss ) and the international organization of securities commissions ( iosco ) published new international standards for payment, clearing and settlement systems, including central counterparties. the main objectives of the new principles are to ensure a robust global financial market infrastructure, which if faced with the financial shocks of the magnitude experienced in 2007 / 2008, will continue to operate effectively. these new standards are tougher and are due to be adopted by cpss and iosco members by the end of 2012. however, i note that the next session will be dealing specifically with this issue, insofar as it pertains to south africa and our state of readiness, and so i will refrain from going into any further detail. 4. financial market infrastructure developments in south africa it is important to indicate at the outset that financial market infrastructures in both the payment and securities markets require a collaborative approach from all the stakeholders. clearing and settlement processes in both these areas involve the interaction of various parties, including participants, infrastructure providers and regulatory authorities, who all have an important role to play. as early as 1993, discussions were initiated between the south african reserve bank ( the bank ) and the banking industry to modernise and develop the domestic payment system. in this process, a strategic approach for the development of the payment system was adopted and meetings were held at different levels with various stakeholders, which culminated in the publication of the framework and strategy document for the national payment system ( commonly known as the “ blue book ” ), in 1995. the blue book bis central bankers ’ speeches outlined various strategies envisioned for the payment system over the next ten years, leading up to 2005. the strategies addressed various aspects of payment system reform that had been identified, as well as the establishment of key pillars of the desired financial market infrastructures and appropriate supporting arrangements. one of the strategies, for example, relates to the establishment of a sound legal framework which culminated in the promulgation of the national payment system ( nps ) act in october 1998. a review completed in 2003, revealed that all | came much later only recently – was when donald kohn, former vice chairman of the us federal reserve apologized by saying, “ the cops were not on the beat, resulting in the worst economic recession and loss of millions of jobs ”! at the end of the day, the problem is not not knowing the problem, but knowing it and dithering, agonizing over choices, temporizing, procrastinating and doing nothing credible, timely, tangible and decisive about it. in other words, in my considered opinion, we don ’ t really have to rethink capitalism and globalisation, for paraphrasing john ruskin, what finally matters is not knowing what must be done but actually doing what must be done and doing it when it must be done!! 2. the cataclysmic financial crisis has thrown into sharp relief, as never before, the critical and important role of “ asset price ” inflation / asset bubbles also, as opposed to that of shop floor / products / services inflation alone, as a key variable, in monetary policy response. for what happened was unprecedented in that with monetary policy focused only on traditional cpi, interest rates were kept low in spite of exploding prices of assets like real estate / property, credit assets, equity and commodities. and this was all made possible because of the huge pre - crisis current account surpluses in china and other emerging market economies ( emes ), and huge private capital inflows into emes in excess of their current account deficits, getting recycled back as official capital flows into government bonds of reserve currency countries, especially the usa, resulting in compression of long term yields which, in turn, translated into lower long term interest rates even for the riskier asset classes mentioned above. this chasing of yield, due to global savings glut, in turn, led to a veritable credit bubble, characterized by unprecedented underpricing of risk as reflected in the all - time - low risk premia with junk bonds spreads becoming indistinguishable from bis central bankers ’ speeches investment grade debt! such a low interest rate environment coupled with luxuriant supply of liquidity, created enabling environment for excessive leverage and risk taking. this financial syndrome was a classical case of “ too much ” and “ too little ” – too much liquidity, too much leverage, too much complex financial engineering, too little return for risk, too little understanding of risks ”. this syndrome of too much of arc | 0 |
zeti akhtar aziz : strengthening economic structures and fundamentals statement by dr zeti akhtar aziz, governor of the central bank of malaysia, at the joint annual discussion of the boards of governors at the 2005 world bank - imf annual meeting, washington dc, 26 september 2005. * * * as we strengthen our global relationships, there needs to be greater engagement with the entire spectrum of member countries. if we are to achieve a more balanced global growth, greater stability in the global financial system and significant progress in the fight against poverty, there needs to be greater appreciation and understanding of the global issues from the perspective of the emerging and developing economies. in the current environment, the risks to global growth have increased, presenting us with an even more challenging environment to achieve these goals. should the trend of higher oil and asset prices, and rising interest rates continue, their combined effect could diminish the near - term global growth prospects. in this environment, appropriate policies are vital to ensure that any moderation in growth does not evolve into a fundamental economic slowdown. while countries have strengthened their resilience, international cooperation becomes important in addressing these issues. at the national level, widespread reform efforts have intensified. these have been reinforced by regional initiatives. of equal importance are reforms at the international level. it is the nature of the leadership that is exercised at the international level, and the actions initiated, that will determine the effectiveness and relevance of the role of the international financial institutions in the global economy. in asia, significant progress has been made at the regional level in strengthening the underlying economic structures and fundamentals. the economies in asia continue to be among the fastest growing in the world, and thus contributing to the rebalancing of global growth and stability. in addition to promoting domestic sources of growth, economies in asia have also enhanced regional economic and financial cooperation, including measures to strengthen regional surveillance and financial support mechanisms, and to deepen the regional capital market. the greater economic and financial integration in asia has been a mutually reinforcing force in strengthening growth in the regional economies. intra - regional trade and investment flows in asia have continued to increase significantly in recent years. progress has also been made in the further deregulation and liberalisation of the economic and financial sector, thereby increasing the potential for the asian economies to contribute to global growth and stability. malaysia's own performance has been favourable, with continued steady growth being experienced. the malaysian economy has continued to shift to new areas | of comparative advantage, to new areas of growth, with the private sector being the main driver of growth. resources have continued to shift towards the services sector, towards strengthening linkages in the manufacturing sector, and to the resource - based industries and the agricultural sector. this has contributed to a well - diversified economic structure and has increased the resilience of the economy to external developments. the financial sector has also seen significant transformation. the restructuring, consolidation, and internal rationalisation of the banking sector is now virtually completed. governance and risk management practices have also been improved while structural enhancements have been made in the capital market, significantly enhancing its role in the financial system. a comprehensive and robust islamic financial system now also operates in parallel with the domestic, conventional financial system. against the background of strengthened economic fundamentals and financial system, malaysia has taken the opportunity to sequentially deregulate and liberalise the financial system. this includes the introduction of a new interest rate framework that is market - driven, 1 / 2 the liberalisation of foreign exchange administration rules to promote greater efficiency and enhance risk management in foreign exchange transactions, and the introduction of new foreign players into our financial system. in july this year, malaysia adopted a managed float for the ringgit exchange rate to better position malaysia to respond to structural changes in the global and regional environment. under this arrangement, the ringgit is monitored against a basket of currencies of malaysia's major trading partners. in this world of greater uncertainty, there has been significant focus on the issue of surveillance and risks and vulnerabilities. experience has shown that surveillance has improved policy performance as well as the ability to take pre - emptive action to contain the impact of disruptive and destabilising developments. these efforts, however, need to be balanced by efforts to enhance the capacity of countries not only to manage the risks and vulnerabilities, but also to sustain their own capacity to support growth and development. capacity building involves helping countries to help themselves. it requires enhancing the institutional capacity of the country. support in putting in place the necessary institutional structures, arrangements and systems would increase the potential for the sustainability of the development process. strengthening these foundations are vital to the deregulation and liberalisation process. they represent the pre - conditions to any reform agenda. in this regard, capital account liberalisation needs to be managed in accordance with the country's own institutional capabilities and implementation capacity. supporting financial infrastructures, sound and strong financial institutions, | 1 |
international investment position, australia : supplementary statistics, 2012 ”, abs cat no 5352. 0, tables 2 and 5. abs ( 2013b ), “ international trade in goods and services, australia, aug 2013 ”, abs cat no abs 5368. 0, tables 14a and 14b. abs ( 2013c ), “ overseas arrivals and departures, australia, aug 2013 ”, abs cat no 3401. 0, tables 5 and 9. acemoglu d, s johnson and ja robinson ( 2001 ), “ the colonial origins of comparative development : an empirical investigation ”, the american economic review, 91 ( 5 ), pp 1369 – 1401. bis central bankers ’ speeches acemoglu d, s johnson and ja robinson ( 2005 ), “ institutions as a fundamental cause of long - run growth ”, in p aghion and sn durlauf ( eds ), handbook of economic growth, vol 1a, chapter 6, elsevier bv. blainey g ( 1983 ), the tyranny of distance : how distance shaped australia ’ s history, macmillan, melbourne. dyer c ( 2009 ), the french explorers and sydney, university of queensland press, brisbane. grier rm ( 1997 ), “ colonial legacies and economic growth ”, public choice, vol 98, pp 317 – 335. maddison a ( 2003 ), the world economy : historical statistics, development centre studies, oecd publishing. mitchell br and deane p ( 1962 ), abstract of british historical statistics, cambridge university press, london. mitchell br and jones hg ( 1971 ), second abstract of british historical statistics, cambridge university press, london. ons ( office for national statistics ) ( 2013 ), “ uk trade, june 2013 ”, statistical bulletin, august, pp 1 – 51. rba ( reserve bank of australia ) ( 1997 ), “ australian economic statistics 1949 – 50 to 1996 – 97 ”, reserve bank of australia occasional paper no 8. ukhov a and wn goetzmann ( 2005 ), “ british investment overseas 1870 – 1913 : a modern portfolio theory approach ”, nber working paper no 11266. vamplew w ( 1987 ), australians : historical statistics, fairfax, sync & weldon associates, sydney. bis central bankers ’ speeches | made, but on which there is still much work to do. in my view, having developed a very substantial pipeline of work since 2008, our energies need now to be devoted to careful and systematic implementation of the already agreed reforms. that is not to preclude new regulatory initiatives, which are still being put forward. but the implementation task arising from the pipeline of reforms already agreed, either in detail or at a conceptual level, is very large indeed. of these, the most important ones are the basel iii package, the reforms for otc derivatives trading and clearing, establishing appropriate oversight of “ shadow banking ”, and work to address the problem of “ too big to fail ”, including cross - border resolution of systemically important financial institutions. this by no means exhausts the list of work streams, but these are the key ones. each is individually very demanding for regulators and industry players alike. taken together, they are, in a word, daunting. we need to avoid reform fatigue, and to sustain our support to those doing the hard grind of devising the new rules and making them work. to do that, we need, in my opinion, to contain the growth in the regulatory agenda, and to respond only to the most important calls for further major work streams, at least for the next little while. let me be clear this is not a call for current reform efforts to stop, or to be watered down. it is about ensuring we focus our finite energies and resources on the most important problems, and getting industry to do the same. the second point is that the business community, both in the uk and australia, and generally under the auspices of the “ b20 ”, can contribute to meaningful progress towards the g20 ’ s broader goals. that contribution will be most constructive if it can avoid being dominated by particular national or industry interests, if it can adopt a genuinely global perspective, if it can have realistic aspirations and if it can understand the constraints under which policymakers operate. a contribution like that will be key to achieving the g20 ’ s goals : an open world economy, characterised by strong, sustainable and balanced growth. i hope that australian and uk business leaders, along with their peers from around the other g20 countries, will seize that opportunity and that responsibility. references abs ( australian bureau of statistics ) ( 2012 ), “ migration, australia, 2010 – 11 ”, abs cat no 3412. 0, august. abs ( 2013a ), “ | 1 |
’ s 2 percent objective, with the personal consumption expenditures ( pce ) price index up only 1 / 4 percent over the 12 months ending in may and the core index, which excludes the volatile food and energy components, up only 1 - 1 / 4 percent over the same period. to a significant extent, the recent low readings on total pce inflation reflect influences that are likely to be transitory, particularly the earlier steep declines in oil prices and in the prices of non - energy imported goods. indeed, energy prices appear to have stabilized recently. although monthly inflation readings have firmed lately, the 12 - month change in the pce price index is likely to remain near its recent low level in the near term. my colleagues and i continue to expect that as the effects of these transitory factors dissipate and as the labor market improves further, inflation will move gradually back toward our 2 percent objective over the medium term. market - based measures of inflation compensation remain low – although they have risen some from their levels earlier this year – and survey - based measures of longer - term inflation expectations have remained stable. the committee will continue to monitor inflation developments carefully. monetary policy regarding monetary policy, the fomc conducts policy to promote maximum employment and price stability, as required by our statutory mandate from the congress. given the economic situation that i just described, the committee has judged that a high degree of monetary policy accommodation remains appropriate. consistent with that assessment, we have continued to maintain the target range for the federal funds rate at 0 to 1 / 4 percent and have kept the federal reserve ’ s holdings of longer - term securities at their current elevated level to help maintain accommodative financial conditions. in its most recent statement, the fomc again noted that it judged it would be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. the committee will determine the timing of the initial increase in the federal funds rate on a meeting - by - meeting basis, depending on its assessment of realized and expected progress toward its objectives of maximum employment and 2 percent inflation. if the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target, thereby beginning to normalize the stance of monetary policy. indeed, most participants in june projected that an increase in the federal funds target | not just the federal reserve – should be directed and empowered to take account of risks to the broader financial system as part of their normal oversight responsibilities. conclusion as we work together to build on the progress already made toward securing a sustained economic recovery, we cannot lose sight of the need to reorient our supervisory approach and to strengthen our regulatory and legal framework to help prevent a recurrence of the events of the past two years. as i have described today, the federal reserve has been actively engaged in this process. we are working with our domestic and international counterparts to strengthen the standards governing bank capital, liquidity, risk management, incentive compensation, and consumer protection, among other areas. we are also improving supervision, and giving it a greater macroprudential focus, through enhanced consolidated supervision and through the development of new supervisory tools – including comprehensive horizontal reviews, off - site quantitative evaluations, and more extensive information gathering. we are moving quickly to bring unresolved issues to the attention of senior management and requiring prompt responses. regulators and supervisors can do a great deal, but comprehensive financial reform requires action by the congress. strengthening consolidated supervision, setting up a mechanism ( such as a systemic oversight council ) to identify and monitor risks to financial stability, and creating a framework that allows for the safe unwinding of failing, systemically critical firms are among the essential ingredients of a new system that will reduce the probability of future crises and greatly mitigate the severity of any that occur. we at the federal reserve look forward to working closely with the congress as the legislative process evolves. | 0 |
for retail payments is a stark reminder that if we don ’ t take the initiative, someone else will. page 2 sur 6 the need for a safe settlement asset has therefore become apparent. to date, tokenised finance has indeed lacked the anchor provided by central bank money, which reduces counterparty and liquidity risks, and crucially ensures the finality of payments. as a monetary anchor, tokenised central bank money would ensure convertibility between tokenised assets, exactly as central banks currently ensure the convertibility between commercial bank monies. in short, tokenised central bank money would provide a “ safety pivot ”, and serve as a reliable basis of trust on which these new technologies could realise their full potential. this is why it is in the interest of both european commercial banks and the public sector to work together towards a tokenised european framework. on the public side, this means advancing on the front of a wholesale cbdc. since last april, the eurosystem has started exploring new technologies for the settlement in central bank money ii, including the issuance of a first type of tokenised cbdc. the eligibility criteria and the call of interest be published in the coming weeks, and experiments will be rolled out over the course of 2024, including trials with real transactions. commercial banks and other financial actors will have a key role in the success of the exploratory work of the eurosystem. in this regard, the bis has made a strong case for the concept of “ tokenised deposits ” : recorded as a liability on the issuer ’ s balance sheet, they differ from stablecoins, which are backed by a specific pool of assets and issued mainly by bigtechs, not by banks. i invite european commercial banks to take ownership of “ tokenised deposits ” and experiment with its implementation. european players cannot lag behind : on the one hand, remaining a spectator of the surge of stablecoins issued by bigtechs, none of which are european ; on the other hand, not investigating the front of tokenised deposits, where american and asian banks seem to be innovating faster. private tokenised money providers could complement a wholesale cbdc ; such a framework would replicate the two - tier monetary system, thereby ensuring a key role for commercial banks in the tokenised world. page 3 sur 6 b. enhancing cross - border payments improving cross - border payments has been identified as one of the g20 ’ s priorities : the dedicated 2020 roadmap | g20 and the financial stability board ( fsb ) in particular have been instrumental in efforts aimed at enlarging the scope of financial regulation to make sure that the systemic importance and interconnectedness of institutions, markets, instruments no longer escape our vigilance. naturally, the necessary reform of otc derivatives markets has gained traction and the g20 has set a very clear roadmap on these matters. efforts aimed at integrating these markets into regulated and supervised market infrastructures are indeed an essential policy response to risks accumulated in these markets. however, the crisis has not just shown us that we should expand the scope of regulation and supervision. in fact, two clear trends have emerged and are greatly affecting the very nature of regulation. the first observable trend is that we must complement micro - supervision with macrofinancial supervision : this macroprudential approach has in fact developed in many countries. the second trend is that regulation needs to become more global in response to the globalization of finance. in that respect, the commitment by all g20 jurisdictions to implement basel ii by 2011 and to finalize this year a new package aimed at strengthening bank capital and liquidity standards is a great achievement. we are confident that making tangible progress on each of these fronts is an essential response from policy makers to the roots of the global financial crisis. to some extent, the ultimate aim of financial regulation has to do with financing the real economy. sound regulation should enable the stable provision of financial services to economic agents as they strive to finance their productive investments and consumption, which constitute the fuel for growth. banks are central to the financing of economic activity because they perform maturity and liquidity transformation as well as a credit risk screening function. this is especially true in continental europe, where they are responsible for more than 80 % of financial intermediation. this is why the current focus on enhancing banking regulation is right and progress on key reforms to strengthen bank capital and liquidity standards remains a top priority. the recent reform package of the basel committee will lead to a much more robust and resilient banking system in the future, with both a stronger capital and liquidity base than before the crisis. the challenge, now, is to calibrate and phase in the new framework in a way that does not impede the recovery and does not contradict our macroeconomic objectives. the macroeconomic assessment of the reforms underway will help us strike the optimal balance. we must also reduce procyclicality. some of | 0.5 |
repeatedly published its forecast in which the decline in the fertility rate was declared to be only temporary and the birth rate expected to rise again soon ( figure 2. ) similarly, life expectancy forecasts have shown that the actual figures consistently exceeded the forecasts ( figure 3 ). these forecast errors show the fundamental uncertainty surrounding the pace of population ageing. and if the actual outcome deviates from the estimated life expectancy and longevity of the entire population in an economy, all service providers will be affected. for example, in the case of longevity risk products, even a slight deviation could significantly increase the exposures of service providers. avoiding patchwork and “ spaghetti code ” problems regulatory and supervisory reform is often called for once such deviation causes an unexpected accumulation of losses. however, this kind of loss - induced regulatory and supervisory reform often leads to patchwork plumbing, which in turn results in a vicious circle of further losses and more patchwork. the repetition of such ad - hoc adjustments to the framework can cause what computer programmers refer to as “ spaghetti code ” problems, in which the framework becomes too complex and entangled, like spaghetti, so that no one knows how to fix the problem. thus, we must be careful not to make over - optimistic forecasts, especially when these forecasts underlie the overall framework and any forecast error might bring about irrevocable losses. it is also important to have in advance a clear strategy on appropriate policy responses when a forecast error is observed, especially in dealing with “ spaghetti code ” risks. the performance of the framework should be subject to continuous review, and necessary measures should be readily available at all times. with these measures in place, it should be possible to prevent a mere forecast error from turning into an “ irreversible ” disorder of the whole system. in this sense, it is better to address the challenges of population ageing by incorporating a second best “ fail - safe ” mechanism into our overall institutional framework, rather than by chasing the first best solution while pretending our forecasts are always rational and unbiased. 2 concluding remarks the recent financial crisis has completely changed the landscape of financial services, both for financial institutions and for supervisors. before the lehman crisis, people tended to see only the “ bright side ” of new financial products, such as securitized products, derivatives, and cross - border transactions, believing them to be backed by advanced and innovative risk - management and investment tools. however, since the crisis revealed the risks and problems | yukitoshi funo : economic activity and prices in japan, and monetary policy speech by mr yukitoshi funo, member of the policy board of the bank of japan, at a meeting with business leaders, niigata, 31 august 2016. * * * i. recent economic and price developments a. overseas developments i would like to begin my speech by talking about developments in overseas economies. in global financial markets, uncertainty over the global economy going forward heightened and investors ’ risk aversion rapidly strengthened in response to the result of the united kingdom ’ s referendum in late june, in which the majority voted to leave the european union ( eu ). however, global financial markets have been regaining calmness. in this situation, overseas economies have continued to grow at a moderate pace as a whole, although the pace of growth has somewhat decelerated, mainly in emerging and commodity - exporting economies. as for the outlook, overseas economies are expected to moderately increase their growth rates, as it is likely that advanced economies will see steady growth, and emerging economies in particular will gradually move out of their deceleration phase, mainly through their policy measures. according to the world economic outlook ( weo ) update released in july 2016 by the international monetary fund ( imf ), global growth projections have been revised slightly downward from the april 2016 weo, particularly for europe, but the longerterm projection that the global growth rate will moderately increase from 2015 through 2017, from 3. 1 percent in 2015 and 2016 to 3. 4 percent in 2017, is unchanged. looking at developments by major region, the u. s. economy has been on a recovery trend on the back of firmness in household spending. as for the outlook, the industrial sector and overseas demand will likely continue to show mixed developments for the time being, but the economy is expected to continue to see firm growth driven by private demand under accommodative financial conditions. the european economy has continued to recover moderately as private consumption continues to increase. as for the outlook, the economy is projected to see a temporary slowdown in its pace of recovery as firms ’ and households ’ sentiment is becoming cautious due to uncertainty, mainly associated with the united kingdom ’ s vote to leave the eu, but is likely to return to a moderate growth path. the chinese economy has been slightly subdued, particularly in the manufacturing sector, which faces an overhang of production capacities. as for the outlook, the economy is likely to broadly follow | 0.5 |
company or holdco where they are absorbed following the creditor hierarchy, capital first and then debt. • my third example of issues that will be addressed through resolution planning is foreign law debt. we cannot count as mrel or tlac instruments where the statutory powers of the resolution authority to bail them in are uncertain. brrd is explicit on this requiring, under article 55, all third country unsecured liabilities to carry contractural terms that provide for bail - in. most existing debt instruments do not. as part of the resolution planning process, we will ensure that they do and that our statutory powers in resolution are enforceable. these examples illustrate the basic idea that there is much to be done through the resolution planning process to make existing liability structures compatible with resolution. this won ’ t be a matter of grandfathering. indeed even if a particular liability meets the definition of mrel, on the face of the directive it does not mean it does not represent a barrier to resolvability. as resolution authorities we will address these barriers as part of our resolution planning work and find ways to remove them. or else we will adjust mrel requirements for bis central bankers ’ speeches firms. in the fsb proposal this is the placeholder for a pillar 2 element alongside the pillar 1 minimum requirements set out in the term sheet. my third theme is why then a standard – if we are going to be preparing resolution plans and setting mrel for individual firms why have a standard at all? there is an obvious level playing field consideration, especially among the g - sibs that compete with each other and operate internationally. but there is a deeper reason that goes to making resolution – and indeed international banking – work. the resolution naysayers point to the events of the crisis and the lehman failure in particular and say that cross - border resolution will never work, national interest will always win out. clearly the whole enterprise of resolution planning is to face up to this challenge ex ante. the key attributes envisaged cooperation agreements ( coags ) among the authorities to describe a common resolution plan for an individual g - sib. but to work coags need underpinning and this is where tlac comes in. not only does tlac provide countries with confidence that g - sibs are operating with sufficient resources to be resolved safely. but that confidence is provided in a concrete form. this is the internal tlac downstreamed in spe groups from the parent entity to material subsidiaries | elements. this approach allows the participants to exploit potential business opportunities while fulfilling certain social responsibilities. 6. cross - border exchange and cooperation are imperative. apart from taking into full consideration the elements of time, place and people, we can benefit from observing the achievement of others in financial innovation. for products or services that are sophisticated or distinctive, we can study the concepts, repackage or adapt them for introduction to the local market. much can be gained and shared from getting to know other markets through cross - border exchange. through mutual understanding and interaction, we have better understanding of other markets and hence better knowledge. since the return to the motherland and the signing of the closer economic partnership agreement ( cepa ), economic ties between hong kong, macao and the mainland have much strengthened. there will be profound implications if trade transactions between these places can be settled in renminbi. this is a form of financial innovation which can only be materialized through cross - border cooperation involving not only the trading of commodities but also cooperation between the governments concerned. now, i would like to share with you another live experience. as we all know, since the return to the motherland, the macao sar government has been trying to turn macao into a service platform for the mainland and portuguesespeaking countries by capitalizing on the historical relationship that macao built up with the latter. financial cooperation between portuguese - speaking countries and msar has flourished from mere acquaintance. in september 2006, the bank of china ( macao branch ), bpi of portugal and its angolan subsidiary, bfa, signed a tri - partite cooperation agreement in the annual “ macao international trade & investment fair ” ( “ mif ” ). this agreement covers financial services including remittance made available to chinese enterprises and workers in angola. this appears to be a very simple cooperation arrangement. however, a closer look shows a few special features. traditionally, similar arrangements involve only two parties. now, this one involves one more party for a specific reason. the arrangement is not concluded for business between macao and angola or between macao and portugal. it is specially arranged for transactions between angola and the mainland. from this example, there is great potential for financial innovation in the area of cross - border cooperation. besides, we believe that much can be achieved between the pan - pearl delta region and its brother provinces and regions, between macao and the mainland, as well as between the mainland and portuguese - speaking countries | 0 |
( with inverted sign ). for the us it is based on g. rudebusch ( 2009 ), “ the fed ’ s monetary policy response to the current crisis ”, san francisco fed economic letter. for the euro area it is based on an update of the reaction function estimated in l. christiano, r. motto and m. rostagno ( 2010 ), “ financial factors in economic fluctuations ”, ecb wp no. 1192. the price of risk of equity is derived from the vix - index following bekaert et al. ( 2010 ), “ risk, uncertainty and monetary policy ”, nber working paper series no. 16397. the charts are based on the historical decomposition derived from their multivariate model, extended also to the euro area. subject to data availability, the sample is 1997 – 2007. source : ecb staff calculations. bis central bankers ’ speeches chart 12 : monetary policy accommodation and leverage note : monetary policy accommodation is proxied by the residual of an estimated monetary policy reaction function ( with inverted sign ). for the us it is based on g. rudebusch ( 2009 ), “ the fed ’ s monetary policy response to the current crisis ”, san francisco fed economic letter. for the euro area it is based on an update of the reaction function estimated in l. christiano, r. motto and m. rostagno ( 2010 ), “ financial factors in economic fluctuations ”, ecb wp no. 1192. for the us leverage is computed as the year - on - year change in the leverage ratio of brokers and dealers. for the euro area it is computed as the year - on - year change in the leverage ratio of ofis computed on the basis of asset transactions to make sure that movements in leverage are not dominated by revaluation of assets. subject to data availability, the sample is 1997 – 2007. source : ecb staff calculations. bis central bankers ’ speeches | is no surprise that most of the countries with the largest deficits and the largest increase in debt after the crisis have been those in which the financial sector played an increasing role, also as a source of fiscal revenue. as the financial industry becomes less profitable, and provides less tax revenue, the gap has to be filled by other sources of taxation, or lower public expenditures, which may be politically difficult to accept. these aspects may not have been fully incorporated in the projections for the adjustment of public finances in many advanced economies, unless it is expected that the financial sector will return to its pre - crisis peak, which is a risky assumption. more generally, this crisis has shown the vulnerability of public finances to volatile structures in the economy. in good times, volatile sources of income, such as those from the financial sector or the housing market, may overestimate the soundness of public finances, while the adjustment costs in the downturn may be enormous. a case in point is that of ireland, which during the pre - crisis years was able to reduce taxes and increase expenditures for an amount of about 12 % of gdp ( in the period 2003 – 2008 ), thanks to the rise in revenues from the financial sector and from housing. the comparatively large size of these two sectors made irish public finances vulnerable to the bust of the cycle, leaving personal income tax as the shock absorber until the economy recovers. interestingly, the fiscal package that is included in the irish adjustment programme with the imf is of a comparable magnitude to the pre - crisis fiscal expansion. surveillance has clearly failed to understand this phenomenon. more attention needs to be paid to the overall size and interconnectedness of the financial sector as a whole in the various countries, and to the ability of these countries to absorb shocks affecting not only a single financial institution but the whole financial system. it is now fashionable to stress - test the banks. it would probably be appropriate to stress - test countries as well. bis central bankers ’ speeches conclusions let me conclude by suggesting that surveillance of the world economy, in particular some of its systemically relevant members, has to focus more on the sustainability of their policies, in particular their fiscal and monetary policies. some policies may appear to be sustainable on the basis of assumptions which may turn out to be simplistic, especially those relating to long - term trends of growth and inflation. in particular they may not take sufficiently into consideration the impact of broader developments under way in the global economy. as keynes said | 1 |
risks from a commercial firm to its bank : i ) first, by limiting related - party transactions between the bank and its commercial firm owner and requiring that their relations are conducted at market prices, ii ) second, by aligning the incentives of banks ’ board members and managers. for example by requiring that the majority of banks ’ board members remain independent from the controlling firm or other affiliates of the conglomerate. and iii ) third, through the analyses and risk assessments of the financial positions of the entire group. in order to gain a meaningful idea of the risks of a large conglomerate, some financial authorities have suggested that supervision must cover the relevant risk positions of the letter to congressman james a. leach, january 20, 2006. board of governors of the federal reserve system. entire group. this constitutes a formidable challenge. legal amendments would have to be made to compile basic management information on financial condition and risk exposures of the group as a whole. it is also important to send a clear message that the bank will be able to stand alone if the commercial owner gets into trouble, and thus banks ’ depositors and creditors do not need to run for the exit. other conflicts of interest likely to surface when commercial firms become bank owners are the anticompetitive practices that commercial firms may conduct once they have a bank. for instance, commercial firms may require their suppliers to have their financial services arranged by their banks. banks belonging to a commercial firm may also engage in tied selling practices by, for example, extending consumer credit only for purchases made in the commercial retailer. finally, we should be very careful with the protection of personal data to prevent the non - authorized transfer of personal information ( bank secrecy ). final remarks embracing globalization brings both benefits and challenges. the evolution of the financial industry in mexico constitutes a good example. openness to foreign direct investment in the financial system was essential to recapitalize the banking sector and increase efficiency. it also brought other benefits, such as new technologies and products, and advanced risk management techniques. however, it is important that the authorities continue to foster competition through transparency and disclosure, as well as new entrants to the system without increasing the risks to it. | javier guzman calafell : groundbreaking shifts in the international financial system remarks by mr javier guzman calafell, deputy governor of the bank of mexico, during the conference “ groundbreaking shifts in the international financial system ”, organized by “ the us - korea institute at johns hopkins school of advanced international studies ” and “ the reinventing bretton woods committee ”, washington dc, 17 april 2015. * * * the views expressed in this document are strictly personal and do not necessarily coincide with those of banco de mexico ’ s board. i thank the organizers, and especially marc uzan, for the invitation to participate in this panel. the global financial crisis has been a painful reminder of the crucial importance of macrofinancial linkages for financial stability. in particular, it has shown how interactions between the real and the financial sector can give rise to “ procyclicality ” and thus to systemic risk, especially through their impact on the value of assets and leverage. it has also become evident after the crisis that common risk exposures by financial institutions, or the interconnectedness among institutions or markets, can also be a source of systemic risk. naturally, there may be a close relationship between both sources of systemic risks, and in fact they frequently arise simultaneously. the international community has made a major effort to take on board the lessons for financial stability deriving from the global financial crisis. thus, new bank capital, liquidity and leverage rules have been introduced under basel iii to reduce procyclicality and crosssectional systemic risks ; special measures have been designed for systemically important firms ; stress tests are conducted to make sure that banks can continue to operate under very difficult conditions ; accounting standards have been strengthened ; reforms have been introduced to address some of the risks related to the nonbank sector ; new standards for the financial infrastructure, with particular attention to the derivatives markets have been developed ; and in general a macroprudential approach for regulation and supervision has been emphasized. the measures implemented after the crisis have contributed significantly to mitigate some of the vulnerabilities that precipitated it. however, the challenges arising from macrofinancial linkages have not disappeared, and in fact a number of new risks have emerged. let me touch briefly on some of these issues. in the first place, notwithstanding the efforts made, some of the difficulties that surfaced during the crisis have not been fully tackled. • balance sheet repair of the non - financial sector in advanced economies is a case in | 0.5 |
efficacy of the payment card industry data security standard ( pci dss ) is a proprietary information security standard for organizations that handle cardholder information for the major debit, credit, prepaid cards etc. bis central bankers ’ speeches such a retail payment system for the country. the impact of innovations on cash and monetary policy may be required to be analyzed in the long run once the volumes pick up. retail payment systems – kyc constraint although we always propagate that availability and accessibility of a payment product / process is the key factor to be considered for financial inclusion the fact remains that these customers have to pass the test of proving identity. innovating a retail payment system keeping the biometric identity in mind is the need of the hour. but that calls for nationwide initiative. in india, however, integrating the aadhaar ( biometric ) with payment systems has started happening with the regulator supporting its acceptance as a valid kyc proof. concluding thoughts i hope all of you have had two days of fruitful discussions and debate. i also hope you had a pleasant stay in india. i know the best is yet to come when you will be taken to the country ’ s historically most important infrastructure, the taj mahal, tomorrow. wish you have a great time exploring india and that you will all return academically and culturally richer back to your respective countries. wish you all the best. bis central bankers ’ speeches | wealth funds be permitted to take a controlling stake of 40 percent. asset quality 13. during the quarter ended december 2013, banks collectively held loan provisions of about rupees one lakh crores, an increase of 13 percent over the year, indicating that loan asset quality of banks in india deteriorated considerably the trend of y - o - y growth in gross non - performing advances ( gnpa ) outstripping the y - o - y growth of advances, that started from the quarter ended september 2011, continues although the gap in the growth rates is narrowed 5. the psbs continued to register the highest level of stressed advances at 11. 3 per cent of the total advances as at end march 2014, followed by the old private bank at 5. 8 per cent. though agriculture sector showed the highest gnpa ratio the industry sector showed distinctly high level of restructured standard advances, resulting in the stressed advances of the industry sector reaching 15. 6 per cent followed by the services at 7. 9 per cent as at december 2013. there are five sub - sectors, namely, infrastructure { which includes power generation, telecommunications, roads, ports, airports, railways ( other than indian railways ) and others infrastructure }, iron and steel, textiles, mining ( including coal ) and aviation services had significantly higher level of stress and thus these sub - sectors / segments were identified as “ stressed ” sectors in the banks ’ lending portfolios. the share of these five stressed sub - sectors to the total advances of the scbs is around 24 per cent. infrastructure has the highest share at 14. 7 per cent in the total advances. among the bank - groups, these five sub - sectors have the highest share at 27. 3 per cent in the case of psbs. 14. it is widely accepted that the economic slowdown has affected the asset quality of banks adversely though the impact is not similar across bank groups. sector - wise and their sizewise analysis of asset quality shows that the gnpa ratio of psbs across the sectors and their size are significantly higher than the other bank - groups. how do we face up to the challenge of deteriorating asset quality of banks? though analysts have often pointed out that the poor asset quality of the banks, to a great extent, could be attributed to the not so the system level gross non - performing advances ( gnpa ) of scbs as percentage of total advances, declined to 3. 9 per cent in march 2014 from 4. 2 per | 0.5 |
world will probably take some time, but sooner or later the differences between emerging and developed economies will narrow, mitigating pressures on our currency. beyond these fluctuations, the gains in competitiveness that our country needs in order to remain on the path to development will be achieved not with actions that artificially increase the level of the nominal exchange rate, but rather with structural reforms that will improve productivity and, therefore, the competitive stance of our exports. the many differences in the speed of the economic recovery in the world has combined with foreign exchange tensions and, in the past few months, increased inflationary pressures at the global level. food prices, responding to the stronger demand of emerging economies and to worsened supply - side conditions, have skyrocketed, rising even faster than between early 2007 and mid - 2008. add to this the sustained increase in the oil price since mid - 2010, which intensified last february because of the political unrest in the middle east and northern africa. bis central bankers ’ speeches under these circumstances, today monetary policy faces an important challenge. like after the global financial debacle of 2008, when it was highly flexible in responding to the confidence crisis around the world, now it must again be flexible in withdrawing the monetary stimulus, creating the conditions for sustainable growth and acting preventively to avoid a resurgence of inflation. since last december, the board has raised the monetary policy interest rate ( mpr ) by 75 basis points to 4 percent in the meeting of last march. in the scenario we consider the most likely, we will continue to remove the monetary stimulus, at a pace that will depend on unfolding macroeconomic conditions, but which will be principally oriented to achieving the inflation target. now let me describe the factors that underlie the most likely scenario and the main risks it faces. macroeconomic scenario in the last few months, y - o - y cpi inflation, in line with projections in december ’ s report, has hovered around the target, with an annual variation of 2. 7 percent at february. core indicators have returned to positive, yet still low ( figure 1 ). nonetheless, as i said, even if actual inflation continues to be aligned with the target and our previous forecasts, the latest developments have increased our concern for inflation, as they have in other economies. in the emerging world, growth has proceeded as expected, within an environment where foreign exchange tensions remain and commodity prices continue on the rise, especially for oil and foodstuffs ( figure 2 ). this | levels of capitalization would permit it to absorb an episode of sharp gdp slowdown, an increase in the cost of credit in pesos and an exchange rate depreciation. meanwhile, the state keeps a net creditor position, contributing to the access to external loans at low spreads. our terms of trade, although lower than some months ago, are high by historic standards, and our external credit access conditions are good, also by historic standards as well as compared with other emerging economies. annual inflation is somewhat above 4 %. the latest monthly cpi figure was unexpected, but given its characteristics it does not change our evaluation of the medium - term inflation trend, which remains centered on 3 %, just as we stated in our monetary policy report. private inflation expectations are also stable around 3 % y - o - y. this body of information leads us to establish that our baseline scenario remains in full force. but still in this conjuncture, which looks fairly favorable for the chilean economy and the chileans ’ financial situation, it is necessary to warn about the high risks that persist and that is why the cbc keeps risks for growth biased towards more negative scenarios. in particular, among these risks there is the possibility of new episodes of international financial volatility ultimately affecting the agents ’ expectations, global demand and international credit. the possibility is still there of a deeper than forecast recession in the eurozone, as well as of a disorderly evolution of the continent ’ s problems or even of a fragmentation. and one must also consider the possibility of a sharper adjustment of growth in china. neither should geopolitical tensions in the middle east be overlooked, with its potential implications on the oil price. all these external contingencies are part of the preoccupations we monitor closely at the cbc in cooperation with the finance ministry and superintendences of the financial sector, within the framework of our coordination meetings and those of the financial stability committee. the preoccupation motivating this session is which measures we could take to confront a further worsening of the global situation that could wash over our domestic economy. the central bank of chile has the necessary tools and policy space to act to mitigate the effects of adverse external scenarios over the chilean economy. the capacity of the bank to react to a global worsening has been already proven during the episode of 2008 – 2009. the board, as has been said time and again, has the flexibility and disposition to use these tools as needed. in | 0.5 |
the bank of italy sponsored a hackathon, a worldwide competition on applying big data, natural language processing and artificial intelligence techniques to green and sustainable finance, that was jointly organized with the bis innovation hub of singapore under the italian g20 presidency. in 2020, we created milano hub, a technological hub supporting the development of innovation and the digital transformation of the italian financial system. after the great success of the first two calls for proposals, we will launch a third one in the next months in the last few years, we have redesigned our recruitment and hiring process by seeking out new skillsets such as big data, machine learning and artificial intelligence. this is just the beginning. we need to rethink our processes and foster the adoption and development of the right skills. to achieve these goals, we have sponsored special data science training programmes in some italian universities. the new cohort of hires have already started their journey, which aims to create a flatter organizational structure. in 2020, the total amount of data created, captured, copied, and consumed globally was around 100 zettabytes ( an astounding value of 1023 bytes ), and it is expected to rapidly increase, reaching 180 zettabytes in 2025. 1 the mind - boggling amount of data that is now available to us, provided we are able to analyse it effectively, can give us a better picture of the economy at both the micro and the macro level. the bank of italy has constantly striven to be at the cutting edge in developing software and hardware platforms, enabling big data analytics2 for statistical and economic applications. one of the most significant takeaways from this workshop is recognizing that data is not just a resource : it is essential for effective decision - making in central banking. the quality, quantity, and timeliness of data can make all the difference in crafting policies that safeguard our economies and maintain financial stability. by harnessing the power of data science, central banks can enhance their capabilities, anticipate trends, and respond swiftly to emerging challenges. data taken from https : / / www. statista. com / statistics / 871513 / worldwide - data - created / on september 25 2023. see, for example, ‘ big data processing : is there a framework suitable for economists and statisticians? ’, 2017 ieee international conference on big data ( big data ), 2017, pp. 2804 - 2811, doi : 10. 1109 / bigdata | a possible solution for processing individual data. 4 the bank of italy has begun experimenting with these technologies. see'calibrating noise to sensitivity in private data analysis ’, cynthia dwork frank mcsherry, kobbi nissim, 2006. see ‘ a fully homomorphic encryption scheme ’, craig gentry, 2009. it is important to note that there is no one - size - fits - all approach to data ethics. the specific ethical considerations will vary depending on the type of data being collected and used, the purpose for which it is being used, and the potential impact on individuals and society. looking ahead as we are nearing the conclusion of this workshop, let us bear in mind that our journey with data science in central banking has just begun. the knowledge and skills we have acquired here are tools that we can wield to drive innovation and excellence in our institutions. it is our responsibility to apply what we ’ ve learned, adapt to the everevolving landscape of technology and data, and lead the way in shaping the future of central banking. i encourage all of you to stay connected, collaborate, and continue the dialogue beyond this workshop. the relationships we have built here can be the foundation for future partnerships and collaborations that will drive progress in our field. the bank of italy is firmly committed to carrying out further research on these issues and cooperating with other institutions to strengthen methodologies and applications. finally, let us not forget the significance of our work. central banking plays a key role in the stability and prosperity of our countries. data science can help us navigate the complex waters of modern finance. together, we can steer our institutions toward greater resilience, transparency, and effectiveness. we have had the privilege of learning from distinguished experts and practitioners in the field, who have shared their knowledge, experiences, and insights. these interactions have enriched our perspectives and deepened our understanding of the intricate relationship between data science and central banking. i would like to extend my heartfelt gratitude to all the speakers, instructors, and organizers who have made this workshop a resounding success. thank you all for your dedication, your commitment, and your thirst for knowledge. it has been an honour and a privilege for me to be a part of this workshop with you. i wish you all continued success in your endeavours, and may the insights gained here guide us toward a brighter future in our profession. | 1 |
associated with an increase in cross - border shopping. while these are adverse forces, it is also important to point out that a weaker sterling may benefit some smes that rely on imported inputs from the uk and that real income gains to households due to cheaper imports from the uk may in part be recycled into higher spending on domestically - produced goods and services. over the longer term, the irish sme sector will have to adapt to the post - brexit environment. the current uncertainty about the future uk - eu relationship will delay many investment plans. in turn, as clarity about the post - brexit world improves, firms will have to develop new strategies to respond to the new configuration. in response to higher trade barriers between the uk and the eu, some firms may plan to serve uk customers through fdi into the uk, while others may search for new export markets. in the other direction, some uk firms may look to set up affiliates in ireland both to serve the irish market and as a platform for eu - wide trading. smes and the central bank the mission statement of the central bank is “ safeguarding stability, protecting consumers. ” the last decade has provided a painful reminder that the sme sector is especially exposed to volatility in domestic macroeconomic and financial conditions. the current work of the central bank is dedicated to improving the resilience of the financial system and mitigating pro - cyclical dynamics in credit allocation. in relation to resilience, a primary international strategy ( implemented through the work of the ecb ’ s single supervisory mechanism ) is to improve the capacity of banks to withstand shocks by fortifying capital and liquidity buffers and implementing a more intrusive supervisory model. in addition, the bank recovery and resolution directive provides a framework that will make it easier to restructure or shut down failing banks, with limited recourse to the taxpayer. as the national macroprudential authority, the central bank is also working to reduce the risk of destabilising credit cycles. in addition to the the new mortgage rules, the central bank has additional macroprudential policy instruments, including the counter - cyclical captial buffer which can be raised if there are signs of overheating in the credit system. the vigorous use of nationallevel macroprudential policy is essential for small, open economies, given the elevated exposure to external financial shocks. such measures can play a substantial role in helping to reduce macro - financial volati | is changing the whole environment. the latest phenomenon is internet banking which introduces new challenges for the regulator who must ensure that the interests of customers are safeguarded. financial institutions are concerned that there be clarity from a legal and regulatory perspective. the central bank has adopted a very positive approach towards the use of the internet as a medium to provide services ; a number of applications for licence or authorisation are being considered. our local industry is under threat from centralisation within the european union as the financial markets become more integrated. investors have a preference for larger markets with greater liquidity. up to 30 banks from the european economic area are now branching into ireland. we cannot entirely dismiss the prospect that within a few years the irish market could be dominated by foreign owned banks. competition is growing more intense ; there is a price to be paid and this is perhaps reflected in the recent closures of local branches which can no longer be subsidised. the irish banks must be cost efficient in order to maintain their position. this is the background against which the regulator must operate. a high level of professionalism is demanded. we must aspire to having the highest standards of regulation. we must keep pace with international developments and much is happening internationally. general in conclusion, may i draw attention to some figures in the annual report and accounts of the central bank for 1999. the banka€™s profits from its operations during 1999 were million. of this, million is transferred to the exchequer. at the end of last year, the bank reserves were in the region of billion. the numbers employed last year totalled approximately 650 of whom about 140 worked on supervision. full details of all our activities are given in the annual report ; i recommend this to the committee. | 0.5 |
inflation targeting. there can be little doubt that both real and financial global integration have brought enormous economic benefits. still, it has been increasingly questioned of late. we partly understand why. we know that there are significant gains from real integration but that there are winners and losers. the losers can be compensated in principle, but in practice this does not always happen. inequality has increased within many countries and economic integration is blamed, although research shows that technological change plays a significantly bigger role. at least in part, the case of financial integration is different. finance is an integral part of economic progress, and there are significant benefits from global financial integration. but more is not always better when it comes to finance, as we learned the hard way during the latest financial crisis. furthermore, large and volatile capital flows can undermine the financial stability of countries. it is not clear who the winners are in that case nor what the compensation mechanism would be. spillover effects from monetary policy of global rate setting countries to small, open and financially integrated economies ( sofies ) increase as global financial integration intensifies. in particular, if the global rate setter experiences an economic slack at a time when a sofie is booming, the sofie might find it difficult to pursue warranted macroeconomic policies without risks to financial stability and / or significant detrimental effects on export sectors. this could be the case if there are perceived limitations to the use of fiscal policy ; for instance, if there is already a sizable headline surplus. in this situation, macroprudential and even capital flow management measures could help. in iceland ’ s case and some others, this raises the issue of compatibility with existing international and regional treaty obligations regarding free movement of capital. the jury is still out on these issues. it is one thing to try to make global financial integration safer and to mitigate unwanted spillover effects – which might involve some retrenchment, as it did in this country and many others after the crisis – but it is another matter entirely to bring about a large - scale reversal of the global financial integration of recent decades. most likely, such a reversal would seriously undermine real economic integration and the benefits associated with it. we are going to discuss these issues and others that pertain to the current state and future prospects of global economic integration. after jaime ’ s keynote speech, we will have two sessions with substantive presentations and discussions on different aspects of the topic. this afternoon, we aim to take stock of recent trends in global and regional economic and | roughly 100 seminars around the world and must be among the best connected individuals in this business. at the time of the 70th anniversary of the bretton woods conference he edited a large volume of short essays on the international monetary system that i among many others had the pleasure to contribute to. i have also spoken in several of his seminars. it is a great pleasure to work with him, and he has become a good friend. i have come to realise that what drives him is a passion to improve the international monetary system. it matters a lot, and for various reasons it matters more for small countries like iceland than for big countries that can better fend for themselves in a non - multilateral and non - rule based world. that is why we are having this conference here. marc, the floor is yours. | 1 |
and resilience of banks has increased significantly as they have built on the regulatory reforms and supervisory efforts that followed the great financial crisis. this has enabled them to support households and firms through the economic hardships stemming from the pandemic. we need banks to be able to do the same in the context of the current macroeconomic and climate challenges. we want banks to thrive. and we need them to play their role in the economy, now and in the future. this is why we continue to push them to assess whether their risk management tools and practices are still fit for purpose, and to improve them where necessary. and it's why we insist that banks should remain prudent and not take favourable developments in net interest income for granted. let me conclude. as banking supervisors, much of what we have to do echoes the mindset of monetary policymakers. we have to remain on our guard. we are committed to delivering on our mandate of keeping the banking system safe and sound. we will make sure that the banks under our supervision remain mindful of and resilient to the risks that may emerge. and we will use all the instruments at our disposal. this goes beyond our formal supervisory measures. it means that, in our ongoing supervisory interactions with banks, we will be perceptive with our eyes, receptive with our ears and – whenever necessary and appropriate – insistent with our mouths and intrusive with our presence and through our actions. attentive to risks. always promoting prudence. to make sure that my future speaking notes can continue to refer to healthy and resilient banks in the euro area, irrespective of the tides and currents that come to our shores. vielen dank fur ihre aufmerksamkeit. 1 lagarde, c. ( 2022 ), " monetary policy in a high inflation environment : commitment and clarity ", lecture organised by eesti pank and dedicated to professor ragnar nurkse, tallinn, 4 november. 2 nagel, j. ( 2022 ), " die pandemie und ihre okonomischen auswirkungen ", speech at the wirtschaftsclub karlsruhe, 10 november. 4 / 5 bis - central bankers'speeches 3 enria, a. ( 2002 ), " better safe than sorry : banking supervision in the wake of exogenous shocks ", speech at the austrian financial authority supervisory conference 2022, vienna, 4 october. 4 | still needed as several sectors in various areas remain burdened by excessive regulation. these delays act as a brake on the flexibility and competition that is required to improve the long - term sustainable employment and growth prospects. one area still requiring much attention, as i already mentioned, is the labour market. the potential benefits, in terms of higher aggregate welfare and employment growth, of reforming euro area labour markets are high. following the reforms implemented in the 1990s, positive effects can already be felt. these include the stronger employment growth and the sharp decline in unemployment rates recorded in the euro area in recent years. progress with labour market structural reforms has, however, been very uneven among euro area countries. indeed, rigidities persist. for example, although the euro area unemployment rate in 2001 stood at 8. 5 %, survey studies show that companies often had problems in recruiting workers. such labour mismatches demonstrate that more reforms are needed not only to increase labour supply and demand and improve job creation, but also to increase the likelihood that vacancies be filled and the unemployed find work more quickly. in addition, an unemployment rate still above 8 %, low levels of labour force participation and uneven labour market performances across euro area countries clearly indicate that further measures need to be taken. reforms, in particular, are required to improve job intermediation, to enhance wage flexibility and increase wage differentiation, to improve education and to promote training and life - long learning in order to maintain and develop human capital. moreover, reforms of the tax and benefit systems, the introduction of less restrictive employment protection, working time flexibility, and measures to increase labour mobility are also needed. it is also important to keep in mind that these reforms should be carried out in a broader, more systematic and co - ordinated manner across sectors and countries than at present. if the objective is to transform the euro area into the most competitive and dynamic economy in the world, as was decided at the lisbon european council in 2000, more efforts are needed. challenges for fiscal policy i would now like to devote my attention to fiscal policy. national fiscal policies in europe are guided by the budgetary provisions contained in the maastricht treaty and in the stability and growth pact. the provisions in the maastricht treaty, which limit the levels of government deficit and government debt, have been key to achieving sounder public finances. the stability and growth pact, agreed upon in 1997, introduced the target of a budgetary position close to balance or in surplus | 0.5 |
on more employees. using the same reasoning, unemployment would therefore rise if inflation was pushed down by tightening monetary policy. it is this relationship that is usually described with the aid of what is known as the short - term phillips curve. some of the criticism aimed at monetary policy in recent years appears to be based on the assumption that there is a clear - cut long - term relationship between inflation and unemployment. however, it is not possible to buy lower unemployment in the longer term by allowing inflation to rise. sooner or later wage - earners will require compensation for the higher inflation by raising their wage demands. as prices and wages rise, the stimulating effect of monetary policy will wane. demand will fall again and employment will decline. in the long term, unemployment will return to its long - term equilibrium level. a systematic, expansionary monetary policy would only have the consequence that inflation and inflation expectations would soar. this correlation is usually illustrated with the aid of the so - called long - term phillips curve. there is currently a broad consensus on this, both in central bank circles and the academic world. in my opinion, it is therefore not possible to claim that an economic policy that aims for low and stable inflation would in itself lead to higher unemployment. another part of the criticism is based on the assumption that it is not possible to buy lower unemployment by pushing up inflation, although there is instead apparently an assumption that if only the riksbank would ensure that inflation remains at 2 per cent, then unemployment would stabilise around its long - term equilibrium level. in practice, however, there is no such simple relationship between inflation and unemployment. firstly, unemployment is affected by a number of factors other than inflation, most of which have nothing to do with monetary policy, such as productivity changes, changes in regulatory systems and various shocks that regularly impact on the economy. similarly, inflation is affected not only by developments in the labour market, but by many other factors. empirical studies have shown that unemployment “ explains ” a relatively small percentage of total inflation. this means that inflation developments are largely “ explained ” by other factors than unemployment. secondly, it has proved very difficult to assess what is a long - term equilibrium level for unemployment and moreover that this also varies over time. one conclusion of this is that even if the riksbank were to always succeed in holding inflation at the target, this would be no guarantee that unemployment would be low and stable. unemployment is instead determined in the long run by how well | is important to give a detailed report of when such factors are taken into account. this is a strategy the riksbank follows. so far, the riksbank has not found reason to take account of what happens beyond the normal forecast horizon when formulating its monetary policy, although it does normally produce surveys of the economy for longer periods. however, i have argued on several occasions in 1999 and 2000 that there was reason to raise the instrumental rate, taking into account the effects in a longer term perspective. nevertheless, asset prices should not be included in the formulation of monetary policy targets. there is otherwise a risk that the central bank would counteract adjustments that were fundamentally motivated. this would reduce the efficiency of the resource allocation and probably subdue growth. other measures in addition to price stability, most central banks have a responsibility for financial stability. according to a narrow definition, financial stability is equal to a lack of crises in systemically - important banks. the banks have important functions with regard to the payment system and the supply of capital. it is easy to see that without an efficient payment system and capital supply the economy would be unable to function. monetary policy would have no effect in this situation. large shocks to the functioning of the financial system would also reduce the effectiveness of monetary policy, as the transmission mechanism is affected by the efficiency of the capital supply and the mediation of payments. the fact that there are close links between the central banks'two tasks becomes particularly evident when the effects of financial bubbles are discussed. an important part of the process leading up to large imbalances is credit granting by the banks. the fact that households and companies demand loans for increased consumption and investment when asset prices are rising is one thing, but it also requires that the banks increase their supply of loans. if the banks have well - developed risk systems, and rules and supervision are designed to motivate the banks to utilise them, the risk of exaggerated lending will be reduced. the way that capital adequacy rules are designed and applied is of great significance. the new capital adequacy rules, basel 2, are aimed at reflecting to a greater extent than now the risks the banks actually take. however, valuating credit risks over a whole economic cycle is very difficult. the indications are that both internal credit risk models and credit rating agencies tend to underestimate credit risks during an upturn in economic activity and to overestimate them during a downturn. there is thus a risk that | 0.5 |
dealing with the situation of developing countries. our compatriots are concerned about the solidity of european banks in general and that of french banks in particular. many readers are wondering if their savings are safe? are they safe? european banks are much stronger than they were in 2008. their capital ratios have practically doubled. their regulatory framework has been strengthened and their supervisors are far more vigilant and scrupulous than they were back then. the banking sector is as strong as one could wish for. savers can rest assured. 3 / 3 bis central bankers'speeches | union is key to halt it, and i welcome eu leaders ’ resolve to swiftly agree on a single resolution mechanism. finally, europe should remain open to the world. further progress on bilateral or regional free trade agreements, and cooperation in implementing the new financial regulatory standards, are the best signal in this respect. conclusion let me draw to a close by re - emphasising that crises, despite their negative consequences, can have positive effects. they can galvanise efforts and focus minds. they can drive change and bring about progress. they can pave the way for innovative solutions. but to secure these gains, cooperation across national borders is crucial, in other words, there must be a willingness to work towards common goals and to learn from each other and resist protectionism. this spirit will be essential to tackle the challenges still ahead of us, not only in the euro area but also at a global level. it is often claimed that the chinese and japanese word for crisis, weiji or kiki ( [UNK] [UNK] or [UNK] [UNK] ), is made of the two characters meaning “ danger ” and “ opportunity ”. while there can be no doubt that wei means “ danger ”, i would rather understand ji as meaning the critical moment when things have to change – the ancient greeks ’ kairos. this critical moment has now arrived for europe. europe has emerged from the danger zone. it ’ s time for us to get our act together, to reform, and to grow. thank you very much for your attention. bis central bankers ’ speeches chart 1 credit growth to the private sector in east asia and the euro area ( in percentage changes, year to year ) sources : imf weo and haver analytics. bis central bankers ’ speeches chart 2 current account balances in east asia and the euro area ( in % of gdp, east asia in 1996, euro area in 2008 ) sources : imf weo and haver analytics. bis central bankers ’ speeches chart 3 real gdp growth in east asia and japan before, during and after their crises ( in percentage, year to year ) source : haver analytics. bis central bankers ’ speeches chart 4 export and import volumes of goods and services in east asia ( in percentage changes, year to year ) sources : imf weo and haver analytics. bis central bankers ’ speeches | 0.5 |
but they are prone to inconsistent quality and incompleteness. without harmonization of the definitions and methods underlying these disclosures, it will be challenging to make comparisons across firms and exposures. consistent, comparable, and, ultimately, mandatory disclosures are likely to be vital to enable market participants to measure, monitor, and manage climate risks on a consistent basis across firms. 18 the securities and exchange commission has responsibility for this critical workstream in the united states. 19 making progress going forward, it will be important to improve our understanding of climate - related financial risks and vulnerabilities. the federal reserve ’ s supervision climate committee is engaging with domestic stakeholders and other supervisors from a prudential perspective. ultimately, i anticipate it will be helpful to provide supervisory guidance for large banking institutions in their efforts to appropriately measure, monitor, and manage material climate - related risks, following the lead of a number of other countries. in addition, the federal reserve ’ s financial stability climate committee is assessing climaterelated risks to financial stability from a macroprudential perspective — that is, one that considers the potential for complex interactions across the financial system. both the prudential and macroprudential work programs will benefit from the development of climate scenario analysis. conclusion together these efforts can help ensure that the financial system is resilient to climate - related risks and well positioned for the transition to a sustainable economy. our conversations with climate experts, large banking institutions, other financial intermediaries, stakeholders, and 4 / 6 bis central bankers'speeches regulators underscore the complexity of the connections between the climate and economic and financial systems. to better understand these connections, several foreign regulators have already undertaken climate scenario analysis, affording us the opportunity to learn from their experiences. it will be helpful to move ahead with the first generation of climate scenario analysis to identify risks and potential issues and to inform subsequent refinements to our models and data. we will reach better outcomes if we tackle these challenges through open dialogue and continued engagement of the kind exemplified by today ’ s conference. 1 i am grateful to luca guerrieri and cindy vojtech as well as kevin stiroh of the federal reserve board for their assistance in preparing this text. these views are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. return to text 2 see intergovernmental panel on climate change ( 2021 ; in press ), “ summary for policymakers, ” in | lael brainard : building climate scenario analysis on the foundations of economic research speech ( via webcast ) by ms lael brainard, member of the board of governors of the federal reserve system, at the 2021 federal reserve stress testing research conference, federal reserve bank of boston, boston, massachusetts, 7 october 2021. * * * i want to thank all of you for joining our research conference and the organizing committee for inviting me to share some thoughts on climate scenario analysis. 1 economic analysis suggests that climate change could have profound consequences for the level, trend growth, and variability of economic activity over time and across regions and sectors. some of these effects could occur gradually, while others could occur relatively quickly in the presence of “ tipping points. ” policy, technology, and behavioral responses could similarly have material financial consequences. against this backdrop, the federal reserve is carefully considering the potential implications of climate - related risks for financial institutions and the financial system, with scenario analysis emerging as a potential key analytical tool for that purpose. climate change is projected to have profound effects on the economy and the financial system, and it is already inflicting damage. the sixth assessment report by the intergovernmental panel on climate change ( ipcc ) notes that “ if global warming increases, some compound extreme events with low likelihood in [ the ] past and current climate will become more frequent, and there will be a higher likelihood that events with increased intensities, durations and / or spatial extents unprecedented in the observational record will occur. " 2 we can already see the growing costs associated with the increasing frequency and severity of climate - related events. the total cost of u. s. weather and climate disasters over the last 5 full years exceeds $ 630 billion, which is a record. 3 during this period, massive flooding in the midwest has caused billions of dollars in damages to farms, homes, and businesses. 4 the california department of insurance has documented growing problems with the availability of fire insurance for homeowners, and the state legislature provided new protections for wildfire survivors. 5 last year was the sixth consecutive year that the united states experienced ten or more billion - dollar weather and climate disasters. 6 and this summer, hurricane ida alone is estimated to have caused more than $ 30 billion in insurance losses. 7 the pandemic is a stark reminder that extreme events can materialize with little warning and trigger severe financial losses and market disruptions, and the ipcc sixth assessment report is a reminder of the | 1 |
. – on the other hand, and that concerns the economy as a whole, it is essential to foster the development of a market financing as a complement to bank financing. although the process has already started, the speed and extent of the shift differs across countries and sectors. the development of a more balanced funding structure is a necessarily long process, which requires a strong commitment and support from public intervention. in europe, a series of initiatives, led by the authorities, are under way to revive the moribund securitization market but also to develop the private placements markets. on securitization, incidentally, allow me to note that it suffered unduly in europe from the us experience, while having been much less prone to default. more generally, the european commission ’ s capital markets union project will support the increase in funding flows, the diversification of risks and a better allocation of resources. bis central bankers ’ speeches this shift towards more market - based financing entails two main implications from a financial stability perspective : – first, the proliferation of regulation brings uncertainty to market participants. the analysis of the cumulative impact and the interactions between regulations is still in its early days but it must be continued. vigilance is indeed required to ensure that the implementation of reforms does not result in a reduction of activities that are vital for financing investments and firms. i notably think of the market - making activity which shows signs of decline, partly due to the regulatory costs. this decline needs to be monitored in a financial system where we are promoting market financing and where market making is key for issuers and investors. – second, the development of alternative sources of funding, outside the banking system, brings a necessary diversification. yet the risks associated to disintermediation are clear, notably a limited assessment of risks by investors or less ability to address difficult situations and gaps in supervision. in parallel, reintermediation by non - banks raises level - playing field questions linked with uneven regulation and supervision across sectors and countries. to discuss these important issues, we are extremely fortunate to gather an exceptional panel today, with : • mrs sheila bair, chair of the systemic risk council, former chair of the federal deposit insurance corporation ( fdic ), who is obviously a prominent regulator. dear sheila, your work to build a more robust financial system, that serves the economy, is particularly impressive and your views on how to make it even more resilient are very sharp ; • we also have mrs | council of state conference – paris, 14 november 2023 monetary sovereignty in the 21st century speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ) and deborah guedj ( deborah. guedj @ banque - france. fr ) page 1 of 6 mr president of the constitutional council [ laurent fabius ], vice - president of the council of state [ didier - roland tabuteau ], general [ andre lanata ], madam section president [ martine de boisdeffre ], ladies and gentlemen, i am very honoured to have been invited to take part in this conference on sovereignty. i realise, however, that this has very little to do with me personally, but a great deal to do with the object that i represent : money is the natural and almost obvious participant here. money has been a standard attribute of sovereignty, ever since the theory first advanced by jean bodin in the 16th century that : “ only he who has the power to make law can regulate the coinage ”. i this power to create money was for a long time embodied in the person of the king : in france, philippe iv the fair ( 1285 - 1314 ) was the first to mint gold coins bearing his effigy. but it was louis xiii in 1640 who first named them after himself : the term “ louis d ’ or ” even lasted throughout part of the revolution, before gradually being replaced by the “ napoleon ”. through metonymy, the “ sovereign ” is the name of an english gold coin first minted in 1489. this equivalence between money and sovereignty is therefore centuries old, but i would like to revisit it this evening from two angles : ( i ) first, by looking at the relationship between monetary sovereignty and political sovereignty, and two of its contemporary metamorphoses ; and ( ii ) by examining the most acute, but probably less perceived, challenge that we face today, which is that of the renewed competition from private “ currencies ” – due to technology – vis - a - vis public money. i. monetary sovereignty and political sovereignty the assertion of monetary sovereignty was one of the most powerful instruments in the construction of national unity and state sovereignty. the gradual centralisation of the minting monopoly – from the middle ages onwards page 2 of 6 in france – and the promotion of national currencies, were | 0.5 |
or in addition to the lack of demand, as posited by larry summers, and the slowdown in productivity growth prognosticated by bob gordon, a cause which could become the most important of all. that said, the risks of technological unemployment are aptly, if somewhat controversially, summarised in tony atkinson ’ s recent remark that “ the direction of technological change should be an explicit concern of policy - makers, encouraging innovation in a form that increases the employability of workers and emphasises the human dimension of service provision ”. 35 however, what we should do is not so much fear the direct impact of the new technologies and computerisation on jobs, as work to take advantage of the enormous cost reductions that will derive from them. the growth of innovative industries is now the principal engine of growth in employment and in productivity. in an influential book, enrico moretti has shown that every high - tech job created in a particular us metropolitan area has been accompanied by five new jobs in the traditional, low - skilled, low - education sectors. 36 perhaps the level of generality of this result still needs to be established, but it is indicative of the powerful effects of innovation. what is certain is that people will have to work in different ways, in different jobs and different places, over a career span marked by continuous, lifelong learning and training. we must acquire the skills necessary for the twenty - first century : critical thinking, aptitude for problem - solving, creativity and acceptance of innovation, the ability to communicate effectively, and openness to cooperation and group work. this while we continue to invest in knowledge, in schools and universities, with the aim of rapidly overcoming the very serious deficit of “ functional literacy and numeracy ” observed in many countries ( notably in italy ) by the 2013 oecd ’ s programme for the international assessment of adult competencies. 37 indeed, as famously stated by benjamin franklin in his almanac, “ an investment in knowledge pays the best interest ”. this investment in knowledge must necessarily pay b. eichengreen, “ secular stagnation : a review of the issues ”, in teulings and baldwin, op. cit. a. b. atkinson ( 2014 ), “ after piketty? ”, op. cit. e. moretti, the new geography of jobs, boston - new york, houghton mifflin / harcourt, 2012. oecd, “ oecd skills outlook 2013 : first | antonio fazio : franco modigliani address by mr antonio fazio, governor of the bank of italy, at the accademia nazionale dei lincei international conference, rome, 18 february 2005. * 1. * * some personal recollections franco modigliani occupies a central role in 20th century economic analysis. for his work on the theories of saving and finance he was awarded the nobel prize. he made considerable contributions on innumerable topics, as is borne out by the five volumes of his collected papers. his participation in the debate on italian economic policy answered to the profound need of the man and the economist, who, after analyzing problems, threw into the search for solutions the whole weight of his civic passion, his commitment to the welfare of the community, of those he regarded as his fellow citizens. discussions, whether with economic policymakers or with young people eager to learn from him, were always lively and directed to conclusions that were analytically well - founded and socially fair. i first met franco modigliani in 1957. during a trip to italy, the first since the end of the war, he gave a lesson in piazza borghese to professor travaglini ’ s political economy students. we had studied bresciani turroni, including his attempts to make an empirical analysis of the demand for egyptian cotton, and were tackling value and capital. i was struck by franco ’ s description of the way the consumption function was estimated, in the united states, of course. political economy did not end with sophisticated analyses of isoquants, the income effect and the substitution effect : it was a practical science. after graduating and spending some time in the bank of italy ’ s economic research department on a scholarship, i was encouraged by professor cutilli to write to a number of american universities in order to specialize in monetary theory and econometrics. in the end i chose northwestern, because professor modigliani taught there, and it was partly thanks to him that i was admitted. at the beginning of 1962 franco announced to me that he was moving to the massachusetts institute of technology and suggested i should follow him. i did, without hesitating. under paul samuelson ’ s influence, mit was already at the forefront of the academic world, for the originality of its research, the quality of its teaching staff, and the constant wrestling with practical problems ; among the latter, i have pleasure in recalling kennedy | 0.5 |
every day. some of the important risks that could affect all instruments – from terrorist attacks, invasion of computer systems, or even the consequences of a flu pandemic – are almost impossible to quantify, and past experience offers little guide. be cautious about how much you borrow is not a bad maxim for each and every one of us here tonight. ignore the unsolicited emails that rain down on us offering unwanted credit. i received one last week that began, “ we have the solution, mervyn, for your bankruptcy ”. the development of complex financial instruments and the spate of loan arrangements without traditional covenants suggest another maxim : be cautious about how much you lend, especially when you know rather little about the activities of the borrower. it may say champagne – aaa – on the label of an increasing number of structured credit instruments. but by the time investors get to what ’ s left in the bottle, it could taste rather flat. assessing the effective degree of leverage in an ever - changing financial system is far from straightforward, and the liquidity of the markets in complex instruments, especially in conditions when many players would be trying to reduce the leverage of their portfolios at the same time, is unpredictable. excessive leverage is the common theme of many financial crises of the past. are we really so much cleverer than the financiers of the past? concerns about the rate at which credit is being created extend to monetary policy. as i said last week in cardiff, it would be optimistic in the extreme to suppose that the rapid growth of money and credit could be dismissed solely as a positive shock to the demand for money. the spread between interest rates paid by households and businesses and interest rates available in the money market has fallen. this has been one of the factors behind the strength of demand in the uk economy over the past year. despite greater availability of labour, businesses have not expanded employment sufficiently to prevent stronger demand from increasing capacity pressures. such pressures encourage businesses to raise prices. and that is exactly what the business surveys suggest has been happening. that underlying upward pressure on inflation has in part been hidden by the volatility of domestic energy prices. but it is why we have raised interest rates four times and by 1 percentage point in all over the past year. our central view remains that inflation will fall back this year as the rises in domestic gas and electricity prices last year drop out of the annual comparison, and the recent cuts in prices feed through to household bills. but | from earlier in the year, we should not take much solace from that. after a very weak first half, when growth was less than one percent, economic activity has strengthened somewhat and inflation pressures are starting to ease. growth in the third quarter is currently estimated 2. 5 percent, and recent indicators suggest growth in the fourth quarter could be somewhat higher. however as we look toward 2012 the u. s. economy continues to face several obstacles to a robust economy. accordingly, i expect growth of about 2. 75 percent for 2012, not much higher. we also continue to face significant downside risks, mostly related to the stress in the eurozone. we cannot be satisfied with the current state of the economy or the outlook for the next few years. the economy is operating far below its productive potential – leaving the levels of output, income and employment much lower than they would be if the economy ’ s unused resources were put back to work. one summary statistic says it all – the unemployment rate is unacceptably high at 9 percent. imbalances and deleveraging so why has the u. s. recovery been so underwhelming? i think the answer lies in the nature of the boom in credit and housing, and the collateral damage that the bust caused to household balance sheets and to the financial system. recoveries that take place in the aftermath of severe financial shocks and big declines in asset prices that were mainly funded by debt require highly indebted borrowers to deleverage, or in other words, pay down their debts. these shocks and asset price declines, in turn, generate large losses for the financial sector that tightens credit availability and further restricts demand. with weak demand comes weak income growth. meanwhile, financial and economic volatility and the uncertainty this creates about prospects for future incomes causes those who retain access to credit to hold back. what we have learned, i think, is that the power of these economic forces is even stronger than we had previously understood. and, in such circumstances, although a stimulative monetary policy is essential for recovery, it may not be sufficient. to illustrate the problem, let ’ s begin by examining net debt flows in the private nonfinancial and government sectors over the last 10 years. as can be seen in chart 1, borrowing by the bis central bankers ’ speeches private nonfinancial sector rose rapidly from 2003 to 2006 and remained high until the crisis hit. then borrowing turned negative as new | 0 |
exports of goods, tourist arrivals and receipts. the improved outlook for the economy boosted economic sentiment, increased bank deposits, improved greece ’ s credit rating and led to successive declines in the banks ’ dependence on central bank financing : for example, emergency liquidity assistance ( ela ) for greek banks now stands at €26. 9 billion, down from its peak of €90 billion in july 2015. in addition, yields of greek government bonds declined to late - 2009 levels, which allowed the greek government to return to international markets, after a period of three years, on july 25. moreover, the slope of the yield curve steepened, implying improved investor perceptions for the outlook of the greek economy. corporate bond yields have also fallen to historically low levels. meanwhile, greek banks have made their way back to international financial markets by selling covered bonds. looking forward recent soft data, such as the manufacturing pmi and the economic sentiment indicator, point to a sustained recovery in the coming months. overall, in 2017 the bank of greece estimates that gdp will increase by approximately 1. 7 %. for 2018 and 2019, growth is projected to accelerate to 2. 4 % and 2. 7 % respectively. these projections are mainly based on the assumption that the reform programme will be implemented smoothly and according to the existing timetable. 3. risks and major challenges ahead despite the positive signs that are being recorded today and the progress achieved, there are still downside risks to the outlook of the greek economy. in the short - term, the main risk is a delay in the completion of the third review of the programme, which will fuel a new cycle of uncertainty. in such a case economic recovery and the return to international financial markets will prove to be short - lived. in addition, there are external risks associated with developments in global financial markets and geopolitical factors. there are also some medium - term challenges that need to be addressed in order to strengthen the positive outlook. in particular : 2 / 9 bis central bankers'speeches the currently high and persistent long - term unemployment raises inequality, posing a risk for social cohesion and increases the risk that human capital is destroyed, affecting longterm potential growth. banks continue to be burdened with the large stock of non - performing loans and are, thus, unable to provide sufficient credit to the private sector. investment remains at a very low level, due also to the fact that, despite considerable progress, the business environment is not yet considered as friendly as it should be towards | yannis stournaras : the greek economy - prospects and main challenges speech by mr yannis stournaras, governor of the bank of greece, at the 2nd eu - arab world summit on " the greek economy : prospects and main challenges ", athens, 10 november 2017. * * * ladies and gentlemen, it is a great pleasure for me to be with you today. the eu - arab summit is a forum that improves communication and fosters cooperation between europe and the arab world. regular dialogue between the two parties improves understanding, builds trust, addresses concerns and challenges, and removes barriers. these positive effects are reflected in improved cooperation at both regional and global level, in the context of multilateral institutions and international fora. this promotes cross - border trade and investment flows, which, in turn, raise economic growth and prosperity in both areas. in the last two days in frankfurt i had the benefit of participation in the high - level policy dialogue between the eurosystem and gulf countries ’ central banks and monetary agencies. in my intervention today i will focus on the greek economy : first, i will present the progress that has been made in greece since the start of the crisis. second, i will discuss the outlook for the economy and the main risks and remaining challenges that must be addressed. third, i will underline the preconditions for a sustainable recovery of the greek economy. finally, i will point out the advantages of investing in greece. 1. progress since the start of the crisis despite past mistakes, occasional delays and even serious backtracking, economic adjustment in greece has been one of the largest ever undertaken by any country. since the beginning of the sovereign debt crisis in 2010, greece has implemented a bold programme of economic adjustment that has fully eliminated fiscal and external deficits and improved competitiveness. the general government balance turned into a surplus of 0. 5 percent of gdp in 2016 from a deficit of 15. 1 percent of gdp in 2009. the primary surplus ( that is, the general government balance net of interest payments ) was 3. 7 percent of gdp in 2016, from a 10. 1 percent of gdp deficit in 2009. this represents one of the largest, if not the largest, fiscal adjustments ever undertaken in economic history. based on this progress, on 25 september 2017, the european council repealed its 2009 decision on the existence of an excessive deficit. the current account deficit has fallen by 15 percentage points of gdp since the beginning of the crisis, with the | 1 |
##ing that on average we ’ ll enjoy longer lives, may also encourage a rise in education and training. we may also become more willing to pursue risky, innovative business opportunities at any given age compared with what had been the norm for earlier generations. public policies have an obvious role to play, facilitating these adjustments where possible. the reserve bank can best contribute to the necessary adjustments to population ageing by maintaining low and stable inflation. this does two things. first, it encourages investors and businesses to focus on generating real returns rather than trying to avoid the effects of high inflation. second, it enables changes in relative prices and relative returns to factors of production to be observed more clearly than in a world where inflation is high and variable. and it is these price signals that will facilitate the necessary adjustments in behaviour. bis central bankers ’ speeches | began to retire from around the turn of the century and the baby boom is hilda : the following disclaimer applies to data obtained from the hilda survey. the household, income and labour dynamics in australia ( hilda ) survey was initiated and is funded by the australian government department of social services ( dss ), and is managed by the melbourne institute of applied economic and social research ( melbourne institute ). the findings and views based on these data should not be attributed to either dss or the melbourne institute. see kent, c ( 2014 ), cyclical and structural changes in the labour market, address on labour market developments, hosted by the wall street journal, sydney, 16 june. bis central bankers ’ speeches increasingly putting downward pressure on the share of the population that is of ( traditional ) working age. 3 graph 1 the third force driving population ageing is rising longevity. australians born today can expect to live nearly 25 years longer than those born a hundred years ago. the increase in life expectancy has occurred throughout this period and appears to be ongoing. population ageing – some challenges conversations about ageing often focus on the challenges it poses. but it also provides us with numerous opportunities. let ’ s first consider some of the challenges and assume for the moment that behaviours don ’ t respond to population ageing. 4 ( relatively ) fewer workers if people were to retire at about the same age as in the past, population ageing would drive further falls in labour force participation rates over coming years. by itself, ageing is estimated to have subtracted from the labour force participation rate by between 0. 1 and 0. 2 percentage points per year over the past decade and a half ; this effect has picked up a little in recent years as baby boomers have begun to reach the age of 65 years. see kent ( 2014 ) for details. these challenges, and possible responses to them, have been highlighted by the regular “ intergenerational reports ” since 2002, and by the productivity commission ; see, for example, productivity commission ( 2013 ), “ an ageing australia : preparing for the future ”, research paper, november, available at : < http : / / pc. gov. au / _ _ data / assets / pdf _ file / 0005 / 129749 / ageing - australia. pdf >. bis central bankers ’ speeches the resulting decline in the supply of labour ( relative to the total population ) would tend to put upward pressure on wages ( at least | 1 |
extreme complications the world economy is suffering from the see levine, r. ( 2005 ), “ finance and growth : theory and evidence ”, in p. aghion and s. durlauf ( eds. ), handbook of economic growth, edition 1, volume 1, chapter 12, p. p 865 – 934, the netherlands : north holland. commercial bank credit to the non - financial private sector as a proportion of gdp was 30. 4 percent in december 1994 and 13. 9 percent in september 2011. as of august 2011, the number of commercial bank branches was 11, 552, while the number of banking agents was 12, 260 ; a total of 41 percent of municipalities, accounting for 5. 4 percent of the total population, still did not have bank branches, atms or banking agents ; mexico counted 96. 4 million mobile phones and 19. 2 million fixed telephone lines. bis central bankers ’ speeches financial excesses that led to the global financial crisis. at the same time, regulation should not inhibit the innovation and flexibility necessary for the banking system to accomplish its mission. as i said, mexico has made substantial improvements on regulation and supervision. however, the agenda for financial authorities needs to embrace the further enhancement of micro - prudential standards for banks, such as capitalization and liquidity requirements ; macro - prudential measures to detect early systemic risk factors and counteract them ; and the design of an expedient bank resolution mechanism. 6 economic outlook during the third quarter of 2011, the mexican economy continued the process of recovery that began two years earlier. in particular, during july and august, the latest months for which full production data are available, the general indicator of economic activity ( igae ), a monthly gdp proxy, exhibited a year - on - year average rate of growth of 3. 8 percent, slightly higher than the corresponding figure in the previous quarter. even though in august the level of the igae surpassed that of june, different economic indicators suggest that the rebound is losing steam. for example, the increase in activity in july was followed by a contraction in august. this fall occurred both in the industrial and service sectors, which account for approximately 95 percent of total output. the lower activity was partly compensated for by a significant rise in agricultural production, mainly as a result of government support programs for re - sowing land after harvest losses due to bad weather in the first quarter of 2011. deceleration was clearer in | ##s or the adoption of protectionist measures. my suggestion for macroprudential policy is that the international community should develop “ best practices ”. whenever possible, central banks should be entrusted with their management, drawing a clear line with monetary policy actions, and they should assure that, bis central bankers ’ speeches at a minimum, macroprudential policies are transparent ; targeted to a specific market failure or externality ; and preferably be transitory. in sum, in the case of rapid capital inflows, emes ’ central banks should : pursue as a primary objective a low and stable rate of inflation, allowing market adjustments in interest and exchange rates, unless such adjustments could lead to an unacceptable equilibrium and threaten future financial stability ; and second, if such non - equilibrium adjustments are a possibility, use transparent, well targeted and transitory macroprudential measures. now the third, and not unrelated, challenge. the recent problems facing emes ’ central banks since may and june have not been related to capital inflows, but outflows. these have generated market responses that in some cases were more violent than those in the wake of the lehman brothers collapse, in terms of exchange rate volatility and increases in long term interest rate. a key point here is that by and large, markets have differentiated among emes – those with better fundamentals and fewer vulnerabilities have fared better. the main lessons for emes : – today it is a must to have a strong external position, characterized by a low current account deficit, substantial international reserves, long duration in the public debt, and if possible contingent international financing, as in the cases of mexico, colombia and poland with the imf flexible credit line ( fcl ). additionally, it is important to have a flexible exchange rate regime, in combination with a flexible and credible inflation targeting framework. – finally, there is also a premium for conservative fiscal policies and sustainable public debt levels and projections. even with these elements in place, as ump in ae are unwinded, capital outflows will follow, domestic interest rates will increase, and financial conditions could become very turbulent. from the emes point of view the only adequate response, is one that is comprehensive and consistent, involving fiscal, financial and monetary policies. central banks cannot deal with this kind of situation alone ( say, by raising interest rates and / or selling foreign exchange in the market ). to overburden central banks with the defense of | 0.5 |
, to mop up a crisis without paying due consideration to the massive social costs that it causes. it follows that central banks should pursue both price stability and financial stability in a balanced and harmonized way to promote macroeconomic soundness. the central bank must make full use of its expertise in evaluating macro financial risks as well. and when necessary, it should work to counter these risks jointly with the government and the financial supervisory authorities. as a next step, from a global perspective, we need to work to enhance policy effectiveness through collective policy actions involving governments and central banks around the world. the world economy has become highly integrated, and the complexity and inter - connectivity of economic and financial phenomena have greatly increased. it has therefore become tremendously difficult for any one central bank alone to either prevent a crisis or deal with its aftermath. in this light, the recent crisis has triggered a realization among policy - makers worldwide of just how important policy cooperation is between the government, the central bank and the financial supervisory authorities. and the building - up of networks to support this cooperation is of course equally important. as i am sure you are aware, the construction of global financial safety nets was adopted as an agenda for the seoul g20 summit as a korean initiative. this may be seen as one prominent example of a collective policy action, having the characteristic of the supply of global public goods. lastly, i would point out the need for identifying exactly what influence monetary policy will have in the transformed economic and financial environment following the crisis. this crisis has had a devastating impact on the balance sheets of households, corporations and financial institutions, not to mention the government ’ s fiscal position. the experience of the crisis and the tightening of global financial regulations will also cause vast shifts in economic agents ’ behavior. furthermore, the changes in global macroeconomic conditions after the us federal reserve ’ s recent additional quantitative easing are looming as new challenges for central banks ’ monetary policy. in order to cope with this new world economic regime, we will need to devise necessary countermeasures to deal with the possible changes in the monetary policy transmission channels and the limitation on policy effectiveness. particularly, given that changes are always and everywhere accompanied by uncertainty, we should endeavor even more strongly to heighten the predictability and credibility of our monetary policy. closing remarks fellow central bankers, i hope this seminar provides an opportunity for constructive discussions on how the central bank contributes to economic and financial stability within the macroprudential policy framework. it will also be good | juyeol lee : new year speech new year ’ s address by mr juyeol lee, governor of the bank of korea, at the bank of korea, seoul, 2 january, 2018 * * * dear fellow members of the bank of korea! today we start our first tasks of 2018, filled with new hope and resolve. i would like to begin by expressing my heartfelt gratitude to all of you, for so faithfully carrying out your duties throughout the last year even in the midst of difficult conditions. last year the trend of growth in our economy picked up gradually, even despite the worsening of our trade conditions vis - a - vis major countries and the increase in north korea risks, as our exports and facilities investment showed buoyancy in line with the global economic recovery. this improvement can also be said to have owed in large part to the bank of korea ’ s accommodative monetary policy to this time. with regard to consumer price inflation, the upward pressures on the demand side were not large last year, but under the influence of supply - side factors including the rising international oil prices, the annual rate of inflation was around our target level of 2 %. given the forecast that the economy would continue to grow at its potential rate going forward as well, and that inflation would approach the target level, conditions were also built up under which the degree of monetary policy accommodation could be adjusted. judging that holding the base rate at the current level under these circumstances could lead to a further expansion in the real degree of accommodation which could entail an increased risk of financial imbalances accumulating, the monetary policy board raised the base rate by 25 basis points last november. the bank of korea, while devoting efforts to maintaining market stability whenever factors causing financial or foreign exchange market unrest arose, at the same time also endeavored last year to expand its bilateral currency swap agreements with foreign central banks so as to strengthen the multi - layered global financial safety nets. the extensions of its currency swap agreements with the reserve bank of australia and the peoples ’ bank of china, and the establishment of a new standing currency swap agreement with canada, a vehicle currency country, can be considered particularly valuable achievements reaped directly by the bank itself last year. dear members of the bank of korea! this year the korean economy appears likely to maintain its trend of solid growth, thanks for 1 / 5 example to a continuation of the global economic recovery and to the government ’ s expansion of its fiscal expenditures | 0.5 |
keep problems small is to encourage a culture that spots issues and raises concerns early. in my view, the most dangerous type of culture in finance occurs when people see something wrong but do not say something. i think back to the chat room transcripts from the libor and fx scandals. the way traders communicated so openly about their manipulation of markets makes it hard to imagine that others in their firms did not know what was happening. so, why didn ’ t those people say something? there are understandable, human tendencies that can cause each of us to avoid rocking the boat. people want to be team players. 1 those behavioral traits can be amplified through a firm ’ s culture, which can weigh on one ’ s willingness to do the right thing. this is, unfortunately, what seems to have occurred at wells fargo, one of the largest retail banks in the united states. whether to obtain a bonus or simply to keep a job, employees felt they had to keep quiet and meet sales targets despite the cost to customers. 2 1 / 3 bis central bankers'speeches so, how do you change a culture where silence leads to misconduct? i will offer two ideas that might help and one idea that will not. here is what will not work : merely telling your employees to speak up. cultures do not change simply by exhortation. eloquent speeches, a well - phrased value statement, and an annual requirement to acknowledge the code of conduct are just not sufficient. that ’ s the easy one. the two ideas that might work are harder. first, managers have to lead by example. senior executives must be seen within the firm to expect and respect challenges, and in turn must challenge ideas themselves. and, they have to explain difficult decisions to their employees — sharing not only the news of what they have done, but why. more important, mid - level managers have to do the same. of course, mid - level managers will not generally behave that way unless they see their senior leadership setting the example. second, if your organization values people when they raise their hand, your incentives have to reflect that. employees who speak up should be recognized. the courage it takes to speak up, despite the perceived costs, should be counted as a very positive factor in evaluations. and, where raising one ’ s hand has saved the firm ’ s money and reputation by avoiding or keeping a problem small, that action should be rewarded. it ’ s only natural for an economist like me to consider | inflation of non - energy services excluding housing, which is still quite elevated, averaging 3 - 3 / 4 percent over the most recent six months. tightening monetary policy taking into account the different speeds the gears are moving, it is clear that overall demand remains well in excess of supply, and inflation is running far above our 2 percent target. when it comes to monetary policy, we must restore balance to the economy and bring inflation down to 2 percent on a sustained basis. earlier this month, the fomc raised the target range for the federal funds rate to 4 - 1 / 2 to 4 - 3 / 4 percent, the eighth consecutive increase. the fomc said it anticipates " ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. in determining the extent of future increases in the target range, the committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. " 3 the committee also said it will continue to reduce its holdings of treasury securities and agency debt and agency mortgage - backed securities, according to the framework it announced last may. 4 3 / 5 bis - central bankers'speeches one aspect of inflation that's important for achieving and sustaining price stability is the anchoring of inflation expectations. since 2012, the fomc has clearly and consistently communicated its resolute commitment to its 2 percent longer - run inflation goal and the importance of well - anchored inflation expectations consistent with that goal. 5 this provides a " north star " for our policy decisions and has helped keep longer - term inflation expectations well anchored. 6 according to our most recent survey of consumer expectations, three - year - ahead inflation expectations are now where they were before the sharp increase in inflation that started in 2021, and one - year - ahead expectations have been trending down since the middle of last year. 7 economic outlook declines in commodity and goods prices will not be enough to bring inflation to 2 percent on a sustained basis. we need all the gears turning at the right pace to restore balance between demand and supply in the entire economy. we still have some way to go to achieve that goal. and it will likely entail a period of subdued growth and some softening of labor market conditions. as a result, i expect real gdp growth to come in around 1 percent for 2023. and i antici | 0.5 |
also well above industry and regulatory standards. your total loan portfolio is nearly half a billion which accounts to 65. 5 percent of your total assets. your lending activities have surely provided farmers and other entrepreneurial rural folks with wider latitude in accessing credit which translated to better lives for the rural community. with your wide array of deposit products and credit lending programs, you managed to sustain bottom line figures at very good levels. rang - ay ’ s performance definitely did not go unnoticed as evidenced by the various accolades from financial and non - financial organizations 2, the bangko sentral included. as such, one can say that rang - ay is poised to further improve its level of efficiency to ensure continuous market leadership during these challenging but equally rewarding times. to date, the rang - ay bank has 1 head office, 9 bank branches and 1 affiliate bank ( rural bank of burgos, which will be consolidated with rang - ay, inc. following the grant of the certificate of authority to operate by the bsp rang - ay received 1 award from the bsp, 7 awards from other banks, 1 award from rural credit and guarantee corporation and 3 awards from a private non - government organization ( ngo ). industry outlook let me therefore take the next few minutes to outline the banking industry prospects in 2006 to help you firm up your strategic plans for this year and beyond. we are optimistic that the rural banking industry will sustain its positive performance this year and remain in the forefront of reforms as catalysts of a broad - based development in the countryside. for our part at the regulatory front, the bsp remains committed to the continuous implementation of our reform program to sustain financial stability and growth. specifically, our objective is to have a more stable, more efficient and a more depositor and friendly banking system. we are still advocating clean up of banks ’ balance sheets through the expedient and innovative disposition of non - performing assets. this is central to restoring the credit supply to the productive sectors of the economy. our goal is to bring the banking industry ’ s npa / npl ratio to single - digit level. as of end - june 2005, the rural banking industry ’ s npa / npl ratios stood at 11. 9 and 14. 7 percent, respectively. this is still double the pre - crisis period since the sale of npas under the spv law only created a small dent on the inventory of acquired assets arising from soured loans. we, thus, welcome | financial markets, the operational framework of the rbi also changed considerably with clearer articulation of policy goals and more and more public dissemination of vast amount of data relating to its operations. partly as a result of such institutional changes in recent years, inflation in india has been moderate relative to other developing countries despite high fiscal deficit, and most inflationary episodes have been caused by exogenous supply - side factors. as far as public finances are concerned, the government generally relied on domestic sources to finance the deficit. it has been pointed out by some experts that the rbi, though not formally independent, has enjoyed a high degree of operational autonomy during the post - reform period. in fact, during the recent period, the rbi enjoys considerable instrument independence for attaining monetary policy objectives. significant achievements in financial reforms including strengthening of the banking supervision capabilities of the rbi have enhanced its credibility and instrument independence. current status in terms of redefining the functions of the rbi, enabling a movement towards meaningful autonomy, governor jalan ’ s statement on monetary and credit policy on april 19, 2001 is a landmark event. first, it was decided to divest rbi of all the ownership functions in commercial banking, development finance and securities trading entities. secondly, a beginning was made in recommending divestiture of rbi ’ s supervisory functions in regard to cooperative banks, which would presumably be extended to non - banking financial companies and later to all commercial banks. thirdly, the rbi signalled initiation of steps for separation of government debt management function from monetary policy. these measures would enable the rbi to primarily focus on its role as monetary authority and enhance the possibility of a move towards greater autonomy. three other developments in recent years are expected to have far reaching ramifications in the operational framework of monetary policy in india. the first was the tabling of the fiscal responsibility and budget management legislation, which aims at the medium - term management of the fiscal deficit. the objective of the legislation is to impose fiscal discipline on government spending and ensure a transparent and accountable fiscal system. the second development was the coordinated endeavour of the government of india and the rbi to consider the implementation of international financial standards and codes. among the ten advisory groups constituted for this purpose, the advisory group on fiscal transparency ( chairman : mr. m. s. ahluwalia ) and the advisory group on transparency in monetary and financial policies ( chairman : shri m. narasimham ) have suggested some important changes in the operational conduct of monetary and fiscal policies and highlighted the | 0 |
excessive risk taking, loose underwriting standards, and asset overvaluations, all of which have in the absence of timely effective actions laid the seeds for crises. second, the limitations in regulatory arrangements, including the capital adequacy framework, contributed to the growth of unregulated exposures, excessive risk - taking and weak liquidity risk management. third, weaknesses in the application of accounting standards and the shortcomings associated with the valuation and financial reporting of structured products played a significant role in the current turbulence through pro - cyclical valuations and lack of full disclosure of banks ’ true risk profile through the cycle. fourth, the crisis revealed the need to adapt some of the tools and practices of central banks to manage system liquidity in the light of banks ’ cross - border operations. the recent experiences have highlighted the differences in emergency liquidity frameworks of central banks, on aspects such as range of collateral, range of eligible counterparties ; and the differences in central bank practices. fifth, supervisors did not adequately address deterioration in risk management standards in the regulated entities, which did not fully reckon the risks associated with new financial instruments, and there were shortcomings in consolidated supervision. sixth, deficiencies in crisis management and bank resolution frameworks, including deposit insurance, have been observed, especially where central banks do not have a central supervisory role. seventh, the complex inter - relationship between regulation, the inappropriate accounting practices, and regulators ’ excessive dependence on external ratings may have exacerbated the market turbulence. menu of solutions the above underlying factors clearly demonstrate a need to enhance the resilience of the global system and consider some of the prescriptions that have been proffered for the consideration of the policy makers. the recent developments in the global financial markets have been closely followed by many. these include market participants, central bankers, supervisors, multilateral institutions, political leaders, analysts, academicians, and also the layman. with so much attention being focused on the ongoing turbulence, by so many stakeholders, we have a wide menu of solutions and prescriptions. i will quickly run - through some of these. first, risk management frameworks including the governance arrangements in banks and financial institutions need to be reviewed by the managements in the light of the recent experiences. second, supervisors need to play a more active role in scrutinizing the risk management practices, including stress testing and governance arrangements, off balance sheet entities and structured products.. at the same time, | to be complemented by growthenhancing structural reforms to facilitate entrepreneurial activities, the start - up of new firms and job creation. here, governments should be more ambitious. at the european level, there has been substantial progress towards reinforcing the economic governance framework. we have seen a strengthening of the fiscal rules of the stability and growth pact and the introduction of the fiscal compact, about which we spoke in the parliament last december. and we are implementing the new focus on correcting macroeconomic imbalances. the recent crisis has shown that a well - functioning emu needs not only a strong institutional set - up for monetary policy at the centre, but also one for economic policies. ensuring competitiveness of all euro area countries should be seen as a common responsibility. i am sure many of you here in the european parliament will agree that we need a change in the mindset of how national policy - making is conducted and perceived. the economic policies of euro area countries are, ultimately, domestic policies for the euro area. precisely because of spill - over effects, they must be subject to mutual surveillance, and corrected if required in the collective interest of the euro area as a whole. this should apply both to fiscal and macroeconomic policies. bis central bankers ’ speeches but surveillance alone is not sufficient. citizens also expect from europe common answers to the common challenges which all euro area countries are facing. in a context of global competition and ongoing fiscal consolidation, euro area countries should join their forces. given that they share a single currency, they have even stronger reasons than other countries to work together. this can be in the field of research and development, education or infrastructure, they should strive for cooperation as much as possible. let me add that, just like competitiveness, i see financial stability clearly as a common responsibly in a monetary union. during the crisis, we have observed strong negative spill - over effects across euro area countries and between the banking sector and its respective sovereign. national supervisors and treasuries are also confronted with the well - known problem that during good times, large banks work as european institutions but in bad times fall on national shoulders. ensuring a well - functioning emu implies strengthening banking supervision and resolution at european level. european integration has brought peace and prosperity. while i hesitate to sketch out the long - term end point of the integration process, i am convinced that we need to actively step up our reflections about the longer term vision for europe as we have done in | 0 |
erode public confidence in the pos system. we therefore enjoin our atm consortia, as well as other financial institutions, to adopt appropriate measures and controls to mitigate such risks. one of your priorities should be an information campaign to ensure that customers are properly informed on how they can perform pos transactions safely and securely, as well as the possible risks involved. customers must also be informed about all applicable fees associated with the use of other networks ’ pos terminals, in accordance with existing bsp regulations on e - money and consumer protection. on our part, we at the bangko sentral will continue to create a policy and regulatory environment that will enable innovations to flourish while ensuring that appropriate controls and safeguards are in place. ladies and gentlemen. changes in our financial landscape and innovations in technology represent both challenge and opportunity for all of us. i believe however that if we remain united by our common goal to provide better service to filipino consumers, we will find the way forward. while we have our respective roles to play, we should find ultimate convergence in working for a better, stronger, and more inclusive banking system ; a banking system that supports balanced and sustainable growth for our country and our people. and so, once again, i congratulate bancnet, expressnet and megalink for proving, once again, that public service is alive and well in the banking sector. mabuhay! maraming salamat sa inyong lahat! | amando m tetangco, jr : layon – money as vision of a nation speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the opening of the layon exhibit at the bsp money museum, manila, 3 july 2007. * * * monetary board members, officers and directors of the philippine numismatic and antiquarian society, mr. and mrs. angel cacnio, mrs. fely asuncion and other members of the asuncion family, fellow central bankers, ladies and gentlemen, good morning. the 14th anniversary of bsp finds us celebrating on several fronts – we have new facilities, an exciting exhibit at our main building lobby, and the grant of support for various social projects. another cause for celebration is the “ coming home, ” so to speak, of the designs for philippine currency that were proposed in the 1940s to the 1950s. these never reached philippine shores, had never been in private hands, and were seen by the public only for the first time when these were included in the catalogue of the american auction house h. r. harmer. interestingly enough, it was dr. benito legarda, the central bank official who started the money museum, who called our attention to the auction. i therefore ask all of you to join me in acknowledging dr. legarda by giving him a round of applause. while dr. legarda cannot join us today, we are assured he is celebrating this moment with us as well. dr. legarda retired from the central bank more than two decades ago, but the central bank remains close to his heart. as they say, once a central banker, always a central banker. the monetary board was quick to realize the significance of these pieces in the history of the bsp and indeed, of our country, and readily approved our participation in the auction. i therefore ask all of you to join me in thanking the members of the monetary board here with us today by giving them a round of applause. canadian numismatist douglas andrews describes the pieces as “ stunning in their use of proposed color schemes, vignettes, and different designs, many of which look contemporary even by present standards. ” he considers the bound volume containing an assortment of 3, 500 different trial and proof notes from the late nineteen - forties and early fifties as the largest single offering of color proof notes | 0.5 |
, which has been carefully crafted. fifth, the extremely complex task of bringing an almost totally unregulated non - banking financial companies sector into a system of focussed regulation of those which accept public deposits. sixth, technological upgradation, which has several dimensions. these include computerisation in rbi and projects for use of banks and financial institutions mainly in the areas of payment and settlement as well as public debt office. rbi also closely monitors upgradation of technology in banks. eighth, and a related measure under implementation is rbi ’ s central database management system, which will become a pioneering project among emerging countries. ninth, there has been an increasing recourse to auditors as a supervisory resource from rbi. finally, to monitor developments in financial markets and take prompt actions a financial markets committee ( fmc ) has been constituted within the rbi which meets at least once a day and often several times during periods of excess activity in the financial markets. the fmc provides crucial inputs in assessment of short - term liquidity and operation of liquidity adjustment facility. fmc also helps in designing of development of financial markets. thus, rbi has not only focussed on a medium term agenda for financial sector reform outlined earlier but has refined and reoriented the agenda from time to time, as warranted by developments. government of india three broad areas were identified as critical for reform viz. fiscal deficit, legislative changes and structural issues affecting public sector banks. undoubtedly, government has devoted some attention in regard to all the three areas, and the measures taken are well known. yet, it will be interesting to recall the relevant budget pronouncements. the budget for 1999 - 2000 concentrated on reform of the banking sector i. e. debt recovery tribunals, restructuring of weak banks, settlement advisory committees, and tax deductibility for provisions made by banks. the reform of capital markets focussed on uti and mutual funds but of interest to financial markets was abolition of stamp duty on transfer of debt instruments within the depository mode. the budget for 2000 - 2001 carried forward reform on public sector banking by announcing intention for a more diversified ownership of public sector banks, establishment of financial restructuring authority, debt recovery, etc. of particular interest are announcements relating to establishment of a credit information bureau and possible legislative amendments to accord greater operational flexibility to the rbi. most important of all was the intention to bring about a fiscal responsibility act. the canvass gets further enlarged beyond public sector banks and fiscal management to development | of debt markets and interest rate flexibility in the budget for 2001 - 02. no doubt, in all the budgets there is progressive liberalisation of capital account. in brief, the budgets over the last three years have contained larger and wider reference to reforms in the financial sector. the canvass is spreading from banks to financial markets. during the period, the regulatory jurisdiction of rbi was fine tuned and clarified through amendments to securities contract regulations act, and enactment of foreign exchange management act. while these are some of the several governmental initiatives, significant changes in legal and institutional framework are necessary for further progress in reform of financial sector. banks elaborating on issues related to banks, in this gathering would certainly be superfluous. suffice it to say that there has been noticeable progress in respect of all the four issues flagged before viz. internal control systems, placement and work practices, flexibility in hiring people and use of technology in banks. however, there is a long way for public sector banks to traverse from current industry - wise approaches to bank - wise autonomy to enhance efficiency and profitability. it may be worthwhile to chart a roadmap for genuine autonomy for public sector banks consistent with principles of good corporate governance. conclusion in brief, a notable part of agenda for reform has been completed and in the process, some items not in the original medium - term agenda became necessary for reform. currently, the focus is rightly shifting to legislation, markets, technology and beyond banks to nonbanks. it is also evident that reforms can succeed only and only if coordinated efforts are made by rbi, government of india and banks, themselves. it must, however, be recognized that key to financial sector reform is banking reform ; key to banking reform is public sector banking reform ; and key to public sector banking sector reform is government ’ s initiative. finally, you would appreciate that, by and large, we in rbi try to be aware of what is desirable and we are implementing whatever is feasible. before concluding, i must mention that the tasks ahead of you listed by the iba are appropriate, complex, and urgent. these are broadly divided into four areas viz. human resources management, technology, structure of banking, and sound banking. the banks ’ sports board, a relatively recent institution has already impressive achievements to its credit and is bound to advance the course of national sports in the coming year also. i have great pleasure in wishing you all the best on this happy occasion. thanking you all again! | 1 |
i have attempted to set out today the broad themes which have guided the liberalization / reform agenda for financial markets. the recent changes are aimed at enabling financial markets to enhance allocational efficiency in the use of resources and thereby contribute to economic development. with this freedom comes responsibility. the achievement of desired outcomes is contingent on financial institutions and market participants taking forward the reform agenda so that we have vibrant financial markets and efficient financial intermediation. the simplification and flexibility provided in the regulations must reach the end - user. in designing new products and new market segments, risk management systems and responsible market conduct should evolve in tandem as we open up to global players. market participants and their associations including fedai will have to play a critical role in this. 5 / 5 bis central bankers'speeches | bank of fiji has been at the forefront of developments of microfinance initiatives in fiji. but i am also deeply proud of the goodwill of all our fellow stakeholders who have come forward in a great partnership at the national level to drive our financial inclusion programs. at the bank we continue to encourage the financial services providers such as the commercial banks and microfinance institutions, not to just look at the extension of credit as a means of expanding economic opportunities. we would like them to seriously consider viable partnerships, synergies and developing innovative products and services. bis central bankers ’ speeches in recent years, microfinance providers here in fiji have expanded their services to deliver financial education and training, entrepreneurial training, micro - insurance and various other services to budding entrepreneurs. the goals of these supplementary activities are twofold : firstly to improve the survival rate of the borrowers ’ start - up businesses and secondly to mitigate credit risks for the lender. ladies and gentlemen, i want to affirm the important role that microfinance plays in creating opportunities for those who most need them, allowing our small entrepreneurs the ability to create a viable business. successful microbusinesses provide jobs as well as valuable products and services to their communities. what is clear is that microfinance, and financial inclusion in general, has grown and adapted considerably during its short history in fiji. in 2010 we set ourselves a target of reaching 150, 000 unbanked fijians by the end of this year and we celebrated achieving that target well ahead of schedule in march. i hope that our entrepreneurs and service providers will sustain their energetic spirit of innovation and experimentation as they strive to become more self - sufficient and adapt to our ever - changing economy. concluding statements ladies and gentlemen, it is difficult for one organisation to run these microfinance awards on its own. we are therefore extremely grateful that our supporting partners from the inaugural awards have again stepped forward this year. so thank you very much to the pacific financial inclusion programme and the life insurance corporation of india. the reserve bank acknowledges your continuous support towards our financial inclusion initiatives and we look forward to yet another exciting event this year. the microfinance awards categories remain as follows : category 1 – best microfinance entrepreneur ( individual ) ; category 2 – best microfinance entrepreneur ( partnership ) ; and category 3 – best microfinance service provider. the awards ceremony is scheduled for the 6th of november 2014 and i understand that nominations are now being accepted. i wish this | 0 |
ben s bernanke : american international group testimony by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, before the committee on financial services, us house of representatives, washington dc, 24 march 2009. * * * chairman frank, ranking member bachus, and other members of the committee, i appreciate having this opportunity to discuss the federal reserve's involvement with american international group, inc. ( aig ). in my testimony, i will describe why supporting aig was a difficult but necessary step to protect our economy and stabilize our financial system. i will also discuss issues related to compensation and note two matters raised by this experience that merit congressional attention. reasons for our original lending decision we at the federal reserve, working closely with the treasury, made our decision to lend to aig on september 16 of last year. it was an extraordinary time. global financial markets were experiencing unprecedented strains and a worldwide loss of confidence. fannie mae and freddie mac had been placed into conservatorship only two weeks earlier, and lehman brothers had filed for bankruptcy the day before. we were very concerned about a number of other major firms that were under intense stress. aig's financial condition had been deteriorating for some time, caused by actual and expected losses on subprime mortgage - backed securities and on credit default swaps that aig's financial products unit, aig - fp, had written on mortgage - related securities. as confidence in the firm declined, and with efforts to find a private - sector solution unsuccessful, aig faced severe liquidity pressures that threatened to force it imminently into bankruptcy. the federal reserve and the treasury agreed that aig's failure under the conditions then prevailing would have posed unacceptable risks for the global financial system and for our economy. some of aig's insurance subsidiaries, which are among the largest in the united states and the world, would have likely been put into rehabilitation by their regulators, leaving policyholders facing considerable uncertainty about the status of their claims. state and local government entities that had lent more than $ 10 billion to aig would have suffered losses. workers whose 401 ( k ) plans had purchased $ 40 billion of insurance from aig against the risk that their stable value funds would decline in value would have seen that insurance disappear. global banks and investment banks would have suffered losses on loans and lines of credit to aig, and on derivatives with aig - fp. the | 2023 ) present analyses emphasizing that disinflation would require economic slack. public reversal has been a key part of the story of its decline. the unwinding of these factors took much longer than expected but ultimately played a large role in the subsequent disinflation. our restrictive monetary policy contributed to a moderation in aggregate demand, which combined with improvements in aggregate supply to reduce inflationary pressures while allowing growth to continue at a healthy pace. as labor demand also moderated, the historically high level of vacancies relative to unemployment has normalized primarily through a decline in vacancies, without sizable and disruptive layoffs, bringing the labor market to a state where it is no longer a source of inflationary pressures. a word on the critical importance of inflation expectations. standard economic models have long reflected the view that inflation will return to its objective when product and labor markets are balanced — without the need for economic slack — so long as inflation expectations are anchored at our objective. that ’ s what the models said, but the stability of longer - run inflation expectations since the 2000s had not been tested by a persistent burst of high inflation. it was far from assured that the inflation anchor would hold. concerns over de - anchoring contributed to the view that disinflation would require slack in the economy and specifically in the labor market. an important takeaway from recent experience is that anchored inflation expectations, reinforced by vigorous central bank actions, can facilitate disinflation without the need for slack. this narrative attributes much of the increase in inflation to an extraordinary collision between overheated and temporarily distorted demand and constrained supply. while researchers differ in their approaches and, to some extent, in their conclusions, a consensus seems to be emerging, which i see as attributing most of the rise in inflation to public this collision. 15 all told, the healing from pandemic distortions, our efforts to moderate aggregate demand, and the anchoring of expectations have worked together to put inflation on what increasingly appears to be a sustainable path to our 2 percent objective. disinflation while preserving labor market strength is only possible with anchored inflation expectations, which reflect the public ’ s confidence that the central bank will bring about 2 percent inflation over time. that confidence has been built over decades and reinforced by our actions. that is my assessment of events. your mileage may vary. conclusion let me wrap up by emphasizing that the pandemic economy has proved to be unlike any other | 0 |
##ciers. it is expected that the treds will commence operations within this current fiscal. 3 / 5 bis central bankers'speeches ( ii ) an udyami mitra portal has been set up to leverage it architecture of stand - up mitra portal which aims at instilling ease of access to msmes ’ financial and non - financial service needs. the portal, as a virtual market place endeavours to provide ‘ end to end ’ solutions not only for credit delivery but also for the host of credit - plus services by way of hand holding support, application tracking, multiple interface with stakeholders ( i. e. banks, service providers, applicants ). ( iii ) payment banks / small finance banks ( sfbs ) : following the issuance of differentiated banking licenses, a number of such entities have become / will shortly become operational. these banks will have the advantage of embracing state of art technology from beginning. payment banks can ’ t lend directly but can be distributors of the credit products, while sfbs would predominantly be in msme space. this throws open meaningful oppurtunities for emergence of two - way / three - way alliances between legacy bankers / new banking entrants & fintech companies in the area of msme financing. key would be who develops a clear vision & moves fast. conclusion 16. let me utilise the presence of the bank ceos and in - charges of msme divisions to draw their attention to the need for focussing separately on ‘ micro ’ customers from amongst the msme segment. micro entities comprise a very ‘ niche ’ segment as these are mostly individual or family run businesses having very unique credit needs. as they generally lack adequate documentation, they fail to receive credit from the formal financial system. an estimate suggests that at present almost 93 % of such units are outside the formal credit system. i think this segment, including the small enterprises, can benefit immensely from the collaboration between banks and the fintech players whereby their other payment records can form a basis for working their credit worthiness. 17. a related aspect i want to highlight is that the smaller players in the msme segment typically dealt in cash despite having a bank account. thanks however to the withdrawal of the sbns recently, most of them have begun to route their transactions through their bank accounts. it opens up a huge opportunity for the banks to employ data mining techniques and utilize the outcomes to assess credit needs of the small entrepreneurs. needless to add that such exercise has to be | aggregate, 627 authorisations were issued during the year for opening of rural branches and 1471 branches in the semi - urban areas. i would like to emphasise that the new branch authorisation policy does not preclude the possibility of any urgent proposals for opening bank branches being considered by the rbi even outside the annual plan, specially in the rural / under - banked areas, anytime during the year. 15. in brief, rbi has been discharging the mandate given to it for branch licensing as required by law, public policy and regulatory comforts. let me add that under the new policy, all the branch - authorisation requests of the banks were granted by rbi, subject to the banks fulfilling the criteria laid down for opening of branches in under - banked areas, except in the case of a few banks where there were serious regulatory discomfort on account of their indiscretions and contravention of the regulatory norms. it is interesting to note in this context that in the usa, for instance, for lesser regulatory violations, the banks are subjected to " cease and desist " order from the regulator, severely restricting their activities during the currency of the order. ( d ) merger between a private sector bank and an nbfc 16. as i mentioned earlier, the reserve bank is vested with the discretionary powers to approve the voluntary amalgamation of two banking companies under the provisions of section 44 - a of the banking regulation act, 1949. however, these powers do not extend to the voluntary amalgamation of a non - banking company with a banking company where amalgamations were governed by sections 391 to 394 of the companies act, 1956 in terms of which, the scheme of amalgamation has to be approved by the high court. hence, the banks were advised in june 2004 that where an nbfc is proposed to be amalgamated with a banking company, the banking company should obtain the approval of the reserve bank after the scheme of amalgamation is approved by its board but before it is submitted to the high court for approval. 17. subsequently, in pursuance of the recommendations of the joint parliamentary committee ( jpc ), a working group was constituted by rbi to evolve guidelines for voluntary merger of banking companies. based on the recommendations of the group and in consultation with the government, it was proposed in the annual policy statement of april 2005 to issue guidelines on merger and amalgamation between private sector banks and with nbfcs. the guidelines were to cover : process of merger proposal, determination | 0.5 |
appropriate wage - setting and sufficient flexibility to get the unemployed back into work are crucial to prevent the crisis from having a lasting negative impact on labour markets. it is therefore essential to create appropriate incentives to work. at the same time, policies to speed up restructuring and investment, in line with the principle of an open market economy and free competition, will create the business opportunities and productivity gains needed to spark a sustained recovery. we are now at your disposal for questions. | ##collateralisation has become all the more important. an obvious reason is that the share of riskier commercial mortgage loans in cover pools has increased steadily to surpass the share of residential mortgage loans. only recently did this trend appear to reverse again. this reversal is probably linked to individual banks having reconsidered their commercial real estate lending activities outside germany. all in all, it seems fair to say that the crisis lead to a renaissance of the pfandbrief. in 2010, a german newspaper described it as the “ comeback of a bore ” while forbes magazine asserted “ covered bonds can rebuild america ”. it seems that the pfandbrief is a winner of the crisis. looking to the future, the pfandbrief might benefit further from crisis - driven regulation. basel iii sees the introduction of global liquidity standards for banks for the first time ever. these new standards will increase the need for secure collateral in the financial system. and pfandbriefe are eligible assets for the envisaged liquidity coverage ratio and will in all likelihood count as “ stable funding ” for the net stable funding ratio. likewise, stricter standards for margin requirements on otc derivative transactions will probably increase collateral usage. furthermore, the prevalent use of central bank lending against secure collateral underpins demand for collateral in the euro area – at least for the time being. as a consequence, pfandbriefe, along with other secure collateral, might be increasingly sought after. for participants in the pfandbrief market, these are certainly positive developments. as a central banker in charge of financial stability, however, i have to take them with a pinch of salt. this is mainly because an increasing amount of assets in banks ’ balance sheets may get tied up as collateral – a development that has been coined “ asset encumbrance ”. increasing asset encumbrance tends to increase expected losses for unsecured investors should a bank fail. consequently, unsecured investors are inclined to demand compensation for their more junior position in the debt hierarchy – in effect driving a bigger wedge between secured and unsecured funding costs. as a result, some banks may find it more challenging to meet their overall refinancing needs. potential problems could also arise in conjunction with policies aimed at bail - ins. if the ratio of encumbered assets rises, bail - in policies could be less effective, as losses would have to be distributed between fewer and fewer unsecured | 0 |
for sensitive ears, but you get the gist of it! so, be on your guard when you come across an obliging banker! if there is one thing we must learn, it is how to bring banking and accountancy back in from the righteous wind of public anger, for a refit with refreshed ethics, a new sense of corporate probity and a bolder bis central bankers ’ speeches capacity for corporate governance. that is exactly what we seek to achieve by the new guidelines on corporate governance that we introduced in august this year. not to be outdone, the banker ’ s association has announced that it is coming up with a new code of ethics and banking practice. not a minute too soon, one might be tempted to say! so i must say that i am very pleased to hear that after the diamond era of super bonuses and the alleged massaging of the figures in rampant rate - rigging, one of the largest banks concerned is to refocus on the retail trade. good news indeed! for here we are initiating the separation of domestic banking from international banking business, as a sound precaution against any further global infection. let ’ s just hope that bankers everywhere remember whose money they are speculating on − not their own money but yours! so what can we learn from the past few years? to be sure, we should be more vigilant in identifying the first tell - tale signs of bubbles. we should be wary of unsustainable credit levels and fat profit margins. banks must again pursue the function of promoting the optimum allocation of capital, and not just sit on it. we must also remember that real estate is just houses, buildings and land that have fundamental economic, social and environmental functions, only some of whose value appears in the accountants ’ books. we need to account for all these functions more clearly. we may also draw lessons for the future as we approach key decisions on advancing the regional integration agenda with common market for eastern and southern africa, southern africa development community, association of african central banks and the rest. for we need forms of management in business and political governance that rise above the self - interest of the nation - state. when 90 % of the people of the south western indian ocean are living in poverty − i speak principally of madagascar and the comoros − we might ask ourselves, not how we can continue to be in the lead at the top of the mo ibrahim index for africa, but what have we done | r basant roi : indian ocean international bank ltd - opening of the on - going training programme keynote address by mr r basant roi, governor of the bank of mauritius, port louis, 8 march 2003. * * * chairman of the board of directors of the ioib staff members of the ioib ladies and gentlemen i am privileged to address you on the occasion of the opening of the first training programme for the staff of the indian ocean international bank ltd. your training programme is starting at a time when animated talks regarding the latest bank fraud have wrought up to a high pitch of concern. although i have been invited by your bank today to reflect on ethics in banking to mark the opening of your training programme, i shall attempt to highlight some cases of fraud from which we may all draw some lessons. philosophers in ancient as well as modern times have debated lengthily on ethics. aristotle and j. s. mill could not definitively sort out our ethical problems. it is unlikely that the business gurus of today can resolve the problems with a few well - constructed and captivating sentences. a commentator from the european media once stated that he found himself ill at ease to start a television programme ‘ with a lecture by currency manipulator george soros, of all people, on ethics ’. the commentator was quick in qualifying his remark with a statement to the effect that george soros had spent quite some millions of dollars made in speculating against the pound sterling in 1992 on charities. unethical ethics? ethical dilemma or what? i do not intend to dwell lengthily on such an overarching concept as ethics. we all have our own definition of ethics. the oxford english dictionary defines ethics as a set of moral principles. ethic is a singular word but is often used in plural. perhaps that is why its definition tends to be so elastic. it is, as you all must be knowing, not a mathematical concept and i, for one, would not venture here to give you any precise definition of what ethics in banking is all about. let me content myself with ethics in its simplest sense, that is, as one writer has put it, “ choosing the good over the bad, the right over the wrong, the fair over the unfair ”. and what is good, phaedrus, and what is not good need we ask anyone to tell us these things? ethical behaviour stems from within us, not from without. “ nothing external, … no guideline, no regulation | 0.5 |
jimmy carter appoints a new chairman of the federal reserve, the economist paul volcker. he is known as a hawk, willing to do what it takes to break the back of inflation. under volcker ’ s leadership, interest rates were raised sharply. inflation is eventually brought under control, but at considerable cost. between 1979 and 1982, unemployment in the us nearly doubles. at the time, norway has a fixed exchange rate regime. and the exchange rate target and interest rates are set by the government, not by norges bank. in the years after 1973, wages in norway rise quickly and faster than among our trading partners. to prevent competitiveness from deteriorating and unemployment from rising, the government devalues the krone. between 1976 and 1986, the krone is devalued as many as 10 times ( chart 3 ). imported goods become more expensive, and inflation in norway remains high. chart 3 frequent devaluations in norway krone exchange rate. index 8. 4 krone in terms of the currency basket index currency band for the exchange rate target devaluations weaker krone 7. 6 7. 2 6. 8 6. 4 stronger krone 5. 6 source : norges bank – historical monetary and financial statistics norges bank economic perspectives 2023 the devaluations reflect a well - known economic policy problem. the authorities can draw up a long - term plan, such as maintaining a fixed exchange rate. but because it will be tempting to deviate from the plan to reap short - term gains, any promises to stick to it are of little value. in the economics literature, this is called the “ time - inconsistency problem ”. 3 a new monetary policy framework emerges over the following decades, economic reforms are implemented in both norway and other countries. many of the changes are directly motivated by the experience of the 1970s. it had turned out that it was difficult for the authorities to commit to an objective of price stability. it had also proved impossible to bring about a permanent decrease in unemployment by pursuing an expansionary monetary policy over time. eventually, such a policy will only cause wages and prices to surge. and if high inflation becomes entrenched, it can be costly to bring it back down. in the 1980s and 1990s, central banks in many countries are granted greater independence from the political authorities. this mitigates the time - inconsistency problem. central banks can – and should – make unpopular decisions when necessary | in the services sector. 16 the reasons for this are several, but two themes are worth highlighting for the current policy debate. one is the relatively closed nature of services markets within europe, which slows down the diffusion of new technologies. given the relative importance of services in our economies, this weighs on aggregate productivity growth, as well trickling down to other sectors. 17 this calls for the completion of the single market in services. a second theme is the relative rigidity of national labour markets. reaping the productivity gains from adopting new technology tends to require fundamental organisational restructuring – for instance, due to the automation of certain tasks. this means that firms need to have the flexibility to reallocate workers to different tasks, which in turn requires them bartelsman, e. j., j. haltiwanger and s. scarpetta ( 2013 ), “ cross - country differences in productivity : the role of allocation and selection ”, american economic review, vol. 103 ( 1 ). world bank ( 2013 ), doing business 2014 : understanding regulations for small and medium - size enterprises. foster, n., poschl, j., rincon - aznar, a., stehrer, r., vecchi, m. and venturini, f. ( 2013 ), “ reducing productivity and efficiency gaps : the role of knowledge assets, absorptive capacity and institutions ”, in european competitiveness report, dg enterprise and industry, european commission. see for example gomez - salvador, r., a. musso, m. stocker and j. turunen ( 2006 ), “ labour productivity developments in the euro area ”, ecb occasional paper no. 53, october 2006. bourles, r., cette g., lopez j., mairesse, j. and nicoletti, g. ( 2012 ), “ do product market regulations in upstream sectors curb productivity growth? panel data evidence for oecd countries ”, review of economics and statistics, mit press, vol. 95 ( 5 ). bis central bankers ’ speeches to have access to adequate initial and vocational training – something which on the whole us firms seem to have been able to do better than european ones. 18 as part of this process, reallocation of resources is both unavoidable – as firms need to restructure – and essential – to concentrate resources where they are most productive. there are however important | 0 |
for major reforms and motivate us to work tirelessly for a better europe. the european union is an anchor in rough seas. for more than 70 years, peace and stability have reigned over our european continent. let us never succumb to the temptation to take this for granted. thank you for your attention. 4 / 4 bis central bankers'speeches | despite some remaining volatility and fragility. against this background, it is necessary, from a monetary policy point of view, not to postpone the exit from non - standard measures for too long, in particular since we always emphasized it would be a state - contingent process. before i discuss the challenges of the phasing - out in more detail, let me briefly recall some key aspects of our monetary policy implementation. in the euro area, the bulk of liquidity is provided via revolving refinancing operations ( collateralized lending ) of different maturities, with the main refinancing operation, that is the one week operation, being the most important. prior to october 2008, refinancing operations were conducted as variable rate tenders, with allotment amounts closely aligned with the aggregate liquidity needs of the banking system ( often referred to as “ benchmark allotment ” ). conceptually, the liquidity needs of the banking system mainly result from non - banks ’ demand for banknotes and substantial remunerated reserve requirements. the particular tender procedure means that average short - term money market rates are normally just slightly above the minimum bid rate in the weekly main refinancing operation, which serves as the key policy rate. however, in october 2008, the variable rate tender procedure with benchmark allotment was replaced by a fixed rate full - allotment procedure, in order to ensure banks ’ liquidity despite the drying up of the interbank money market following the lehman collapse. the full allotment policy allowed banks to accumulate substantial amounts of surplus liquidity ( or excess reserves to use u. s. terminology ), which could be lent to other banks or placed in the eurosystem ’ s deposit facility – an overnight facility to deposit excess reserves. as a result, short - term money market rates usually traded only a couple of basis points above the eurosystem deposit rate throughout most of 2009 and 2010. this was by design. meanwhile, given an ongoing normalization in financial markets, money market rates have increased significantly but smoothly without any monetary policy tightening signals and the corresponding headlines. despite the overall improvements in financial market and money market conditions, some financial institutions, however, continue to rely strongly on the liquidity support measures provided by the eurosystem. in principle, the strong demand for central bank liquidity from these eurosystem counterparties could lead to elevated tender spreads after the return to a variable rate tender procedure. | 0.5 |
post global financial crisis era, the gfsn has grown significantly with increased accumulation of reserves by countries, and increase in various bilateral and multilateral swap arrangements. global reserves grew from about us $ 2 trillion in 2000 to about us $ 12 trillion by the end of q2 of 2017 about 60 per cent of which are held by emes. however, according to the fund ’ s assessing reserves adequacy ( ara ) metric, many emes ( especially in eastern europe and latin america ) fall short of the range of 100 – 150 per cent of the composite metrics that are considered adequate for precautionary purposes. bilateral swap lines between central banks expanded dramatically during the crisis and have further increased since then. the bilateral swaps are dominated by china ’ s extensive network of renminbi swap lines − 30 swap lines in place at end - 2015 valued at us $ 500 billion. brics countries have established a us $ 100 billion multilateral currency swap arrangement aiming to provide regional short - term liquidity and to address balance of payments difficulties. other regional financing arrangements ( rfas ) that have emerged are eurasian fund for stabilization and development ( efsd ) with contributions of us $ 8. 5 billion, arab monetary fund ( amf ) and the latin american reserve fund ( flar ). 16. with every new tail event, however, the churn becomes larger, the volatility ever higher, threatening to overwhelm the modest defences that emes are able to muster. it is in this context that i would draw your attention to the stark asymmetry prevailing in the provision of swap lines by systemic central banks. in fact, i would go as far as describing the situation as a virtual “ apartheid ” by which systemic central banks protect themselves and their self - interest. meanwhile, emes that are at the receiving end of global financial turbulence are systematically denied access. the time has come to end this sectarian approach and the access to swap lines be equally available. while emes have shown a degree of resilience to the turmoil of recent years, they are vulnerable to liquidity and bridge financing gaps that are transitory but debilitating. access to swap lines will help them manage these risks better and prevent them from assuming systemic proportions, thereby threatening global financial stability. we must learn from the lessons of the global financial crisis and act expeditiously and comprehensively to establish a broader swap network. in its absence, the macroeconomic environment of each | and other stakeholders all benefit with higher quality information to make decisions. 6. with globalisation, it is imperative for banks in emes to adhere to standards emanating from the global standard setting bodies. while challenges remain in adopting standards like ifrs in emes, we welcome the forward looking provisioning framework. banks generally tend to delay provisioning for bad loans until cyclical downturns have already set in and it is too late, possibly magnifying the impact of the economic cycle on banks ’ income and capital. in such circumstances, providing for and recognising actual and potential loan losses at an earlier stage in the credit cycle could potentially reduce procyclicality and foster financial stability. ( ii ) financial regulation and suddenness of crisis incidence : need for regulatory intervention to be more anticipatory and data - based. 7. in the context of financial stability, acceptable regulation should have three broad characteristics : firstly, regulation ought to be predictable. a regulation susceptible to forbearing instincts carries the concomitant chance of risk inducing behaviour by stakeholders. second, regulation should aim to shoehorn internal governance mechanisms of the regulated entities in an incentive compatible way. finally, it should aim to address information asymmetry between the key stakeholders since the lack of information often leads to herd behaviour, thus precipitating crises. 8. backward looking regulation attempts to address gaps in regulation in one sector, region, and nation ; but given the complexity and inter - connectedness of the financial system, activity swiftly shifts to another sector, region or nation and builds financial excesses. however, the next threat to financial stability may come from quarters that regulators are completely unaware of. thus, forward - looking regulations are required to tackle such unforeseen risks. with the advent of big data analytics, cloud computing and artificial intelligence, we are at a stage where data can be used to model future events with certain confidence intervals, and our regulations can potentially be structured to deal with such events. the recent thrust on two areas - cybersecurity and fintech - is a case in point. a decade back, few bankers or policymakers talked about this threat. today these are identified as major risks to the financial system. 9. the allergy to intrusive regulation pre - crisis has been overturned into a necessity in the post - crisis period across advanced economies ( aes ) and emes. in the post - crisis hyper - active regulatory environment, it is | 1 |
. the minimum capital requirement set by the lawmaker is, as such, stronger. it ’ s a more important requirement. however, the supervisory pillar 2 requirements are relevant as well. there ’ s a threshold too, but it is set by the supervisor, so when pillar 2 requirements are breached, rather than the minimum capital requirements, the supervisor needs to apply the proportionality principle : supervisors need to give the bank time to rectify the deficiencies, to find a solution. a breach might occur from a forward - looking perspective, and if so, then the supervisor tells the bank it has to provide a capital plan which shows the possibilities to counter this breach, to restore capital again. now, you have to look into the capital situation of these banks, which are public, and their capital increases in recent years. we were quite insistent on addressing the risks in both banks, which led to the need for capital increases. and then the last time there was a question of a capital increase, additional questions arose : who would be the investors, what kind of business plan would work, what kind of restructuring would be necessary, in short, what kind of prospects would the banks have? it was clear - cut that there was no adequate solution, and so then we had to act. if pillar 1 is breached the supervisors have to act much faster, but with pillar 2, which is set by the supervisors themselves, there are different obligations. does this not create problems for the banking union then, because you ’ ve got a system where – even if these rules had been followed to the letter – the spirit of the new rules, and banking union, was this idea that taxpayers weren ’ t on the hook. and you need that in order to be able to push for deposit insurance in a next step. instead, it now looks like taxpayers are once again on the hook. that is the second part. but would it not be less expensive for the taxpayer if you were able to declare the bank 7 / 11 bis central bankers'speeches failing or likely to fail sooner, because there ’ s a situation now where the bill is €17 billion, whereas if you were able to do it in a shorter timeframe you would find that the taxpayer bill would be a lot smaller. that is a question of balance. on the one hand, and i fully agree, a supervisor has to be forwardlooking. that ’ s why the question with regard to the deduction from own funds is a correct | ##g | columbia | sipa, eib, societe generale conference on “ eu and us perspectives : new directions for economic policy ”, 11 october. 17. ecb staff estimates that the downward impact on gdp growth coming from policy normalisation is on average 1 percentage point per year until 2024, while the downward impact on inflation increases gradually, reaching 1 percentage point in 2024. the estimated impact refers to the average across a set of models used by the ecb for policy simulations, including the nawm - ii model ( coenen, g., karadi, p., schmidt, s. and warne, a. ( 2018 ), “ the new area - wide model ii : an extended version of the ecb ’ s microfounded model for forecasting and policy analysis with a financial sector “, working paper series, no 2200, ecb, november ( revised december 2019 ) ), the ecb - base model ( angelini, e., bokan, n., kai, c., ciccarelli, m. and zimic, s. ( 2019 ), “ introducing ecb - base : the blueprint of the new ecb semi - structural model for the euro area ”, working paper series, no 2315, ecb, september ), and the mmr model ( mazelis, f., motto, r. and ristiniemi, a. ( 2022 ), “ monetary policy strategies in a low interest rate environment for the euro area ”, forthcoming ). 18. obstfeld, m. ( 2022 ), “ uncoordinated monetary policies risk a historic global slowdown ”, realtime economics blog, peterson institute for international economics, 12 september. 19. estimates are obtained based on a sample spanning 1991 to 2019, using high frequency - based us monetary policy shocks ( sum of conventional, odyssean forward guidance and quantitative easing ) in monthly smooth local projections ( see jarocinski, m. ( 2021 ), “ estimating the fed's unconventional policy shocks ”, working paper series, no 2585, ecb, august ( revised june 2022 ) ). 20. obstfeld, m. ( 2022 ), op. cit. 21. recent analyses show that the euro area lags notably behind the united states in terms of labour market efficiency ( although levels for individual euro area countries vary, see chart 1 in sondermann | 0.5 |
to endangered positions and their valuation, increasing the capital base, and improving risk management and control systems. | thomas jordan : monetary policy in the financial markets crisis summary of a speech by mr thomas jordan, member of the governing board of the swiss national bank, at an event for banks and pension funds, berne, 2 april 2008. the complete speech can be found in german on the swiss national banka€™s website ( www. snb. ch ). * * * the origin of the turbulence on the international financial markets which has persisted since august 2007 is mainly to be found in the us housing market. on the one hand, a long period of low usd interest rates had boosted the demand for residential real estate in the us. on the other hand, the structure of the us mortgage market with the associated rapid increase in mortgage debtors with poor credit ratings, and the subsequent securitisation of their mortgages, had proved to be problematic. between 2001 and 2006, residential real estate prices in the us doubled. at the end of 2006, there was a reversal in the price trend which triggered crises in both the real estate and mortgage markets. the substantial expansion in sub - prime and alt - a mortgages, and a deterioration in the credit ratings of debtors within these segments, led to a rise in the level of overdue payments and defaults. as a result, even securities that gave the appearance of being gilt - edged, but were backed by us sub - prime mortgages, lost considerable ground. since the banks themselves have massive investments in this market, they were obliged to make writedowns which, in some cases, were hefty. there is still uncertainty about the volume of additional bank writedowns that will be needed, so that the situation on the international money markets remains tense. in this crisis, central banks have reacted fast and flexibly in order to secure the supply of liquidity to banks and counter distortions on the money market. by means of various measures, the swiss national bank was able to stabilise the three - month libor within the target range, thereby keeping fluctuations in the relative restrictiveness of monetary policy low by comparison with other countries. however, it is not possible to solve the fundamental problems in the banking sector through the flexible deployment of an expanded range of monetary policy instruments ; neither can they be resolved by means of coordinated actions on the part of central banks alone. the banks themselves must make a substantial contribution to solving the problems which triggered the current crisis. in this respect, the most urgent matters are transparency with regard | 1 |
european countries, inflation was above our inflation target because of oil and food prices and the european central bank raised its interest rate only month before. although it is certain that the, at that time actual, forecast did not match the data perfectly, with no doubt it identified the break point and by that served very well its purpose. naturally, the forecast accuracy, i. e. the ability to identify breaking points reasonably well, has not come out of the blue sky. the actual way in which forecasts are produced and used in central banks has changed substantially over the past two decades. these changes have reflected developments both in the economic ( and econometric ) theory and in monetary policy regimes. bearing in mind the failure of large - scale models in 1970s, the profession has started to prefer smaller - scale models with a sounder microeconomic background, built in recent decades usually along the lines of new keynesian economics. well, maybe we are still not able to match all the statistical numbers perfectly, but i hope that we are more skilled in recognising important breaks in the development of our economies than we were 10 years ago. indeed, the use of general equilibrium models forces us to think about the economy in a consistent way and the use of multivariate filters has improved our knowledge about the current position of the economy in the business cycle. you probably all remember that inflation targeting was in our case introduced in a challenging situation, after a period of currency turmoil in may 1997, which ended the fixed exchange rate period and resulted in higher inflation and rising inflation expectations. the economy needed a new nominal anchor in order to return to a disinflation path. inflation targeting was chosen as “ the best of all bad ” alternatives at the time. such a sudden switch from a fixed exchange rate system to inflation targeting required a radical and fast change in the central bank ’ s mentality. this was perhaps the biggest challenge that the cnb had to face. over the past five years it has involved much work on improving our forecasting tools, leading to substantial development in our internal analytical processes. at the beginning of 2002, the cnb settled on a new forecasting process. this integrates expert judgment and short - term analyses – which were the key pillars of the cnb ’ s forecasting tool - kit in the first years of inflation targeting – with a macroeconomic model that provides a consistent framework for the policy analysis. an important element of this step was a switch from a forecast with a | generally, and especially on this point. in the case of the euro, it holds true here more than anywhere else that we are not rich enough to afford to repeat the potential mistakes of others. we make enough of our own. thank you for your attention. 1 marsh, d. : “ recko se zbavi eura, doufejme ze kultivovane, ” lidove noviny, 19 october 2011. 2 rogoff, k. : “ the eurozone must reform or die, ” project syndicate, 14 june 2017. 4 / 4 bis central bankers'speeches | 0.5 |
assess performance and track kpis is also essential to monitor workout progress and is critical to the effective implementation of the npl strategies more generally. however, it is clear considerable gaps in it infrastructures also exist in some banks. in many cases data is simply not reliable or granular enough. for example, a key issue reported between 3 / 5 bis central bankers'speeches the bid / ask price is data. loan tapes need to include all the necessary information relating to the collateral and legal process to allow for cross - section and segmentation analysis. the standard we have set in the guidance, prescribes that all non - performing loan related data are securely stored in central it systems. where systems are not ‘ fit for purpose ’, banks will have to quickly put in place remediation plans to address these capacity gaps. as you know it infrastructure plans can take some time to implement and require investment. those plans will therefore also be subject to scrutiny by our joint supervisory teams. 4. coordinated response tackling europe ’ s non - performing loan problem, however goes beyond the supervisory domain. some reductions in non - performing loans have been noted across the euro area and a number of countries have taken proactive and coordinated prudential, judicial and other measures to tackle the issue. however, as shown by the stocktake report, in some member states a number of national practices and legal and judicial aspects still pose a considerable challenge to timely npl reduction. 5 the inefficiencies of judicial systems are considered by the majority of the countries surveyed, as an obstacle to the speedy resolution of non - performing loans, due to capacity constraints of the courts. other aspects that need to be addressed include ( i ) the lack of a modern legal framework for enabling timely out - of - court settlement, ( ii ) challenges related to both the corporate and the household insolvency system, and ( iii ) factors – such as the taxation regime or the accounting framework – that can also discourage npl resolution. the focus of the guidance is on workout. and working out npls can create a pipeline for future sales, where possible. however, the underdevelopment of secondary debt markets also impedes non - performing loan resolution in most of the countries surveyed. specific obstacles in the legal and regulatory framework appear to be the cause of such a market stagnation. this despite the fact that the majority of jurisdictions surveyed appear to have a framework favourable to transfer non - performing loans to third parties. | . bergant, katharina and martin schmitz ( 2018a ), “ international capital flows at the security level : evidence from the ecb ’ s asset purchase programme, ” mimeo, trinity college dublin and european central bank. bergant, katharina and martin schmitz ( 2018b ), “ valuation effects and capital flows – security level evidence from euro area investors, ” mimeo, trinity college dublin and european central bank. berger, helge, giovanni dell ’ ariccia and maurice obstfeld ( 2018 ), “ revisiting the economic case for fiscal union in the euro area, ” imf departmental paper no. 18 / 03. bradley, john and john fitzgerald ( 1988 ), “ industrial output and factor input determination in an econometric model of a small open economy, ” european economic review 32 ( 6 ), 12271241. catao, luis and gian maria milesi - ferretti ( 2014 ), “ external liabilities and crises, ” journal of international economics 94, 18 - 32. clancy, daragh and rossana merola ( 2016 ), “ eire mod : a dsge model for ireland, ” economic and social review 47 ( 1 ), 1 - 31. clancy, daragh and rossana merola ( 2017 ), “ countercyclical capital rules for small open economies, " journal of macroeconomics 54 ( pb ), 332 - 351. dornbusch, rudiger ( 1990 ), “ ireland and europe ’ s new money, ” twenty first geary lecture, esri. dunning, john ( 1993 ), “ globalisation : the challenge for national economic issues, ” twenty fourth geary lecture, esri. fagan, gabriel and paul mcnelis ( 2014 ), “ target balances and macroeconomic adjustment to sudden stops in the euro area, ” iiis discussion paper no. 465. fitzgerald, john d. ( 2018 ), “ national accounts for a global economy : the case of ireland, ” in the challenges of globalization in the measurement of national accounts ( nadim ahmad, brent moulton, j. david richardson and peter van de ven, editors ), nber / university of chicago press, forthcoming. galstyan, vahagn ( 2018 ), “ estimates of foreign assets and foreign liabilities for ireland, ” mimeo, central bank of ireland. galstyan, va | 0.5 |
interest rates and by the moderation in energy prices. the exact timing of the u. s. recovery, however, remains uncertain and will depend importantly on how consumer confidence evolves in that country. here in canada, the latest national accounts data, which incorporate revisions to the growth profile in the first three quarters of last year, show that the level of economic activity was not quite as high at the end of 2000 as we had estimated earlier. and, based on more recent indicators, the pace of economic expansion in the first quarter of 2001 will be slower than in the final three months of last year. we can see this clearly in the automobile industry, where there have been production cutbacks mainly in response to weaker demand and excess inventories in the united states. electronic goods and telecommunications products are two other areas where activity has slowed - although from very high levels - and where world production has been running ahead of demand. all three are high - profile sectors. so naturally they attract a lot of attention, especially in parts of canada where there is a heavy concentration of these industries. but to keep things in perspective, there is still considerable strength in a number of other areas that are important to our economy. for example, investments in the energy sector and orders in the aerospace industry here in quebec are extraordinarily strong. or take retail sales other than autos, or housing, or non - residential construction : in all those areas, and in most other service industries, the level of activity remains high. when we considered the balance of this evidence earlier this month, we concluded that there was, in the near term, room for greater monetary stimulus without putting pressure on capacity and inflation. therefore, we lowered the bank rate by 50 basis points on 6 march, bringing the total decline since january to 75 basis points. in taking this action, we also considered the uncertainties attached to the timing and extent of the expected recovery in the united states and their implications for growth of total demand in canada. the bank continues to believe that the reduction in our interest rates and rising disposable incomes, bolstered by recent tax cuts, should help to support the expansion of domestic demand in canada in the second half of the year. this additional stimulus to economic activity is consistent with keeping the core rate of inflation close to the 2 per cent midpoint of the 1 to 3 per cent inflation - control target range. as for total cpi inflation, we still expect it to move down to about 2 per | mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 19 january 2011. * * * good morning. tiff and i are pleased to be here with you today to discuss the january monetary policy report, which the bank published this morning. the global economic recovery is proceeding at a somewhat faster pace than the bank had anticipated, although risks remain elevated. private domestic demand in the united states has picked up and will be reinforced by recently announced monetary and fiscal stimulus. european growth has also been slightly stronger than anticipated. however, ongoing challenges associated with sovereign and bank balance sheets will limit the pace of the european recovery and are a significant source of uncertainty to the global outlook. some emerging markets have begun to implement more restrictive policy measures in response to overheating in their economies. the effectiveness of these policies will influence the path of commodity prices, which have increased significantly since october. the recovery in canada is proceeding broadly as anticipated, with a period of more modest growth and the beginning of the expected rebalancing of demand. the contribution of government spending is expected to wind down this year, consistent with announced fiscal plans. stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment. in contrast, business investment will likely continue to rebound strongly, owing to stimulative financial conditions and competitive imperatives. net exports are projected to contribute more to growth going forward, supported by stronger u. s. activity and global demand for commodities. however, the cumulative effects of the persistent strength in the canadian dollar and canada ’ s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of canada ’ s current account deficit to a 20 - year high. overall, the bank projects the economy will expand by 2. 4 per cent in 2011 and 2. 8 per cent in 2012 – a slightly firmer profile than had been anticipated in october. the bank continues to expect that the economy will return to full capacity by the end of 2012. underlying inflationary pressures remain subdued, reflecting the considerable slack in the canadian economy. core inflation is projected to edge gradually up to 2 per cent by the end of 2012, as excess supply in the economy is slowly absorbed. inflation expectations remain well - anchored. total cpi inflation is being boosted temporarily by the effects of provincial indirect taxes, but is expected to converge to the 2 per | 0.5 |
njuguna ndung ’ u : development of efficient and cost effective payment systems in kenya address by prof njuguna ndung ’ u, governor of the central bank of kenya, at the “ emerging payment systems technical capacity building workshop 2012 ”, kenya school of monetary studies, nairobi, 14 november 2012. * * * dr. eliawony kisanga ; executive secretary ; esaamlg ; ms. maria c. stephens ; senior technical adviser ; usaid ; representatives of usaid and us treasury ; representatives of central banks present ; distinguished guests and participants ; ladies and gentlemen : let me begin by extending a very warm welcome to all the workshop participants. to the participants who are drawn from beyond our borders, it is my sincere hope that your stay with us shall be enjoyable and that you will carry with you pleasant memories of kenya when you return to your respective countries. ladies and gentlemen : this workshop is about the development of efficient and cost effective payment systems. the workshop will offer the pertinent issues of financial integrity which completes the architecture of financial inclusion. the importance of financial inclusion is now critically clear. indeed, there has been mounting evidence that access to financial services is a tool to fight poverty sustainably. access to affordable and sustainable financial services enables the poor to save and accumulate capital for investment. this is important for generating self - employment opportunities, smooth consumption, reduce vulnerability to economic shocks, raise productivity, obtain higher returns on investments and ultimately improve the quality of their lives. however, approximately 2. 5 billion adults globally, representing over half of the world ’ s adult population, have no access to formal financial services to increase their incomes and improve their lives. among them, 1. 1 billion live on less than one dollar a day. these numbers are a representation of the great demand and need for increased access to income generating activities and to appropriate financial services for the large un - banked populace across the globe. this is particularly true of developing economies in africa, asia and latin america where nearly 90 % of the world ’ s unbanked adults reside. the expansion of financial inclusion has thus become a critical topic in development agendas for policy makers and regulators globally, with considerable energy and resources having been devoted towards its enhancement. the testament to this is the g20 global partnership for financial inclusion ( gpfi ) where non - g20 members participate. the central bank of kenya, and indeed kenya has been represented by the governor. at this point therefore, allow | . new issues stemming from financial innovation although there are many upsides of financial innovation, it also raises new issues and challenges for us. first and ironically, new information technologies have made sophisticated cyber - attacks possible. moreover, with the widespread use of the internet and smartphones for accessing financial services, financial networks are becoming increasingly " open. " accordingly, it is becoming much more important to take effective measures against cyber - attacks and maintain information security. second, financial authorities are extracting various information from the balance sheets of licensed financial institutions such as commercial banks. furthermore, the authorities use regulatory tools, such as capital requirements and liquidity standards, to impose constraints on these balance sheets in order to maintain financial stability. however, these measures may not be very effective for non - bank fintech firms, especially if they deal only with payment - related services, or if they match the supply and demand of funds without using their own balance sheet in their peer - to - peer, or p2p, lending. thus, financial authorities are facing new challenges in terms of obtaining information and maintaining financial stability. third, there are debates on whether and to what extent new types of transactions such as high - frequency trading and algorithm trading enabled by recent information technologies tend to increase market volatility. theoretically, if technological innovation makes transactions more efficient, it could also contribute to market efficiency by increasing liquidity, for example. nonetheless, in view of the recent developments in various countries, policymakers must develop a deeper understanding of the impact of these new transactions on financial markets. even though new technologies bring new challenges, it may not be wise to try to stop technological innovation. i believe that policymakers should try to maximize the benefits and minimize the negative sides of technological innovation. in some sense, technological innovation reflects the basic human nature of " intellectual adventure. " i believe that human beings are inherently curious and search for better ideas to resolve problems, and that they have a genuine desire to communicate and share such ideas with other people. thus, i do not think it is easy to suppress such human characteristics. i believe the reason why smartphones have instantly become popular worldwide is that they were originally designed to be " tools for communication, " thus satisfying a basic human desire. moreover, if new information technologies are truly advanced ones, we should be able to utilize them also for enhancing information security and maintaining people's trust in financial transactions. to ensure that people support financial innovation and fintech, it is also important to | 0 |
the bank. the government has today announced the appointment of anthony habgood to lead the bank ’ s court of directors and the oversight committee. i welcome the appointment of someone of his depth and breadth of corporate experience. independent oversight by the committee he will chair can strengthen the bank ’ s legitimacy and effectiveness. the oversight committee has access to internal papers, is able to observe meetings of policy committees, and is responsible for reviewing all aspects of the conduct of the executive of the bank, including the delivery of policy, the design of and adherence to rigorous processes and procedures, and the monitoring of our transparency and openness. modelled on the independent evaluation office of the imf, we will create a unit to support this, with a director reporting to the chairman of the oversight committee. it is not just our governance but also our commitment to transparency and openness that must be further enhanced. transparency and openness are central not just to our legitimacy to perform these new tasks on behalf of the citizens of the united kingdom. they are also central to our effectiveness in performing them. just as governor king described in his mais lecture 9 years ago, openness about what policy is seeking to achieve can make it more effective. 21 in monetary policy, that helps to anchor inflation expectations and to support countercyclical movements in the policy setting. to that end, we have introduced forward guidance to reduce uncertainty about the way monetary policy will be set as the recovery gains pace. our inflation report has evolved in the past year to contain more information about the key judgements underlying our forecasts and to widen the set of economic indicators for which we publish forecasts to include the labour market, components of gdp, the world economy and household incomes and saving. it will evolve further, including using our new organisational structure to draw stronger distinctions between staff and mpc forecasts. we will also review the case for releasing transcripts of our policy meetings after some years, and report publicly to the oversight and treasury select committees on the outcome of that review. through our strategic plan, we will also increase the transparency of our work on financial stability. we will publish the results of regular bank stress tests. as with monetary policy, we also intend to publish more of the research and analysis underlying our policy choices. over see king ( 2005 ). bis central bankers ’ speeches time, the financial sector will be better placed to anticipate our responses and as with monetary policy, increased transparency will make us not just accountable, but | assessment of the risks to which they must be resilient. as with monetary policy, expectations matter and the system will be more resilient if the bank ’ s moves can be anticipated. market operations and prudential policy the synergies i have identified so far explain why it makes sense for monetary policy and prudential policies to be operated by a single institution, but there are also complementarities between prudential policy and the way a central bank uses its balance sheet and controls the supply of high - powered money. in a concentrated banking system such as the uk ’ s the resilience of a subset of large institutions has a disproportionate effect on the resilience of the system. one might think that microprudential regulation is then enough to guarantee systemic stability. but that is not so when there are systemic externalities or financial accelerator effects. the latter operate through feedbacks in the macroeconomy, and would depend ( among other things ) in the short run on the response of monetary policy. a macroprudential authority – with a macroeconomic viewpoint – therefore complements microprudential supervision even in a concentrated banking system. see bank of england ( 2009 ) for a discussion. blinder ( 2010 ) makes this argument in the context of potential conflicts between safety and soundness considerations and monetary policy. bis central bankers ’ speeches the design and operation of our liquidity facilities have important synergies with prudential policy. the terms on which we supply liquidity in times of stress affects the level of selfinsurance banks choose. if we are too strict, banks have to over - insure at significant cost by holding an excess of low - yielding liquid assets rather than loans, and markets will freeze too quickly in crises. but overly permissive terms create a moral hazard risk in the form of banks running excessive liquidity mismatches in normal times. 16 prudential supervisors can mitigate the moral hazard risk by imposing minimum liquidity requirements. but there is no point in setting those requirements at a very high level when the central bank is prepared to lend freely against good collateral to solvent institutions. so it is important to coordinate liquidity requirements and banks ’ reliance on liquidity insurance from the bank of england. striking an efficient balance is most likely when responsibility for prudential policy also lies with the central bank. 17 and it explains why we are announcing management changes today to enhance that coordination, with paul fisher – | 1 |
known, the us federal reserve bank reduced its interest rates in several stages, for a total reduction of 2. 25 %, over the course of the fall and winter. the bank of england has lowered its base lending rate twice this winter, for a total reduction of 0. 5 %. other central banks in our neighbouring countries have not lowered their rates. the european central bank has kept its interest rates unchanged for several months, and the central banks in norway and sweden raised their rates earlier this year. the reserve bank of australia also raised its rates recently. australia belongs to the group generally referred to as high - yield countries. at this point, it is impossible to say what these banks ’ next interest rate decisions will be. on thursday, april 10, the central bank will publish its next issue of monetary bulletin, which will contain its newest macroeconomic and inflation forecasts. at that time, the board of governors will announce its next policy rate decision. the global financial markets have been in a state of flux in recent months, primarily because of the crisis in the us sub - prime mortgage market. securitised assets based on sub - prime lending proved much more risky than previously believed, even by credit ratings agencies, which had given various collateralised debt obligations their highest ratings. but when they were put to the test, it emerged that they were far from reliable, and banks all over the world that had invested heavily in them lost staggering sums of money, amounts that are practically unheard of. in some instances, the losses were such that they compromised the banks ’ equity position and forced them to seek out new share capital. a large number of banks have had to write off billions of us dollars, and some have even been forced to write off tens of billions. and in all likelihood, the effects will continue to emerge. last year ’ s changes in the global financial markets were swift. for a long time, liquidity had been ample, interest rates low, and risk appetite high. that situation changed – virtually overnight – to one characterised by a lack of liquidity and a re - evaluation of the pricing of risk, and this resulted in substantially increased interest rate premia. banks became especially careful in their transactions with one another, and a considerable tightening of interbank markets ensued the world over. central banks on both sides of the atlantic reacted by granting special liquidity facilities with virtually unprecedented amounts and maturities. as the end of the year approached, conditions in the interbank markets improved | only 12 % of gdp. they grew somewhat with the first drawdown of the loan in connection with the economic programme with the imf, to about 24 % of gdp by mid - 2009. nearly all of iceland ’ s reserves were financed with foreign credit. so the situation was difficult, but in addition, there was substantial uncertainty about what would happen next. would we succeed in stopping the depreciation of the krona, which was still ongoing, partly because the capital controls weren ’ t working as intended? the second review of the economic programme with the imf, and the disbursement of the second tranche of the loan facility, was delayed because of the icesave dispute. the capital controls had sequestered an overhang of offshore kronur amounting to some 40 % of gdp, and it was not yet known how big a balance of payments problem lurked in the failed banks ’ estates, as the split between the new and old banks had not been completed. the new banks had not yet been capitalised sufficiently, and non - performing loans represented a major problem. as a result, it was highly uncertain how the new banks would fare. would efforts to put public sector finances on a sustainable footing be successful? in short, all three of the key objectives of the imf programme were still up in the air : exchange rate stability, fiscal sustainability, and financial system reconstruction. we know now that the turnaround was just around the corner. the economic contraction, of course, was a consequence of the financial crisis, but it also stemmed from the inevitable adjustment of unsustainable economic imbalances and from the contraction of bloated sectors such as construction and financial services. the adjustment showed most clearly in the current account balance, which flipped from a double - digit deficit before the crisis to a sizeable surplus as early as 2009. such a swift and sizeable turnaround is a rarity in international context and has drawn considerable attention. the drop in the real exchange rate by 45 % from the pre - crisis peak played a role in this adjustment, although it overshot, initially causing severe side effects because of the large stock of foreign - denominated debt owed by resident borrowers without any natural hedging in the form of foreign income or assets. as a result, strong emphasis was placed on halting the collapse of the krona. this was achieved in h2 / 2009. closing loopholes for capital outflows and adopting | 0.5 |
determined by sequential decisionmaking, subject to an understanding of the structure of the economy and of the likely responses of the other policymakers to one ’ s policy actions. in my view, the process works as follows. the administration and the congress together make decisions that determine the fiscal part of the policy mix. over the last 20 years, these decisions generally have been based on considerations that have more to do with long - run objectives such as promotion of higher longer - term growth, than with short - run stabilization. making these decisions takes considerable time because of the dynamics of the annual budget process and the legislative process. the current year ’ s decisions are incorporated and the following years ’ decisions are anticipated in the fiscal policy assumptions underlying the federal reserve ’ s forecast, extending out a year or two. the federal reserve then sets its policy to achieve the broad objectives assigned to it, specifically, price stability and full employment. fiscal decisions are, in turn, affected by budget forecasts that are partly contingent on monetary policy assumptions. in effect, fiscal policymakers make the fundamental decision about the policy mix. monetary policymakers smooth the transition to the new equilibrium, by minimizing the effect on output relative to full employment and on prices. because monetary policy adjusts continuously to changes in the economy, including those resulting from fiscal policy, it makes sense to think that fiscal policy decisions are made first and monetary policy decisions are conditional on the fiscal decisions. so does this mean that monetary policy responds directly to fiscal policy actions? i believe it is more accurate to say that the fed ’ s response is indirect. that is, monetary policy responds to changes in fiscal policy in much the same way that it responds to other influences on the economy, such as equity prices, exchange rates, or the demand for us exports due to changed growth prospects abroad. each and all of these developments affect both the macroeconomic developments and the forecast that drive adjustments in monetary policy in pursuit of full employment and price stability. it is also important not to overstate the role monetary policy plays in shaping the policy mix. indeed, the fiscal policy decision uniquely determines the policy mix. in terms of our diagram, the game is fundamentally over when the fiscal decision pins down the intersection of the is curve and the vertical line at full employment. the only question remaining is how the lm curve will come to intersect at the same point. one possibility, of course, is that the federal reserve adjusts its open market operations to move the interest rate to this | ##es. the imf staff has taken these developments into account in the april 2017 world economic outlook ( weo ) and forecasts that world gdp growth will be noticeably higher over the next two years than in 2016 — a slight upward revision relative to the october 2016 weo. 5 there may well even be some chance that foreign economies kick into gear enough that u. s. and foreign business conditions become reasonably well aligned, as occurred during the u. s. monetary tightening cycles that began in 1999 and in 2004. in both of those episodes, u. s. exports grew substantially against the backdrop of a brisk expansion in foreign activity and a stable or even slightly depreciating dollar. of course, it is hard to predict whether foreign economies continue to strengthen so that the global economy will move more in sync — as i hope — or if a substantial gap will remain between the business cycle positions of the united states and our foreign trading partners. however, even if monetary policy divergence remains substantial, there is good reason to think that spillovers to foreign economies will be manageable. first, i expect that the fed ’ s removal of accommodation will be driven by a continued expansion of the u. s. economy ; thus, foreign economies are likely to benefit from the developments that induce the fomc to tighten. second, most foreign central banks should be able to mitigate an undesirable tightening of their own financial conditions through appropriate policy actions. an important lesson of the taper tantrum was that effective communication and actions by major central banks, including the european central bank and the bank of england, were helpful in quickly pushing bond yields down to levels that these central banks regarded as appropriate to their economic situation. third, many emes have markedly improved fundamentals — including smaller current account deficits and more anchored inflation expectations — that should allow them to better withstand the effects of u. s. tightening, though some vulnerabilities remain. finally, i expect that u. s. policy normalization will be gradual under likely scenarios for the evolution of output and inflation. a gradual and ongoing removal of accommodation seems likely both to maximize the prospects of a continued expansion in the u. s. economy and to mitigate the risk of undesirable spillovers abroad. references ammer, john, michiel de pooter, christopher erceg, and steven kamin ( 2016 ). “ international spillovers of monetary policy, ” ifdp notes. washington : | 0.5 |
trips. 2 one factor that could affect consumer sentiment more broadly is the employment and income situation. for example, if firms offer more jobs and the number of employees rises, the overall outlook for income improves, thereby making consumer sentiment more favorable. an improvement in the employment and income situation could make people more willing to borrow and spend more confidently. in fact, a strong correlation is observed between the active job openings - to - applicants ratio – which represents the number of job openings relative to the number of job seekers – and the consumer confidence index ( chart 6 ). employment conditions as suggested by the active job openings - to - applicants ratio and the unemployment rate deteriorated in the wake of the lehman shock, but thereafter have been on a recovery trend. if this trend continues, consumer sentiment is likely to be underpinned at a high level. the october 2013 issue of the regional economic report released by the bank contains a review of regional features of recent developments in consumption ( available in japanese ). bis central bankers ’ speeches b. sustainable improvement in income : rise in labor productivity a rise in labor productivity is important in terms of providing support for improvement in economic activity and income in the longer run, as this means strengthening the foundations for japan ’ s economic growth. if prospects for a sustainable improvement in income are widely acknowledged, private consumption will continue to be resilient. labor productivity per worker has been growing steadily, albeit at a moderate pace, and this trend has been firmly taking hold despite such significant events as the lehman shock and the great east japan earthquake ( chart 7 ). looking at a breakdown by industry, labor productivity in the nonmanufacturing sector has been exhibiting higher growth in the past couple of years ( chart 8 ). the level of labor productivity in the nonmanufacturing sector is still lower than that in the manufacturing sector. in addition, it remains difficult to increase value - added in some segments of the nonmanufacturing sector, due in part to various regulations. however, labor productivity in the nonmanufacturing sector as a whole continues to show higher growth than in the past, and has been exceeding the level seen before the lehman shock. developments in labor productivity include the effects of cyclical economic recovery, but the underlying trend reflects a pick - up in economic growth potential from a somewhat long - term perspective. for example, reports on interviews with firms and other relevant information across regions suggest steady progress in firms ’ efforts to create demand, such as for high | value - added services, and to make active fixed investment, with both being done across a wide range of areas such as wholesaling and retailing, construction and real estate, accommodations, and eating and drinking services. 3 recent developments in the underlying trend of labor productivity in the nonmanufacturing sector show a strong correlation with developments in private consumption ( chart 9 ). there is a possibility – although this interpretation should be taken with care – that the rise in productivity has been boosting prospects for a sustainable improvement in income, leading to higher growth in private consumption. the rise in labor productivity in the nonmanufacturing sector may also be exerting upward pressure on a broad range of prices through the growth in consumption ( chart 10 ). it can be considered that this rise has exerted a positive influence on the inflation rate through an improvement in the supply - demand balance, as its effects of increasing value - added and demand would more than offset its effects of generating price competition through cost cuts and subsequently exerting downward pressure on prices. 4 in the manufacturing sector, the rise in labor productivity in terms of value - added in japan has come to a pause. however, looking at the corporate sector, firms have been steadily enhancing their ability to make profits on a global basis. overseas, for example, they are increasing their production, fixed investment, and parts procurement. in the manufacturing sector, corporate profits have recently been growing rapidly, helped in part by developments in foreign exchange rates, and stock prices are firm, as are those in the nonmanufacturing sector ( charts 11 and 12 ). it should also be noted that japan ’ s net income from the rest of the world exceeds the historical peak ( chart 13 ). if the current account surplus is maintained see the october 2013 issue of the regional economic report released by the bank ( only the summary of the report is available in english ) and the report on the features of and background to business fixed investment in the nonmanufacturing sector of the chubu region released by the bank ’ s nagoya branch on october 18, 2013 ( available in japanese ). empirical studies also indicate that a rise in productivity will improve the supply - demand balance in a sustainable manner, thereby exerting positive effects on the inflation rate. for example, see ryuzo miyao, “ nihon no keiki hendou youin : jikeiretsu bunseki karano shiten ( sources for japan ’ s economic | 1 |
to 2015. new objectives and strategies have been developed, and some of the vision 2010 objectives and strategies have been reconsidered, resulting in a refocus in, and / or redefinition of the vision 2015. major strategic objectives and challenges up to 2015 include the following : to continue to evaluate opportunities for further access to the nps and improve the participation of non - bank stakeholders in the clearing system and / or in the formal payment system management structures. the recent financial crisis has reemphasised the importance of sound risk management policies and practices in the maintenance of a safe and efficient payment system. to enhance the oversight of banks and non - banks. as non - bank stakeholders are playing a larger role in the payment system, effective payment system risk management policies need to be considered. bis central bankers ’ speeches to enhance communication among stakeholders regarding nps matters. better communication improves the understanding of payment system stakeholders of the multifaceted nature of the payment system, which is complex and at times appears to be misunderstood. to participate in international workgroups and forums. continued participation in international forums ensures that south africa stays abreast of international developments spanning the many dimensions of the payment system universe. to enhance human resources capacity in the broader nps. an intensified focus on human resources development initiatives will enable depth skills and the building of much needed capacity in the industry. to ensure high - level operational effectiveness of the payment system infrastructure. operational effectiveness ensures the circulation of funds in the financial system and efficient liquidity management by participants. failure of the infrastructure components of the payment system could result in substantial systemic operational risk. to facilitate regional payment infrastructure integration that meets the needs of the southern african development community ( sadc ) region. the emphasis will be on commencing the process towards an integrated infrastructure. to formalise and implement an interchange determination process in south africa that is fair, transparent and sustainable. this process should include all payment streams. vision 2015 is the product of inter - organisational brainstorming, debate and consultation between the bank, the banking industry and various other specific stakeholders. the successful implementation of the strategies will, once again, depend on co - operation between all the payment system stakeholders. i would like to take this opportunity to thank the bank and non - bank stakeholders for the input provided and their continued co - operation with the bank. finally, allow me to also convey my appreciation to my colleagues from the national payment system department, under the able leadership of dave mitchell, | . this, in turn, necessitates a broader mix of financial instruments. both infrastructure funds and bonds have great potential. the better and more widespread securitisation of bank loans seems desirable to diversify risks. it may also assist the development of transparent capital market instruments. for emerging markets, financial market development, trusted legal frameworks, and the development of a long - term investor base are pertinent ” this is what we should work for. hopefully, banks would soon move towards credit enhancement, so that other players are willing to subscribe to bonds issued by corporates executing infrastructure projects. it is also necessary that those with long maturity liabilities are encouraged to provide funds to the infrastructure projects. this apart, i feel there is a huge potential to raise money by way of issue of green bonds. india ’ s commitment to the paris climate accord, makes it all the more important to work towards implementing infrastructure projects that are environmentally sustainable because it is both the need of the hour and there could be alternative sources for raising funds for projects that are environment friendly. we will have to set benchmarks for evaluation / rating of the emission prevention / avoidance / reduction that a project brings and harness the financing potential for such projects. let me end by once again thanking assocham for giving me the opportunity to share my thoughts on the subject and i am sure that the deliberations during the day will throw up new and actionable ideas to facilitate flow of funds for the infrastructure sector. 1 special mention account 2 – where principal and / or interest is overdue for more than 60 days. 5 / 5 bis central bankers'speeches | 0 |
sack ( 2004 ), “ monetary policy alternatives at the zero bound : an empirical assessment, ” finance and economics discussion series 2004 - 48 ( washington : board of governors of the federal reserve system, september ), for evidence relating to the increased transparency of the fomc over the past several years to the predictability of short - term interest rates. see christina d. romer and david h. romer ( 2004 ), “ choosing the federal reserve chair : lessons from history, ” journal of economic perspectives, vol. 18 ( winter ), pp. 129 - 62. effectiveness based on inferences from the recent experience of regimes that have specific numerical targets, particularly with respect to inflation, around the world. a basic, yet difficult, issue is the selection of a particular price index to guide policy, even in the case of a single goal such as inflation. experience tells us that economies and the composition of productive enterprises change over time, and therefore the appropriate index and inflation value for the monetary authority would also need to change to reflect technological and other advances. in light of this inherent uncertainty associated with the construction of a price index, one might be concerned that choosing and rigidly adhering to an inappropriate index could have negative economic consequences that might outweigh prospective benefits. also, we must consider the ramifications of quantified goals in the context of our democracy. that is, the quantification of objectives becomes even more problematic for central banks such as the federal reserve with multiple democratically based mandates, some of which are notably less disposed to quantification than others. for example, considering our dual mandate from the congress, how do we measure maximum sustainable employment? indeed, as i mentioned previously, estimates of the nairu and other possible related measures that address the full - employment objective such as the output gap have uncomfortably wide confidence intervals and are far more controversial than selecting a target for a specific price index. of course, the central bank could in principle quantify only the inflation objective. however, i fear that quantifying one goal and not the other would present problems because the monetary authority might inadvertently place more emphasis on the quantified goal at the expense of the nonquantified objective. doing so would seem inappropriate. the ease of quantification should not influence how the federal reserve pursues its dual mandate. in addition, i worry about the potential loss of flexibility from the implementation of an inflation target, as explicit numerical goals might inhibit the central bank ’ | 3 and 10 percent. the recent experience of the united states with inflation has been similar in some respects and dissimilar in others to that of other countries. for example, based on the organisation for economic co - operation and development ’ s measures of overall consumer price inflation, prices rose at an annual average rate of about 3 percent in the united states from 1990 through 2003, compared with about 3 percent in the euro area and in the united kingdom and roughly 1 percent in japan. 1 but, more important, the volatility of inflation was lower in the united states than in these other economies. an equally important indicator of the success of the federal reserve ’ s monetary policy is private expectations for future inflation. measures of inflation expectations obtained from financial asset prices clearly indicate that market participants expect that the federal reserve will maintain low and stable inflation. for example, although the difference between the yields on nominal inflation - indexed and treasury securities is an imperfect measure that includes complicating factors such as inflation risk and liquidity premiums, the five - year break - even inflation rate five years ahead has averaged about 2 - 1 / 2 percent over the past five years and has fluctuated in a narrow range of about 1 - 1 / 2 to 3 - 1 / 2 percent. survey measures confirm that inflation expectations over this period have been subdued and well anchored. the university of michigan ’ s survey of ten - year inflation expectations has averaged less than 3 percent and has stayed within a very narrow range over the past five years. data are from the most recent oecd economic outlook ( no. 75 ) ( excel spreadsheet ). assessing the outcomes with respect to the federal reserve ’ s goal of maximum sustainable output growth is inherently more difficult. estimates of the relevant measures, such as the nonacceleratinginflation rate of unemployment ( nairu ), which in recent years has been decreasing according to some estimates, have very wide confidence intervals. but we can point to some evidence suggesting that the united states has enjoyed, besides subdued and stable inflation, some favorable developments with respect to output and employment. certainly, we can document substantial gains in productivity in recent decades in the united states. according to the oecd, business sector labor productivity growth in the united states averaged about 2 percent from 1990 through the end of 2003, compared with about 1 - 1 / 2 percent in the euro area and in japan over the same period. and since the mid - 1990s, this gap has | 1 |
muhammad bin ibrahim : development and deployment of malaysia ’ s atm network speech by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the launch of meps ( malaysian electronic payment system ) atm initiative, kuala lumpur, 21 october 2013. * * * pooling of resources through meps the launching of meps ’ atms marks an important milestone as this will be the first time that meps, a non - bank entity owned by the banking industry, is deploying atms, instead of by individual banks. this initiative is indeed a welcomed move as it facilitates the pooling of resources by the banking industry for a common objective of developing and deploying industry - wide banking infrastructure. it promotes efficiency and cost effectiveness. widening the atm network through shared resources will also benefit the public by having more convenient points of access to banking products and services. meps had in the past a history of coordinating industry - wide infrastructure development efforts. an outstanding achievement was made when it coordinated the industry - wide migration of the atm cards from magnetic stripe to chip - based technology in 2001 to eradicate the numerous fraud involving magnetic stripe technology. this move was a significant strategy for the country, as malaysia was amongst the first, to adopt a chip - based technology to reduce fraud and boost public confidence in the use of the atm and payment cards. meps should continue to perform this role, as builder of payment infrastructure for the banking industry. as an industry, banking institutions should continue to share infrastructure cost and compete on providing quality products and services. basic payment infrastructure should not be a tool for competitive edge but rather as a means to reduce cost and adopting common standards. migration to e - payments to achieve cost savings accelerating the migration to e - payments is one of the key strategies in the financial sector blueprint. on numerous occasions we had highlighted that a successful migration has the potential to drive further efficiency gains and cost savings. it will improve the country ’ s competitive position. research has suggested that successful migration to e - payments can save the country in terms of costs ( of about 1 % of gdp annually ). today, cheques and cash remain prevalent in malaysia. based on the last 3 years data, an average of 205 million cheques totalling to about rm2 trillion were issued on an annual basis. our preliminary estimates showed that at rm2. 70 cost per unit, the banking industry spends at least rm544 million annually on extending cheques issuing services. this is an expensive way of | two key areas of human capital development and catalysing greater harmonisation of shariah interpretations. the availability of talents who are skilled in both the financial and shariah fields have been essential in invigorating innovation and dynamism of islamic finance in malaysia. this is reflective of our long - held conviction that sustainable growth of islamic finance could not be achieved without adequate attention to the development of intellectual resources. it is out of this conviction that malaysia has committed resources to support the broadening horizon of growth in country and beyond, through the deepening of knowledge and competence among financial practitioners and shariah scholars within the industry. for this purpose, malaysia has established the international centre of education in islamic finance ( inceif ) to support advanced education in islamic finance, while, the international shariah research academy ( isra ) was founded to promote research and rigorous intellectual dialogue among shariah scholars and practitioners on islamic finance. let me now turn to the development of our legal framework, which has been one of the key factors contributing to the competitiveness of islamic finance in malaysia. our legal infrastructure consists of effective regulatory and substantive laws, as well as dedicated adjudicative platforms to undertake legal redresses arising from disputes revolving around islamic financial transactions. the legal infrastructure in malaysia evolved in different phases over the years. our initial focus was to establish dedicated enabling substantive laws for islamic finance, such as the islamic banking act 1983 and takaful act 1984. the enactment of these laws provided the platform for separate regulatory framework for the industry and importantly, established the foundation of the shariah governance framework through two key provisions. these are the requirements imposed on islamic banks and takaful operators to ensure that their business aims and operations are shariah - compliant and the need to form separate shariah board within their respective institutions. our experience has shown that dedicated laws governing institutions authorised to conduct islamic finance are critical elements in instilling and maintaining public confidence in the system. after establishing the necessary legislative measures to establish a more conducive environment for islamic finance to thrive, the next phase was aimed at creating the critical mass which was essential to develop islamic finance in malaysia. amendments were made to the banking and financial institutions act 1989 to allow the conventional banks to operate islamic windows which brought about new players in the industry. at this stage we also saw the establishment of the national shariah advisory council ( sac ), the highest authority on shariah matters related to islamic | 0.5 |
the first quarter of 2011, compared with 6 percent of mortgages originated to borrowers in high - income neighborhoods. the higher rates of delinquency suggest that homeownership may have been a riskier proposition over the past decade for households in low - and moderate - income neighborhoods than in high - income neighborhoods. delinquency rates are higher, in part, because borrowers in these communities were more likely to end up in complicated or inappropriate mortgage products, unacceptably often as a result of unfair and deceptive lending practices. but borrowers in these communities may also be more sensitive to house price declines because they may have fewer financial resources outside of housing, and they may have had little equity in the property to begin with. 10 although investing in a home has risks, it also has positive qualities. households may feel more comfortable investing in housing than in other investments because houses are familiar, tangible, and provide concrete ties to the community. regular mortgage payments may serve as a useful savings commitment device. finally, homes pay out a “ dividend ” in the form of housing services – that is, providing a place to live. the housing services provided by an owner - occupied home – such as control over one ’ s own space – may be preferable to those provided by a rental. in making a decision about homeownership, prospective buyers need to consider the risks as well as the benefits – in particular, the possibility that house prices can fall and that such declines can have long - lasting effects on their financial well - being. the current decline in national house prices and the preceding run - up were, of course, unusually large even by historical standards. but even during times when house prices were rising nationally, prices fell steeply in certain local markets, such as texas in the mid - 1980s or massachusetts in the for a further discussion of the increase in lending over this period, see, christopher mayer, and karen pence ( 2008 ), “ subprime mortgages : what, where, and to whom? ” finance and economics discussion series 2008 – 29 ( washington : board of governors of the federal reserve system, june ). houses represented nearly three - fourths of total assets for homeowners in low - and moderate - income neighborhoods in 2007, according to the survey of consumer finances. in contrast, homes typically represented a bit over half of gross assets for homeowners in higher income neighborhoods in 2007. the median combined loan - to - value | ##closures on neighborhood house prices, crime, and government budgets. as a result, fewer short sales likely occur than would be best for communities overall. this externality is one of the reasons why a government program that provides financial incentives to servicers and borrowers for pursuing short sales or deeds - in - lieu of foreclosure remains undersubscribed. 13 indeed, as of march 2011, only about 12, 000 agreements had been initiated under the program. this is an area where lenders can and certainly should do more. the federal reserve, in conjunction with other financial banking regulators and government agencies, has embarked on initiatives to help resolve the existing stock of vacant properties and prevent even more properties from entering foreclosure. 14 the first initiative involves revisions to the rules governing the community reinvestment act ( cra ) that took effect in january. under the revised rules, depository institutions receive positive consideration in cra examinations for participating in community stabilization activities in areas designated as eligible for funds under the neighborhood stabilization program authorized by the congress. such activities might include donating properties that they ’ ve taken possession of – known as real estate owned – to nonprofit housing organizations or providing financing for the purchase and rehabilitation of foreclosed, abandoned, or vacant properties. although it is too early to assess the effect of these cra changes, the participation of more than 600 banks and industry stakeholders in a webinar recently hosted by the federal reserve indicates that there is interest and potential in this tool. our host today, the federal reserve bank of cleveland, played a key role in envisioning these changes to the cra rules. the second initiative, which is ongoing, is the development of uniform national servicing standards. these standards should address the proper handling of both performing and non - performing loans, including loss - mitigation procedures and foreclosure processing, and should lead to improved customer treatment and better transparency and oversight of mortgage servicers ’ processes. the intent is for servicers to be held to the same standards regardless of their regulator and regardless of whether the loans being serviced are held on the originator ’ s books, have been sold, or have been securitized. by having a common set of standards for the mortgage servicing industry, the financial regulatory agencies will emphasize the importance of servicing practices that promote the best interests of borrowers and the broader housing market. let me turn finally to mortgage credit. no one wants to see a return to the | 1 |
the movement of the indian rupee seems to be broadly tracking the fortunes of the euro against the us dollar – a testimony perhaps to the degree to which global markets are influencing conditions in domestic financial markets ( chart 3 ). before i move to the issue of managing the currency risk, let me briefly touch upon another equally critical macro - economic variable - interest rate that also poses risk to banks and corporates alike and needs to be managed. in contrast to the indian rupee movement, the movement in domestic interest rates ( as represented by the generic 10 - year yield of bonds issued by government of india ) has been range bound ( chart 4 ) with reduced volatility in recent months as compared to the past ( chart 5 ). bis central bankers ’ speeches the trends in interest rate movements have been influenced by a host of factors, such as, policy actions on the rate front and open market operations conducted by the reserve bank, upward revision in fii investment limits in government securities, broadening of investor base for investment in government securities, persistence of inflationary pressure, etc. measures taken by the reserve bank as stated earlier, in the face of increasing volatility in the financial markets and a significant depreciation of the domestic currency, a host of measures have been taken by the reserve bank and the government of india since the beginning of last quarter of 2011. these include, inter alia, the following : i limits on investment in debt securities comprising government securities and corporate bonds by foreign institutional investors were enhanced ; ii. interest rates on rupee denominated non - resident deposits were deregulated while rates foreign currency denominated deposits increased ; iii. the all - in - cost ceiling for external commercial borrowings ( ecbs ) was rationalized ; iv. following administrative measures aimed at discouraging speculative activities were initiated : a. reduction in limits for booking forward contracts under past performance route and only on fully deliverable basis ; b. forward contracts once cancelled cannot be rebooked ; c. net overnight open position limits ( noopl ) of the authorized dealer ( ad ) banks were reduced across the board ; and d. ad banks were advised that their intra - day open position / daylight limit should not exceed the existing noopl approved by the reserve bank ; v. interest rate on export credit in foreign currency was deregulated ; vi. foreign exchange earners were asked to convert 50 per cent balances in their exchange earners foreign currency ( eefc ) accounts | , of course, taken a series of measures to address many of the challenges in the recent weeks. given very limited role that we can play in influencing the global environment characterized by frequent bouts of risk - on / risk - off sentiments, i would like to touch upon the changing scenario in domestic financial markets and its implications for currency and interest rate risk bis central bankers ’ speeches management. thereafter, i would briefly touch upon the challenges these developments pose for banks and corporates and what lessons can be learnt. currency and interest rate risk in the indian context after remaining stable for nearly two years, the indian rupee started depreciating very sharply last year immediately after the credit rating of the us was downgraded by the s & p. as compared to an appreciation of 1. 1 per cent during 2010 – 11, the indian rupee fell by more than 12 per cent during 2011 – 12 ( chart 1 ). the downward pressure on the indian rupee was also marked by heightened volatility. a sharp depreciation within a short period of time had a destabilizing impact on the general market sentiment. as may be seen ( chart 2 ), the indian rupee was relatively less volatile till july 2011 but the level of volatility increased significantly thereafter. there was some moderation in volatility after a series of policy measures were announced by government of india and the reserve bank of india during last quarter of 2011. these measures were aimed at augmenting capital flows and imposing certain restrictions on banks and corporates in order to curb speculative uni - directional bets on the indian rupee by such entities. apart from taking policy measures, the reserve bank did also intervene to maintain orderliness in the foreign exchange market by curbing excessive volatility and in the process stabilizing the market sentiments. during the current financial year 2012 – 13, after depreciating by more than 10 per cent till june 2012, the indian rupee started recovering gradually in response to major central banks ’ decision to go for further policy easing and the announcements of next round of reform measures by the government. the appreciation is, however, also associated with some degree of volatility. bis central bankers ’ speeches at the same time, it can be said that the indian rupee is not the only currency that has been experiencing increased volatility. there are other bric currencies, emerging market currencies and even euro that have seen such sharp movements. in fact, | 1 |
the scap include : a common stress scenario was applied to each of 19 large bank holding companies ( bhcs ). this stress scenario was applied in a consistent manner across these banks. the test was applied at the detailed trading book and banking book level, with the expected loss experiences based upon the particular characteristics of the portfolio being examined. so, for example, evaluation of a residential mortgage portfolio might include detailed factors such as fico scores and geographic distribution of the mortgages. this means that estimated potential losses under the stress scenario bis central bankers ’ speeches vary across banks not just because of differences in overall portfolio composition, but also because of differences in asset quality within particular asset classes. a minimum capital standard was applied after two years of stress and with appropriate reserves at the end of the two - year period. the minimum capital standard was set at 4 percent of tier i common and 6 percent of tier i capital. estimated potential losses were compared with the starting capital level and the estimated resources expected to be generated by the ongoing business – referred to as pre - provision net revenue ( ppnr ) – in order to determine the capital needed to meet the minimum capital standard. details of the test were disclosed on a bank - by - bank basis using a template that the federal reserve established. this common template ensured comparability across the 19 bhcs and ensured that the federal reserve controlled the message, not the banks. in contrast, while ccar had an embedded stress test, the key attributes of the ccar are quite different : the purpose was to assess the bhcs ’ capital planning processes to ensure that the bhcs have good capital plans in place. stress tests were applied by individual banks as part of this exercise. we set the main scenario that the banks must use, and the banks were required to apply the stress test in the manner they deemed appropriate in assessing their capital adequacy. supervisors used independent quantitative techniques both as a check on firm estimates and to assist in their evaluation of the firms ’ tools and processes. we evaluated their efforts in terms of : 1 ) how the stress test is applied, 2 ) what this implies in terms of capital adequacy, and 3 ) their capital plans and requests to pay dividends and / or conduct share repurchase programs. our evaluation of their capital planning processes and their requests to make capital disbursements was based mainly on three factors : 1 ) capital adequacy, 2 ) the quality of the capital | we were making an “ up ” or “ down ” decision per their requests. either we “ objected ” or we “ did not object. ” we want banks to have good capital planning processes and make intelligent decisions with respect to capital. we don ’ t want to determine their capital actions or what their distributions should be. they need to be able to do this. fifth, with respect to disclosure, this decision was left to individual firms. in some cases, banks disclosed whether we objected or not to their plans for distributions, while in other cases they simply announced their intention with regard to future capital distributions. so what have been the lessons from our stress test exercises? one key issue during the financial crisis was the unwillingness of banks to proactively raise capital so they would be better prepared to withstand a “ bad state of the world ” scenario should that transpire. banks didn ’ t want to do this for two reasons. first, capital raises might signal that they were, in fact, weak. second, the capital raises would be dilutive. in particular, in many cases the expected share price would be higher without dilution even admitting the possibility of a “ bad state of the world ” scenario. the problem with this approach was that each individual bank ’ s decision not to raise capital to protect against the “ bad state of the world ” scenario increased the likelihood of the “ bad state of the world ” scenario. there was an important externality. if a bank raises additional capital, it doesn ’ t just make its own bank stronger, it also makes the entire banking system more stable. yet it reaps only a portion of these benefits. this was the collective action problem that the scap was designed to remedy. perhaps, i can best illustrate the problem via two figures. in figure 1, banks have sufficient capital. the mean value of capital is well above zero, the distribution is narrow, and none of the distribution falls below zero – everyone believes the bank is solvent. in figure 2, losses push the distribution of capital to the left and uncertainty about the value of the assets widens the distribution. thus, unlike the case in figure 1, a portion of the distribution falls below zero. the bank may be insolvent. thus, the bank is likely to encounter funding difficulties. the point of the scap was to push the probability distribution back to the right by adding capital – and to narrow it by creating more certainty about how much capital the banks need. by moving | 1 |
housing market will likely involve shifting some of the burden of adjustment from some parties to others. i greatly appreciate the leadership that the senate banking committee has shown on the profound challenges facing the housing market. for its part, the federal reserve will continue to use its policy tools to support the economic recovery and carry out its dual mandate to foster maximum employment in the context of price stability. in its supervisory capacity, the federal reserve will continue to encourage lenders to find ways to maintain prudent lending standards while serving creditworthy borrowers. thank you again for inviting me to appear before you today. i would be happy to answer any questions you may have. bis central bankers ’ speeches | that helped spread the crisis, the response to the crisis needed to be global as well. and many of the responses were indeed global – or at least were quite similar across various jurisdictions. everyone was reacting to the same types of problems, but the similarities also reflected a high degree of global consultation and collaboration. we can see this in the actions of many central banks. beginning in late 2007, central banks generally reacted to funding problems and incipient runs with similar expansions of their liquidity facilities. they lengthened lending maturities, in many cases broadened acceptable collateral, and in several instances initiated new auction techniques for distributing liquidity to overcome the inertia from stigma. central banks were in constant contact through this period, although they arrived at many of these actions separately. however, we did explicitly coordinate to address problems in dollar funding markets. the federal reserve entered into foreign exchange swaps with a number of other central banks to make dollar funding available to foreign banks in their own countries. by doing so, we reduced the pressure on dollar funding markets here at home. governments also reacted similarly when in late 2008 the turmoil deepened and many countries saw a need to provide broad support to their banking systems. the rescue plans in different countries contain similar elements : expanded deposit insurance, guarantees on nondeposit liabilities, and capital injections. although most countries wound up in a similar place, the process was not well coordinated, with action by one country sometimes forcing responses by others. many countries also took measures to deal with financial distress at systemically important firms. efforts in this area were much messier. the failure of lehman brothers highlighted the lack of a framework that would allow for the orderly resolution of a systemically important nonbank financial institution in the united states. even where formal crisis - management frameworks existed, such as within the european union, they were not always used in the heat of the crisis. the reality is that the resolution of failing firms is still a national responsibility, even for institutions that operate globally. early on in the crisis, authorities recognized that addressing the deficiencies made apparent by the crisis required an international effort. many of those deficiencies – for example, in bank capital and liquidity requirements and in accounting systems – were embodied in internationally agreed regulations, standards, and codes of conduct. addressing them would require working through global bodies of national and international standard setters and they would require broad agreement among national authorities. the financial stability forum ( now renamed the financial stability board ) | 0.5 |
be extremely important to build and preserve confidence in the use of digital financial services. learning how to use digital financial services safely is just one dimension. an important goal of improving digital financial literacy is also to help individuals make better use of digital financial services to improve their financial well - being. with an explosion of digital tools that can help individuals plan and manage their finances better, a much wider range of financial solutions, and easier access to financial advice - financial literacy, including digital financial literacy, is critical to help individuals navigate the complexity that comes with more choice. faced with the same set of choices, individuals armed with the knowledge and skills to make good choices and good use of facilities available to them could significantly improve their standard of living, while others who make poor financial choices could be plunged into personal financial hardship. 15. the financial literacy month this year aims to amplify the importance of digital financial literacy in helping malaysians build financial resilience, and enable them to participate fully in the digital economy with confidence. our efforts should reduce the digital divide, expand accessibility, and strengthen individual skills to manage money wisely. 16. it would be a mistake, however, to think that we can hope to provide all the knowledge and information needed, at exactly the right times, for individuals to successfully navigate the digital financial landscape. rather, our job as a financial education community is to help people become comfortable with the language and ways of digital financial services - much like learning how to get around and get things done in a new city. then individuals will be far better able to adapt to the continual changes brought about by new technologies and empowered to know what to look for, where to look, and how to make sense and use what they find to their best advantage. this is not achieved in one month or over the few days that our teams will be spending in each location on the roadshow. it requires sustained efforts on our collective part to help your customers, the schools and organisations that you work with, and the public at large, build greater confidence in using financial services effectively. 17. financial education is absolutely central to the goal of making sure that finance works for the people. today, more than at any time before, our society needs the right 3 / 4 bis - central bankers'speeches knowledge and skills to manage their finances. saving for retirement, borrowing responsibly, investing wisely, and protecting against financial harm will build resilient households. resilient households, in turn, | s foot print is not sustainable, risk premia will rise. central banks can also help to correct the carbon bias in capital markets. in the euro area, central bank purchases of corporate bonds follow a market neutrality principle. this means that the purchases reflect the broader corporate debt market. but what does this neutrality mean if there is a carbon bias in european capital markets because the relative price of carbon emissions is distorted? central banks could explore how, within the boundaries of their mandates, they can redesign their monetary policy instruments to prevent such biases from occurring, and instead contribute to unlocking more green investments. we could take the existing eu policies, such as the non - financial reporting directive and the eu taxonomy for sustainable activities, as a starting point in this respect. i spoke about the need for carbon pricing and transition plans. about the need for good risk management and disclosure. and the need for more supply of risk capital. when it comes to the role of the financial sector, i may have inadvertently left you with the impression that finance always follows the real economy. that if governments and central banks and other policymakers and standard setters provide all the right conditions, then funding for the green transition will follow suit. although i think this is largely true, it is not entirely how i see the role of the financial sector. financial market players should not wait for all the regulations, and conditions, and perfect data sets to be in place before they can have impact. they perform a crucial role in the economy by helping companies to grow and create jobs and wealth. that means they have a social responsibility of their own to make sure that their business models support a sustainable economy. it is good to see that many financial institutions are working on reducing their carbon footprint. to them i would say, keep up the good work, and branch out 3 / 4 bis central bankers'speeches where possible. and to the others i say, don ’ t just talk the talk, but also walk the walk. maybe only now, thirty years later, we fully realize how much courage it took for our central and eastern european partners to embark on their bold experiment. without an existing blueprint. under economic circumstances that make our troubles today look relatively benign. but they had little choice. and neither do we. so let ’ s learn from their experience and take courage from their example. even if we do not yet know exactly what a carbon - neutral economy looks like, and how it will change our everyday lives. the eu green | 0 |
have to see through the orderly resolution of non - viable banks, ensuring the maintenance of their core functions and their restructuring at the least possible cost to the taxpayer. the key attributes further envisage the availability of recovery and resolution plans for each institution that set out a roadmap ahead of a potential crisis situation. lastly, they establish the principle whereby bank shareholders and creditors are those who should bear the bulk of the costs of the crisis. using the parlance of the profession, the “ bail - out ” ( or rescue of the bank with public funds ) disappears and is replaced by the “ bailin ” ( generation of own funds, capable of absorbing losses, converting debt instruments into capital ). 3 / 10 the internationally agreed principles have been passed through to european regulations through the bank recovery and resolution directive ( brrd ). this framework has been completed within the banking union with the establishment of the single resolution mechanism, a system comprising a central authority, the single resolution board ( srb ) – which adopts the relevant decisions for significant banking institutions – and the national resolution authorities that participate in the srb and retain direct responsibility for the less significant institutions. this mechanism has a single resolution fund, endowed with contributions from the industry, that will enable financial support to be afforded to resolution processes. despite the undeniable progress that the new resolution framework adopted in europe entails, its practical implementation is subject to major challenges that i would like to highlight today, drawing on the fact that the brrd will shortly be revised on the basis of a recently submitted legislative proposal by the european commission. accordingly, i shall first refer to the general aspects of the european resolution regulations. next, i shall look at the loss - absorption requirements for bank creditors, which is one of the central aspects of the regulations. and i will conclude with some brief comments of a more strategic nature. 2 general aspects of the european regulations the european union, as reflected in the fsb ’ s second peer review on resolution regimes published in 2016, is one of the jurisdictions where the key attributes have been most rigorously implemented. allow me to highlight some of the main features. first, the regulations consider resolution as an alternative mechanism to ordinary insolvency procedures in the mercantile realm, applicable to banks only in specific circumstances pertaining to the public interest. in particular, resolution shall only be applicable to those banks whose failure may generate risks to financial stability, given that they perform critical functions. second, the use of public funds to support | many cases weightier determining factors than solvency requirements themselves for financial institutions. it is thus necessary to harness the ongoing revision of european legislation and the subsequent re - definition of the policies to be pursued by the resolution authorities so as to fine - tune demands in a way that provides for the orderly adjustment of the industry to the new regime. as earlier discussed, adding flexibility to some requirements and setting transitional arrangements for others may be of help here, while also reinforcing the authorities ’ ability to manage crises in the short and medium term. all told, institutions should be mindful that the new resolution framework will require those banks that exceed a certain size and are liable to generate systemic risk to ensure that their balance sheet structure allows their resolution at the expense, essentially, of their shareholders and creditors. they should, therefore, ensure that their business model is compatible with the issuance of loss - absorbing instruments on the capital markets and that their income statements allow for the remuneration of the supplementary risk that the new resolution regime entails for holders of bank debt. it thus seems likely that several institutions will face objective difficulties adjusting to the recently established resolution framework. these new regulations, therefore, contribute to reinforcing the perception of excess capacity in the sector and, foreseeably, they will contribute to promoting a change in the industry structure that will correct such excess by means of consolidation processes giving rise to banks more capable of comfortably complying with the new demands. the supervisor ’ s role essentially consists of setting in 9 / 10 place the means needed for this seemingly inevitable adjustment process to unfold in as orderly a fashion as possible. 10 / 10 | 1 |
continuation of previous best practice, while at the same time incorporating insights from economic theory and the experience of other central bank. i think it is fair to say that the strategy has served us well. the clearest evidence of this is the high credibility which the ecb has enjoyed since its inception. the historical fact that, at the time of the introduction of the euro, market interest rates on instruments denominated in euro all along the yield curve were to be aligned with the lowest – and not with the average – rates prevailing prior to the euro was not foreseen by many observers prior to stage iii. the historically low level of short, medium and long - term market interest rates was unthinkable in some countries, which had experienced much higher inflation in the past. in my view, the incorporation of monetary analysis into our monetary policy strategy served, in the eyes of the global market, as an anchor for expectations that in no small way contributed to our success in building and maintaining credibility. the monetary policy strategy of the ecb announced in october 1998 explicitly recognises the monetary nature of inflation by assigning an important role to money in the formulation of monetary policy decisions aimed at the maintenance of price stability. as prof. issing explained to us in detail, there were and still are many good reasons to do so. milton friedman ’ s famous dictum that “ inflation always and everywhere is a monetary phenomenon ” is one of the central tenets of economic theory. on the basis of the discussions at this conference, i draw the conclusion that there is no disagreement in the economics profession on this central tenet, but a lot of different views on how to organise the monetary analysis so that it has an appropriate influence on interest rate decisions. and this is the second issue mentioned at the opening of the conference. as was pointed out by prof. christiano and his co - authors rostagno and motto, including informational asymmetries, transactions costs and financial frictions in “ state - of - the - art ” macroeconomic models allows to better reflect the role of money and credit aggregates within such frameworks. i found compelling the argument that monetary analysis be used to monitor ( and possibly offset ) macroeconomic risks which are not related to price stability at shorter horizons, but which may nevertheless have important consequences for maintaining price stability over the medium and long run, like risks to financial stability. on this point in particular lucas papademos ’ remarks yesterday evening were particularly stimulating. although | we can all agree the markets stood up remarkably well. international meetings and joint forums such as iosco are a further step towards setting the foundation for more structured lines of communication amongst regulators. participation in iosco taskforces requires resources but helps to develop better appreciation of characteristics unique in other markets, and alternative approaches to addressing regulatory concerns. it is in recognition of this that mas has devoted resources to active participation in iosco ’ s committees and working groups. we have also found the memorandum of understanding ( “ mou ” ) to be a useful instrument for setting out mutually agreed procedures by which regulators may exchange information and provide mutual assistance. since the mid - 1990s, mas has entered into a number of such mous to ensure that the level of regulatory collaboration keeps pace with the capital market linkages that are in place. a formal arrangement enshrined in an mou may not be necessary in all cases, but are helpful amongst jurisdictions with substantive capital market linkages or trading arrangements in place. impetus for international standards the second proposition is the growing impetus for international standards. in this regard, iosco has taken the lead in putting forward a set of principles which its members subscribe to. some of the principles are necessarily pitched at a broad level, to allow members to agree on key areas which regulators should focus their attention. the challenge ahead is to continue working systematically on the principles to further cross - reference against quantifiable standards. there are several reasons why such international standards are important. danger of a weak link in the system the first is that interconnected markets means that transactions involving intermediaries or markets in different jurisdictions are always exposed to the weakest link. as an example, a localised weak link in clearing and custody networks used for cross - border transactions that buckles under stress will have far reaching repercussions on the smooth functioning of counterparties and markets in other jurisdictions. benchmarking the second reason is that, whereas regulations are developed for local usage, international standards are invariably developed under the close scrutiny of different regulators, and are derived after rigorous debate and sometimes protracted fine - tuning. the end product is usually of laudable standards and serves as a good yardstick for domestic practices to be benchmarked against. investor protection the third reason is that a common set of standards facilitates sound regulatory oversight that is based on consistent treatment of cross - border markets and activities. with regulators using the same standards in assessing systems, products and practices, market players that deal | 0 |
capital buffers to continue providing key financial services and absorb losses while avoiding abrupt and excessive deleveraging that would be harmful to the economy. the support from governments and prudential authorities together with the ecb ’ s monetary policy measures has preserved financial stability so far and ensured a smooth flow of credit to the economy. although policy support has been successful in containing immediate financial stability risks, medium - term vulnerabilities remain high. the pandemic has amplified pre - existing imbalances and created new challenges. for example, the profitability outlook for banks remains weak as lower - for - longer interest rates dent margins and structural challenges persist. in addition, corporate sector vulnerabilities have increased, and higher corporate default rates are to be expected once policy support measures are withdrawn. this would lead to the quality of banks ’ assets deteriorating, resulting in another challenge for these institutions in the coming period. the forceful response of fiscal, monetary and prudential authorities has reduced the economic and social costs of this crisis and created a virtuous circle between sovereigns, banks and corporates. the measures introduced have stabilised demand, ensured the flow of credit to firms, avoided a wave of corporate defaults and protected banks ’ balance sheets. however, they have also increased interdependencies among various parts of the economy, which could lead to the emergence of a negative feedback loop between existing vulnerabilities. authorities therefore face a delicate balancing act. on the one hand, an early withdrawal or scaling back of support risks triggering a wave of insolvencies that would have a large impact on the economy and banks ’ asset quality. on the other hand, providing public support and low financing costs for too long may result in unviable corporates being kept alive to the detriment of banks ’ viability, economic productivity and, by extension, economic growth. 2 / 3 bis central bankers'speeches at the moment, risks from the early withdrawal of policies are higher than the risks associated with keeping support measures in place. we need to preserve the virtuous circle we have created. however, any negative longer - term effects from keeping support measures in place need to be carefully and continuously monitored. conclusion in the short term, all stakeholders, particularly fiscal ones, must keep complementing our accommodative monetary stance. if we want a timely recovery in europe, we have to avoid any cliff effects from the premature scaling back of these policies. it is therefore of | by the harmonised index of consumer prices increased measurably at the beginning of this year, mostly due to temporary and technical factors. headline inflation is likely to increase in the coming months, but some volatility is expected throughout the year. due to weak demand and significant slack in labour and product markets, underlying price pressures remain subdued. our march staff projection exercise confirms that the medium - term inflation outlook remains below our inflation aim. 1 / 3 bis central bankers'speeches at its latest monetary policy meeting in march 2021, the governing council conducted a joint assessment of the inflation outlook and of the prevailing financing conditions, looking in particular at the recent increase in risk - free interest rates and sovereign bond yields. the governing council judged that, if left unchecked, this increase could cause a tightening of the wider set of financing conditions that we monitor, as banks use those rates as key reference points for determining credit conditions for households and firms. such a tightening would have been premature, given the still fragile state of our economy, and inconsistent with the ecb ’ s commitment to counter the downward impact of the pandemic on the projected path for inflation. as a result, we decided that purchases under the pandemic emergency purchase programme ( pepp ) over the next quarter would be conducted at a significantly higher pace than during the first quarter of this year. we also confirmed to conduct net asset purchases under the pepp with a total envelope of €1, 850 billion until at least the end of march 2022 and, in any case, until the governing council judges that the coronavirus crisis phase is over. at the same time, we continue to stand ready to adjust all our instruments as appropriate to ensure that inflation moves towards our aim in a sustained manner, in line with our commitment to symmetry. the impact of the covid - 19 pandemic on the european financial sector let me take this opportunity to discuss in more detail the impact of the pandemic on the financial sector – which is one of the key topics of the ecb annual report this year – and the challenges europe will face in the recovery phase. the spread of the covid - 19 pandemic during 2020 led to a sharp increase in financial stability vulnerabilities across markets and sectors. confronted with these challenges, governments deployed crucial measures to support firms and households. micro - and macroprudential authorities complemented these efforts3, sending a strong signal to banks that they should make use of their existing | 1 |
emmanuel tumusiime - mutebile : banking issues in uganda speech by prof. emmanuel tumusiime - mutebile, governor, bank of uganda, on the occasion of eid - el - fitri celebrations at bou western gardens, kampala, 25 september 2009. * * * your eminence the mufti of uganda distinguished guests ladies and gentlemen asalaam aleikum, eid el - fitr, al - mubarak. it gives me great pleasure to welcome you to this annual auspicious occasion when we at the bank mark the end of the holy month of ramadthan and the celebration of eid el fitr. let me take this opportunity to congratulate your eminence and all muslims in uganda for having been steadfast in observing the fast throughout the holy month of ramadthan. to the bank muslim staff who observed the fast, i highly commend you and urge you to maintain this noble act of worship. the virtues of fasting should be upheld throughout your daily life both at work and elsewhere. the bank of uganda as a public institution upholds the freedom of worship for every member of staff. it is our conviction that religion plays a great role in enhancing morality in the society leading to ethical conduct, discipline in the work place and invaluably contribute to better outcomes. our commitment is demonstrated by the bank values which each staff is required to uphold. this blends very well with the requirements of fasting in the holy month of ramadthan. fasting brings a reminder to all of us to go back to god, to do the right things and shun evil. let me take this opportunity to address you on the health of the uganda's financial sector. first of all there was a baseless rumour in the red pepper of september 14, 2009 that a “ top bank faces closure over gadaffi cash ” that the workers of " an islamic founded bank " were about to become jobless and that the top management faced arrest because the bank was being used as a conduit for money " to some officials at mengo " from foreign sources. let me reiterate the statement in the press release i issued on september 15, 2009 – “ i assure everyone that no bank in uganda is under any threat of closure whatsoever ”. the general public should continue to ignore these completely baseless allegations. all banks and other supervised financial institutions are well managed, well capitalized | the eac monetary union. a durable monetary union depends on a high degree of sustainable convergence regarding price stability, sound fiscal and monetary policies, exchange rate stability and convergence of long - term interest rates in the region. ultimately, the strategic framework should stress the application of the convergence criteria, institutional arrangements for eac monetary union and a clear timetable for the preparations necessary to ensure successful establishment of a unified regional currency and central bank. governors and colleagues, the fast tracking of eac monetary union is upon us, and we must rise to the occasion and meet the challenge head on. we must be strong advocates of this noble cause and convert the sceptics. we must seize the day or as they say in latin, carpe diem! thank you. | 0.5 |
, such changes in inflation expectations are contained by the central bank's commitment to aggressive tightening to control inflation. indeed, since the 1980s, many countries have developed monetary policy frameworks with a view to stabilizing inflation expectations. inflation targeting, of course, is a typical example. however, there are many issues that need to be better understood regarding inflation expectations. for example, market participants, firms, and households all have different expectations formation, given different perceptions of current inflation. in addition, these expectations are susceptible to the influence of their experience or psychological conditions, as well as to the central bank's communication. moreover, there is no guarantee that the way they are formed will remain stable over time. there is still much room for further research in this area, including in relation to central bank communication. new challenges next, i would like to mention two new challenges. the first is about the changing inflation and economic environment. from a long - term perspective, many countries, 2 / 4 bis - central bankers'speeches including japan, typically went through a period of great inflation and the subsequent great moderation, followed by the global financial crisis, and then faced a period of " low for long " before the pandemic. there is a view that the current ongoing global inflationary pressure will eventually subside and that a period of " low for long " will resume. on the other hand, there is also a view that the current period of high inflation will change people's views on prices, leading to a departure from " low for long. " we have seen higher levels of public and private debt as a result of the pandemic and the policy responses. in addition, people have once again been concerned about geopolitical risks since 2022, leading to a partial reversal of globalization. therefore, it may be difficult to deny the possibility that we are already in a new normal that is different from the period of " low for long. " the second challenge is about the changes in central banks themselves. in the period of " low for long, " many central banks faced the effective lower bound of policy rates, which is the traditional policy instrument, and have created various unconventional policy toolkits, including large - scale asset purchases and forward guidance. while a number of empirical studies support some effectiveness of these instruments in stimulating demand, it seems that the mechanisms at play are not fully understood even today. compared to conventional instruments, which have a long history, unconventional instruments have issues such | united states ( chart 15 ). to address this situation, the government has announced plans to lay the groundwork for the creation and growth of startups, such as streamlining the initial public offering ( ipo ) process and exploring a framework for special purpose acquisition companies ( spacs ) from the perspective of investor protection. i expect such efforts, coupled with an inflow of venture capital, to support startup growth. at the same time, i look for more active m & a activities to help integrate ventures with their best owners, and for entrepreneurs to keep trying to start new businesses and drive growth. my strong hope is that these developments will revive the dynamism of japanese firms and generate a wealth of innovation, thereby allowing japan to soon realize new growth. b. reinforcing investment in human capital another key to innovation, alongside corporate dynamism, is human capital. under japan's long - term employment practices, marked by seniority - based wages and internal promotions, both management and employees prioritized achieving greater production efficiency, and there was a strong tendency for them to emphasize gaining experience through business activities and on - the - job training. in an era where boosting the efficiency of existing business operations was the driving force behind growth, i think that venture enterprise center, venture white paper 2021, december 2021 ( available only in japanese ). survey by cb insights ( as of december 31, 2021 ). japanese - style human resource ( hr ) development functioned effectively. in the current vuca era, however, it is no longer possible to achieve sustainable growth simply by boosting the efficiency of existing business operations. also, on - the - job training alone, being an extension of existing business operations, is not adequate to the discontinuous nature of innovation. investment in human capital is vital for acquiring new ideas and capabilities. such investment has been muted in japan, however, being typically treated as a " cost " in corporate accounting. we see the difference, for example, in the ratio of japanese firms'vocational training costs to gdp, which is low relative to other advanced economies ( chart 16 ). meanwhile, the average amount of money spent by firms per employee on offthe - job training and self - development support is also on the wane ( chart 17 ). to encourage firms to invest in human capital, japan's prime minister announced in a policy speech in january that the government would formulate rules for corporate disclosure of nonfinancial information, including investment | 0.5 |
, but to slow to 4. 9 percent. 2 / 3 bis - central bankers'speeches chart : policy rate will likely be held steady for some time the committee assesses that the policy rate needs to be maintained at the current level for some time ahead. a policy rate path broadly consistent with the forecast in the december report provides a reasonable balance between the monetary policy objectives. if the economy evolves as projected in this report, the policy rate will be held steady in the period to autumn before it is gradually lowered. chart : inflation will move down and unemployment edge up we now expect an improvement in the norwegian economy ahead compared with the outlook in december. with the current path of the policy rate, inflation is projected to come down faster this year and to approach target in the course of the coming years. unemployment is expected to increase somewhat, but the number of unemployed is expected to be somewhat lower than projected in december. wage growth is set to edge lower, but given the decline in price inflation, it is still likely that wages will rise faster than prices in the years ahead. there is uncertainty about future developments in the norwegian economy. if the rapid increase in business costs persists or the krone turns out to be weaker than projected, inflation may remain elevated for longer than currently projected. in that case, the committee is prepared to raise the policy rate again. if there is a more pronounced slowdown in the norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier. we know that the steep series of interest rate increases has a cost. the interest rate rise has come on top of a sharp rise in prices. many people have less money to spend, and for some of them it has become difficult to make ends meet. it is likely that no further rate increases will be needed. many people will see an increase in their purchasing power and a lighter debt burden. even so, we must be prepared for somewhat higher unemployment and for a continued decline in activity in certain industries for a while ahead. but given the current outlook, inflation will return to target without a sharp rise in unemployment. 3 / 3 bis - central bankers'speeches | nestor a espenilla, jr : ancient to modern networks speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the host country event " past, present and future of the world economy ", adb headquarters, manila, 4 may 2018. * * * adb president takehiko nakao, chair of the adb board of governors and finance secretary carlos g. dominguez iii, distinguished guests and speakers, good morning! the compelling theme, the powerful messages, the learned speakers, as well as the lively discussions that ensued will not only be imprinted in our minds, but will inspire us to work harder and closer to fulfill our goals. the motivation to network, cooperate and collaborate is one that is ingrained in our common histories and in our very nature as global citizens. this week, we were reminded of this shared intrinsic drive in the most fortunate way when we revisited the silk road discussed ( no less ) by an outstanding historian who authored a bestseller on the topic. professor peter frankopan impressively granted us greater understanding of the past so that we could make better sense of the present. for me, the discussion served as a reminder that to march on to the future we must wholeheartedly embrace our natural desire and need to continuously develop and grow through the sharing and trading, not only of resources, goods, products and services, but also of precious, innovative and transformative ideas. for instance, the launch of the current chinese government ’ s “ one belt, one road ” initiative was inspired by the silk road initiative. the billions being poured into a reinvented and modern ‘ silk road, ’ comprising a network of around 60 countries in asia and europe will result in physical connections through land bridges, railways, utility grids and maritime highways. it will birth a new ecosystem of integrating networks which will benefit the philippines and many countries in terms of the global and regional supply chains. the “ one belt, one road ” initiative highlights china ’ s growing influence. with this and other initiatives and resulting prominence, we ask, “ will there be significant changes in rank and order in the brotherhood of nations? ” even now in various multilateral institutions, emerging markets are clamoring for greater voice, representation and engagement. this is consistent with our increasing role and growing importance in the global economy. as we assess the shifts in the international economic order, there is | 0 |
the asian economy revealed by the crisis the backdrop to this swift recovery staged by the asian economies lies in a number of strong attributes that they possess. firstly, asian economies have great dynamism. since the beginning of the 21st century, they have continued their dynamic economic growth, rising to become central forces in the world economy. basically, this comes from the epoch - making expansions in the extent of their market opening and liberalization. these policies have spurred freer movement and better allocation of resources, which is giving asian economies improved opportunities for higher economic growth due to greater competitiveness. what is more, the asian economy including china possesses a vast market, that is not yet saturated. this means that, as asian economies ’ incomes increase in the future, rapid growth of their domestic consumption markets is possible. for example, the increase in exports to china caused by its policy of expanding domestic demand has also served as a source of regional growth momentum. in addition, the asian economy holds abundant potential in terms of supply. there is plenty of capacity for a continual supply, on a large scale, of well - educated, disciplined and low cost human resources, in addition to asian countries ’ own considerable capital resources accumulated in the course of rapid economic growth until now. the asian economies, being still in their comparatively youthful stages of growth, generally differ much from the majority of advanced economies that have already matured. over and above this, taken together asian economies possess mutually complementary economic structures, as they are at various different stages of development. east asian intraregional trade has grown rapidly since the turn - of - the - century, with the formation of a vertically integrated division of labor centering on parts and components. the weight of intraregional trade among non - japan east asian countries has risen steeply, from 31. 7 % in 1990 to 42. 0 % in 2008. meanwhile, however, this recent financial crisis has also served to throw light on certain weaknesses of the asian economies. the asian economies here are the same as the category used in box 1 of the imf ’ s world economic outlook ( weo ) update on july 2010. the growth rates and growth contributions are from the weo ( april 2010 ) and the weo update ( july 2010 ). the external dependency of asian economies is very high, first of all, because of their pursuits of export - led growth strategies. this has meant that they have weak foundations for domestic driven growth, due to the relatively small sizes of their | the imf, the sovereign debt problems of certain eu member states are likely to act as a factor making for market unrest for a considerable time to come. – if eurozone debt problems do worsen, there is the possibility that the credit risk of newly emerging market countries would also increase owing to a strengthened preference for safe haven assets. ( qe2 ) the global financial markets are likely to react extremely sensitively to the direction of the us fed ’ s monetary policy ahead of the expiry of the second quantitative easing at the end of next june. – market attention may well focus on whether or not there will be further quantitative easing ( qe3 ). 3 commodity markets international oil prices are forecast to maintain their upward trend in line with the continued recovery of the world economy and the increase in global liquidity. next year demand for crude is likely to surpass supply albeit only by a small margin, led by the emerging market countries ( + 500, 000bpd ). – the fact that the oecd countries ’ oil inventories are now at their highest level since 2005 will act as a factor limiting the scale of upward movement in the oil price. global liquidity, which has expanded greatly in line with qe2, could put upward pressure on oil prices if it feeds through into commodity markets. in the announcement of the federal reserve ’ s fomc for november, mention is made of the possibility of additional steps in accordance with future economic activity. 2. domestic conditions fiscal spending budgetary expenditures next year will be increased 6. 0 % over this year ( 260 trillion won ) to 276 trillion won while for the year 2012 there will be a 4. 0 % increase to 287 trillion won. the extent of the front - loading of fiscal spending during the first half of 2011 will be gradually scaled back so that around 2012 it will be back to its pre - crisis level. 4 the ratio of the fiscal deficit to gdp will decline from 1. 9 % this year to 1. 6 % in 2011 as tax revenues increase 5. the sovereign debt ratio will decline from 36. 1 % this year to 35. 1 % next year. for the years 2004 – 07, the front loading of expenditures during the first half averaged 53. 7 %. the government intends to achieve a balanced budget by 2013 or 2014. household consumption household purchasing power is forecast to expand thanks to higher incomes resulting from the continued economic upswing. households are also expected to become more consumption - minded. | 0.5 |
the package of reforms, namely the measures proposed by the commission chaired by sir john vickers, which the government intends to place into legislation in the near future. i fully support the vickers proposals. the key plank of this is to ring - fence commercial from investment banking and, in doing so, define the scope of commercial banking that can be inside the ring - fence. this will be a major structural change for the banking system, and will have important implications for us as regulators. there are two key points for me in the vickers reforms. first, in the last ten years or more, the nature of investment banking has changed to include a much larger element of proprietary position taking. the incentives and risks of this activity are quite different from commercial banking, and i do not believe that the two should be mixed in the same legal entity. regulators around the world have struggled to regulate this mixture, and will continue to do so even though we have raised the cost of doing investment banking business through changes to the regulatory regime. second, in a world where we will not accept banks being too big or complicated to fail, it is sensible to be able to resolve commercial and investment banks separately, and to achieve this we need the ring - fence approach. this will support the continuity of provision of financial services. in conclusion, we have a very big programme of reforms under way, with the central objective that we must not let a financial crisis of this scale happen again. the reform programme is founded on very clear public policy objectives. we are absolutely committed to the reform programme and knitting together the various parts. we expect financial institutions to abide by the spirit of it too. there are big changes in what we are doing, and it is an exciting time to be putting these changes into effect. we will get a much clearer focus from splitting prudential and conduct regulation for banks and insurers, from introducing macro - prudential regulation to help to protect the financial system as a whole, and from bis central bankers ’ speeches focusing our regulation on applying judgement in a transparent way. firms that mess up should, and will, be allowed to fail, but it must not be at the cost of damaging the financial system and economy. ringfencing commercial and investment banking will help to achieve that objective. and, out of these reforms i hope we can encourage a banking system that is more open to competition and serves the public more effectively and, more broadly, a financial system that delivers the public policy objective of financial | the new approach to financial regulation. another key plank concerns the macro - prudential approach to regulation. the legislation will establish the financial policy committee ( fpc ), charged with the primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the uk financial system. in june, the chancellor announced that the government would amend the bill to give the fpc a secondary objective so that subject to being content on the first objective, it should support the economic policy of the government, including its objectives for growth and employment. currently, the fpc is acting in an interim capacity to undertake, as far as possible, the future statutory fpc ’ s macro - prudential role. macro - prudential regulation is focused on protecting the financial system as a whole. in a very “ big picture ” sense, there is nothing new about this activity. the problems of the last five years have emphasised the close links between the health and behaviour of banks and the condition of the economy. this is a lesson of history, and one that should not have been forgotten. but, forgotten it was. at present the fpc is pursuing two important objectives : seeking to increase the resilience of the uk banking system, including to the threats emanating from the euro areas ; and, subject to being content with the path towards greater resilience, supporting the creation of credit in the uk economy. i am in no doubt that if banks take reasonable steps to enhance their resilience, they will be better placed to sustain the availability of credit to the economy by lowering their cost of funding and reducing their vulnerability to unanticipated events. macro - prudential regulation takes a system - wide view of the risks we face and the buffers of capital and liquidity that banks should hold against possible stress events. this is very clearly the resilience objective for the system, to which the fpc attaches great weight. banks in the uk have made substantial progress over the last four years in building that resilience, from of course a very low base. we believe that there is further to go on capital, and the fpc has set this position out, but in doing so we should not forget the distance that has been travelled. we should also remember that more capital cannot be conjured from thin air, particularly as there are at present quite severe constraints around the rate of return earned by banks | 1 |
commitment to support socioeconomic progress and sustainable economic development in namibia. as the bank of namibia, we remain committed to leading with vision and integrity. we vow to serve and grow this jewel called namibia. 7. the good book states in proverbs 12 : 15 states that " he who is wise listens ". in this regard, i will keep my remarks today very brief as i know everyone in this auditorium today as well as those that have joined us online are eager to listen and tap from the well of wisdom of our head of state. therefore, without any delay, i would like to call upon his excellency the president, dr. hage geingob to share his thoughts with us. i thank you. 3 / 3 bis - central bankers'speeches | johannes! gawaxab : talking points a€ “ presidential visit to the bank of namibia talking points by mr johannes! gawaxab, governor of the bank of namibia, at the presidential visit to the bank of namiba, windhoek, 19 october 2022. * * * director of ceremonies, your excellency, the president of the republic of namibia, dr hage geingob, deputy governors of the bank, the entire management and staff of the bank of namibia, members of the media, ladies and gentlemen, good morning, 1. on behalf of the board, management and staff, it gives me great pleasure to welcome you, your excellency most cordially to the bank of namibia this morning. it is indeed an immense honour to host you at the bank today. your excellency, ladies & gentlemen, 2. your presence here today, signifies a day of celebration to honour our history as a central bank and as a nation. this is an opportunity to reflect on how far we have come as a bank of the namibian people, whilst at the same time glimpsing into the future with confidence and hope. it is a day of celebrating great leaders such as yourself, that have brought us to this point. indeed, we are standing on the shoulders of giants. 3. i would like to emphasise that since the dawn of independence, the government of namibia, in recognition of the important role of the central bank, has been committed to providing an enabling environment within which the bank of namibia could operate independently. in doing so, the bank has been able to successfully discharge its mandate and has been committed to taking decisions in the best interest of the namibian people and the economic prosperity of this country. government in general and the ministry of finance in particular have embraced sound, stability - oriented policies, thereby providing a solid foundation that facilitates the bank's operations. your excellency, 4. the world economy has taken a major hit with the devastating impact of the covid - 19 pandemic and now the russia - ukraine conflict, and likewise namibia has not been spared. despite this very difficult global situation, i do believe that there is a lot of promise and opportunity, and that our stars are aligning. the economy recorded positive growth in 2021 after almost five years of contraction, and the first two 1 / 3 bis - central bankers'speeches quarters of 2022 have also delivered neat positive growth rates and opportunities in the | 1 |
to banks. for example, kenyans living within 3km of a mobile phone money agent is 58. 6 % or 23. 64 million compared to only 21. 2 % or 8. 57 million living near a bank branch. ladies and gentlemen : the results we are releasing today are as a result of developments in the wider economy, infrastructural facilities, technological innovation, institutional developments, natural features, as well as financial system policy and regulatory reforms, increased competition and innovations in the financial market. these developments have set off a dramatic shift away from the traditional delivery of financial services. in the delivery of financial services, innovations using technology such as automatic teller machines ( atms ), point - of - sale ( pos ) devices, the internet and mobile phone platforms and its interlinkages with financial institutions platforms have accelerated and moved us closer to branchless banking. we, however, still have some ground to cover in expanding access to financial services, given that about 25 % of the population remains totally excluded. ladies and gentlemen : the information generated by this spatial mapping exercise will help financial service providers identify where opportunities exist. i am delighted that the sector now has such a useful information resource at its disposal. the results from all these efforts will help the public and private sector to better understand the developments and dynamism of the broader kenyan financial market landscape and its dynamics in order to develop appropriate policy strategies and products as well as delivery channels to targeted clientele that they have not served before. ladies and gentlemen : the gis spatial mapping project brings forth more information necessary to satisfy the objectives of the financial access partnership, which remain ; ( i ) to provide information to policymakers about the main barriers to financial access and inclusion ; bis central bankers ’ speeches ( ii ) to provide information to the private sector on market conditions and opportunities ; ( iii ) to provide a solid empirical basis to track progress on financial inclusion and evaluate the effect of government, donor and industry led initiatives ; ( iv ) to provide data for use in research into the impact of access to financial services and products on growth, development and poverty reduction. in conclusion, ladies and gentlemen, let me also observe that the finaccess studies have been championed and driven by a partnership between public and private institutions. i commend and support such initiatives and hope that this lays the foundation for a deeper and sustained partnership between the public and private sector in tackling the challenges and taking advantage of opportunities that arise. in this | as you may well know, the british pound and italia lira were subsequently forced to abandon the exchange rate mechanism. the existence of exchange rate crises and speculative attacks thus serves as clear empirical evidence in favour of the uncovered interest rate parity. in addition, recent empirical studies based on advanced econometric techniques and using intraday data have shown that when the historical data are used properly the result may support the uncovered interest rate parity concept. the exchange rate plays a crucial role for the czech economy as well and is therefore an important part of our forecasting devices. and yes, the core forecasting model we use relies on the uncovered interest rate parity equation. it is also true that the movements of the exchange rate observed recently have surprised us to a certain extent. these surprises, however, should be taken as economic shocks that no economic relationship could have predicted. we central bankers are not very interested in short - term volatilities, but we should not miss breaks in the business cycle. for this task we need a relationship that has an economic grounding in the profitmaximising behaviour of the financial markets. and this is what the uncovered interest rate parity certainly has, and what the statistical models lack. ladies and gentlemen, allow me to wish to all of us fewer exchange rate surprises and the best possible forecasts! | 0 |
) growth, the unemployment rate, and changes in the prices of goods and services. these data certainly reflect expectations but not always in a transparent way. and, these data take some time to compile and so are never available in real time. because financial asset prices embody expectations about the future, they also contain forwardlooking information about prospective developments, and many are available continuously and instantaneously. we pay attention to an extensive range of asset prices, including those of treasury securities ( both nominal and real ), corporate debt and equities, and derivatives. although it is not easy, we use these asset prices to tease out information about expectations that help us to interpret and predict the pace of economic activity and prices. the price of an asset reflects the future cash flows that investors expect to receive from owning that asset. the price also reflects a risk premium, which is the excess expected return over the risk - free rate that investors require for holding risky assets in their portfolios. each asset ’ s risk premium depends on the asset ’ s risk – as measured by the possible variability of its cash flows from their expected level – and on investors'risk aversion, which represents the extent of investors ’ appetite for risk. and we try to measure and understand the elements of the risk premium, in addition to the embedded expectations. mike gibson, song han, matt pritsker, and hao zhou, of the board's staff, contributed to these remarks. in equity markets, corporate earnings are the future cash flows that affect equity prices. given the market ’ s outlook for corporate earnings – as embodied, for example, in the predictions of market analysts – we make a crude estimate of the risk premium on equities as the difference between the ratio of trend earnings to price and a real long - term treasury yield. on occasion, we go further and use structural economic models to decompose the risk premium into components related to risk and to investors ’ risk appetite. in the credit market, the relevant future cash flows are the coupons on corporate debt, less an allowance for expected losses from future defaults. in one exercise, we forecast future defaults with a simple regression model and estimate the credit - risk premium as the difference between corporate yields and treasury yields that is in excess of what would be required to compensate investors for their estimates of expected credit losses. we also estimate a term structure of credit - risk premiums by repeating this analysis using debt that has different mat | donald l kohn : asset - pricing puzzles, credit risk, and credit derivatives remarks by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, at the conference on credit risk and credit derivatives, washington dc, 22 march 2007. * * * good afternoon. i am pleased to participate in the board ’ s conference on credit risk and credit derivatives. song han, matt pritsker, and hao zhou have worked hard to put together a stimulating program of cutting - edge research in this area. 1 your conference focuses on improving our understanding of credit risk and credit derivatives, but i will begin my talk by taking a step back and discussing a wider range of asset markets, in which our understanding is also limited. then i will examine how the research in this conference can help sharpen our focus on this broader range of asset markets. at the federal reserve, we have considerable interest in credit risk and credit derivatives. as these markets develop and become more complete, they facilitate risk transfer and diversification, thereby increasing the resilience of our financial system. with participants coming to rely more on these markets to manage risk, we have focused increasingly on their liquidity and structure. we have worked closely with the private sector to strengthen the clearing and settlement infrastructure and to understand how these markets will function under stress. but my emphasis today will be not the structure or mechanics of credit markets but rather the information contained in the prices we observe in these markets. we at the federal reserve use this information in nearly every area of our responsibility. for example, in our roles as bank supervisors and protectors of financial stability, we monitor the credit spreads of financial institutions as early warning signs of possible financial stress. in our role as monetary policy makers, we analyze information from credit - risk markets to get readings on the cost of capital to businesses and on forward - looking indicators of the health of the corporate sector that can have implications for future macroeconomic developments. extracting information from asset prices as a consequence, the staff at the federal reserve puts considerable effort into research on asset prices and into reporting the results of that research to policymakers. one reason we do so is to try to understand the expectations that households, businesses, and market participants have about the future. expectations are critical to understanding the economy and developments in the financial system. of course, we look at a great deal of data from the nonfinancial side of the economy, such as gross domestic product ( gdp | 1 |
output gap is also judged likely to be significantly less persistent, lasting only around 18 months. these compositional effects were discussed in the february 2021 monetary policy report. broadbent ( 2021 ). all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice chart 11 : demand and prices across sectors ( a ) source : ons and bank calculations. notes : a ) data points refer to goods and services that have been predominantly affected by a demand shock. these are spending categories where consumption and inflation have both increased, or where they have both decreased. categories affected by changes in energy prices and those where prices are regulated are excluded. air travel is also excluded. dashed line represents the line of best fit. ( b ) changes in inflation rates between the three - month average to february 2020 and october 2020, measured as the number of standard deviations from their 2012 – 19 average. c ) consumption growth over the four quarters to 2020 q3. these differences in output gap profile seem plausible. the fall in output after the covid crisis was atypically sharp due to restrictions being imposed. so we might expect an atypically sharp recovery in activity as restrictions are eased. nonetheless, whether these judgements on the output gap come to pass depends, ultimately, on the pace at which demand in the economy returns and the accompanying response of the economy ’ s supply potential. let me discuss those two issues in turn. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice chart 12 : output gap – global financial and covid crises compared per cent - 1 - 2 - 3 - 4 - 5 t = 0 t + 5 t + 10 t + 15 quarters gfc covid ( forecast ) source : bank of england. ( b ) money and money spending i will discuss in some detail the components of private demand, consumption and investment, at a future event. but as after the global financial crisis, some useful insights into possible future paths for aggregate demand and aggregate money spending is provided by looking at developments in the banking system. exceptional amounts of central bank money have once again been created during the covid crisis to maintain borrowing costs at low levels. this additional qe is running at around $ 5 ½ trillion so far and rising. 15 globally, the amount of qe undertaken during the crisis is already rapidly catching - up with the | not weaker, balance sheets, at least for the average household and company. this is likely to increase, not reduce, their willingness to take risk. low risk appetite after the global financial crisis was a correction of the excessive risk - taking that took place in the run - up – an overshoot followed by an undershoot. the covid crisis has seen the exact opposite. people ’ s appetite to spend and socialise has been artificially suppressed. this increases the chances of an overshoot as restrictions are removed, as after previous episodes of suppressed animal spirits. risk - switching is, for me, more likely than risk - scarring. conclusion at present, inflation pressures in the uk and globally are subdued. in the uk, inflation remains well below its 2 % target, as it is in the us and the euro - area. in all three countries, inflation expectations among consumers, businesses and financial markets appear to be well - anchored around the inflation target, although they have fluctuated recently. the next 12 months will see a rapid change in measured inflation. in the uk, it is likely to return to its target by the middle of the year, as the one - off effects of covid wash out of annual inflation rates. thereafter, the mpc foresees uk inflation remaining around its target level. the risks around this projection are, in the mpc ’ s judgement, large but balanced. that these risks are large is fully justified by the high degrees of uncertainty that exist around the forces driving inflation in future, as i have discussed here. but given likely trends in these factors, my judgement is that the risks to inflation in the uk are skewed to the upside, rather than being balanced. certainly, there are good grounds for believing future inflation may behave very differently than in the past. my judgement is that we might see a sharper and more sustained rise in uk inflation than expected, potentially overshooting its target for a more sustained period, as resurgent demand bumps up against all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice constrained supply. financial markets globally have begun pricing this possibility recently, with measures of inflation expectations rising in the us and, to lesser extent, euro - area ( chart 17 ). chart 17 : tail risk in us and euro - area inflation expectations. source : bloomberg finance l. p and bank calculations. note : tail risk is the option - | 1 |
by international comparison, despite the fact that national savings is not low, as we showed in the bank of israel annual report for 2016. therefore, not only are we not close the gap in capital per worker relative to other economies, the gap is even growing. by the way, the investments that increased in 2016 were mainly in residential construction and in the electronic components industry, but not in the other industries, such that the increase in investments made a relatively small contribution to a broad increase in production capacity. a factor that is complementary to private sector investment is government investment in infrastructure. despite some increase in the past two years, the level of this 3 / 4 bis central bankers'speeches investment remains lower than it was at the beginning of the decade. as a result, the stock of capital in the economy is lower than the average in the other advanced economies. exports as a share of gdp also declined in recent years, affected by the weakness in world trade and the strengthening of the shekel. this fact is not harbinger of good news in terms of the dynamics of productivity. in this context, we can examine what happened to labor productivity in israel over time. despite its low level at the point of departure in 1995, its pace of growth was lower than what could have been expected given the fact that in general, the increase in productivity is greater in economies that begin from a lower point, if only because of their ability to adopt technologies that exist in countries at the technological forefront. the fact that the productivity gap has not been closed is particularly disappointing given that growth in productivity in the other advanced economies has also been relatively low in recent years. other than the composition of growth and the insufficient level of infrastructure, i have discussed other reasons for the low level of productivity at various opportunities. the main reasons are unsuitable human capital, as shown by the piaac tests examining the cognitive skills of the adult population in israel — such as problem solving skills in a digital environment — the problem of excessive and inefficient bureaucracy, and the fact that the economy is not sufficiently open to international competition in various aspects, such as the attitude toward competitive supply from abroad or relatively high non - tariff barriers. the question of the implications of growth led by consumption over the long term has been discussed by various international entities in recent years, and the main conclusions from their studies are similar to the analysis we have conducted. such growth tends to be weaker, and it also generally leads to lower future growth. the reason for | bodil nyboe andersen : recent financial and economic developments in denmark speech by mrs bodil nyboe andersen, governor of the national bank of denmark, at the annual meeting of the association of danish bankers ’ association, copenhagen, 4 december 2002. * * * virtually every report and article on the international economic development nowadays starts by describing the unusually high degree of uncertainty. not only has the expected upswing been deferred once again for another year, but it has also become more common to hear expressions of concern for the economy's course in both the usa and europe. the terms recession, depression and deflation make frequent appearances in the headlines, and are often used interchangeably to describe the fact that things are not going as well as we were accustomed to up to 2000. economists apply these three terms to describe different concepts : • recession is the least serious situation. a rule of thumb says that a drop in output for two quarters running is a “ technical recession ”. in the usa, the national bureau for economic research operates with a more sophisticated definition of recession, based on the development in a number of macroeconomic time series. according to this definition, the bureau noted a year ago that the usa went into a recession in march 2001. whether this recession is persistent or has now ceased will not be revealed until the figures have been revised and closely analysed, with a timelag of many months, and perhaps more than one year. • depression is a prolonged period of abnormally low growth and high unemployment. so this is a far more serious situation than recession. the term depression is used in particular to describe the persistent economic crisis in the 1930s. • deflation signifies a drop in the general price level, i. e. the opposite of inflation. a situation with falling prices is dangerous, since it tends to have a self - reinforcing tendency. if sustained price drops are expected, purchases and investments will be postponed, and this in itself will deepen the crisis. the confusion regarding these terms is exacerbated by the fact that “ deflationary ” is sometimes used merely to describe a tendency for the economy to dampen. lower growth is not necessarily a major problem, however. after strong growth and pressure on the labour market, a calmer period can be healthy. the challenge here is that not all countries have experienced strong growth with the related reduction of unemployment up to and around the millennium rollover. for many years, japan's economic | 0 |
the early to mid - 1970s and the early 1980s, inflation was in double digits, partly as a result of a surge in wages. in the late 1980s, asset prices and credit growth were rising to unsustainably high levels, and consumer price inflation was still excessive. both the dynamics of the business cycle itself, and the need for tough anti - inflationary monetary policy, pointed to an abrupt end of the expansion. on this occasion, the picture is different and no one is expecting an abrupt end. 4. why has the expansion been steadier and longer this time? i would now like to make a few comments on why the expansion of the 1990s has been steadier and longer than its two predecessors. here i think we have to look for essentially macroeconomic explanations. the first explanation is to be found in a comparison of the rates of inflation this time compared with the two previous expansions. it is curious now to look back to some of the economic debates of the 1960s and 1970s. in those times, there were many people who thought that you had to tolerate “ a little bit of extra inflation ” to make sure the economy would grow. many, if not the majority, thought that getting inflation down again would not be worth the price, because it would result in permanently lower growth. the short - term trade - off ( the phillips curve ) was incorrectly interpreted as being a summary of our medium - term choices. now when we look back ( table 4 ), nothing could be further from the truth. the low inflation decades - 1950s, 1960s and now the 1990s - are the ones where we did well on growth in absolute terms, or in relative terms. the high inflation decades - the 1970s and 1980s - were the ones where our growth performance was at its poorest. table 4 consumer prices - average annual rate of increase australia oecd 1950s * 1960s 1970s 1980s 1990s 6. 1 2. 9 2. 5 3. 2 10. 1 8. 0 8. 3 5. 1 2. 2 2. 7 * if the short - lived korean war boom is excluded, the average inflation rates in the 1950s would be 2. 5 % for australia and 1. 7 % for oecd. the most reasonable explanation for the lower inflation and hence steadier and longer expansion in the 1990s is the improvement in macroeconomic policies. by this i mean monetary and fiscal policies, or what used to be known as demand management policies. i j macfarlane, statement | . | 0.5 |
zeti akhtar aziz : brief overview of the malaysian bond market speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of the rm760 million wawasan bond by the international bank for reconstruction and development, kuala lumpur, 27 april 2005. * * * assalamualaikum warahmatullahi wabarakatuh and good evening mr hiro tsubota, principal financial officer ibrd mr michael bennett, senior legal counsel, ibrd dato'nazir razak, chief executive, cimb mr jeremy oliver, managing director, abn amro bank malaysia berhad representatives from the ministry of finance, bank negara malaysia and the securities commission ladies and gentlemen it gives me great pleasure to accept the invitation to witness the launch of the 760 million ringgitdenominated wawasan bonds by the international bank for reconstruction and development ( ibrd ). the decision to launch this bond in malaysia is reflective of the confidence in the malaysian capital market. this represents another milestone in the development of malaysia's domestic bond market. malaysia's regulatory institutions are committed to the development of the country's bond market to the advantage of borrowers and investors. our financial system continues to be transformed and redefined to become increasingly more diversified, more robust and more competitive. the significant progress achieved in the development of our bond market has been an important part of this process. with the foundations for strong performance in our financial system now being achieved, steps have been initated to implement phased deregulation and liberalisation of the financial and capital markets. this is not only to enhance competitiveness in the malaysian financial markets but also to strengthen its international integration, thereby facilitating our economic inter - linkages with the global economy. as part of this process, bank negara malaysia on april 11, 2004, liberalised the foreign exchange administration rules to permit multilateral financial institutions and multinational corporations to raise ringgit - denominated bonds in the malaysian capital market. the recent liberalisation of the foreign exchange administration rules on 23 march 2005, has also eliminated remnants of the restrictions on investors and greatly enhanced access to the malaysian domestic market. the malaysian foreign exchange environment is now by far, much more liberal than that existing prior to september 1998. to make the malaysian capital market more competitive, the government of malaysia has also exempted non - residents from paying withholding tax on investments in such ringgit bonds issued in malaysia. infrastructure | non - resident issuers into the ringgit capital market, thereby contributing towards broadening and deepening the market. such issues will have far reaching advantages for the domestic bond market. let me once again, congratulate the world bank and the joint lead managers cimb and abn amro, for a successful issuance of the ibrd bond debut in malaysia. thank you. | 1 |
##b and our banking sector, respectively, are the first public institution and the first economic sector in bulgaria to be part of the euro area. the bnb participates in making the most important decisions related to the supervision and resolution of european banks, including bulgarian ones. moreover, our vote, regardless of the size of our economy and banking sector, has the same weight as the vote of any other central bank in the euro area. furthermore, in the person of mr. radoslav milenkov, the bulgarian national bank has a representative in the steering committee of the supervisory board of the ecb ’ s banking supervision, which includes representatives of only five national supervisory authorities. this is a position that is taken on a rotational basis, but the fact that we receive it at the beginning of our membership is an extremely important sign. these developments in recent years alone have led me to draw the following conclusion : the bnb and our banking sector are very strong examples of institutional development in an environment of still serious institutional deficits. the recipe for this is simple : the right decisions in the right strategic context. the right actions in the banking sector have included major reforms in the sector, including the central bank governance model and the banking supervision, and the right context is the sector's accession to key euro area institutions such as the single supervisory mechanism and the single resolution mechanism. the practical result is the solid capacity, resources and expertise built to solve the challenges facing the sector and the economy. they have been tested and convincingly demonstrated in recent years. the bnb was one of the first central banks to initiate a large - scale anti - crisis package of more than 8 % of gdp at the outset of the covid pandemic. we did it in march 2020, when it was still debated if it wasn't just a common cold that would go away in the summer. the alternative was to wait, monitor and analyse the situation for at least a few months before taking concrete action. from today's perspective, we can say that such waiting could have impacted very adversely banks, businesses and households alike. it was that anti - crisis package that allowed the introduction of a moratorium on loan repayments, which at its peak exceeded bgn 9 billion. here is the place to emphasise that this was a private moratorium, an initiative by our commercial banks, as they better than anyone else understand that when their customers are not well, they are not well either. the association played a | of instant credit transfers in bgn. currently, we report that through the borika ad blink service practically 100 % of customer bank accounts in the country are accessible for instant payments in bgn, which are executed within 10 seconds, 24 hours a day, 365 days a year. as i already said, in the coming year a number of challenges are expected on various fronts, but then again they provide opportunities for the sustainable development of the financial sector as a whole, with which the payment systems in the country will be integrated into the corresponding systems and infrastructures of the euro area. the mentioned projects are essential for the country's financial infrastructure, especially in terms of digitisation and cyber resilience processes, as they will become a foundation for further development of innovations in the sector. the realisation of the stated goals and the prevention of the analysed risks could not be possible without the joint efforts of the regulator and market participants through fruitful cooperation, smooth communication and strong motivation to achieve results. i wish you success in the new, challenging year 2024, as well as fruitful discussions in a spirit of partnership and cooperation. 4 / 4 bis - central bankers'speeches | 0.5 |
success of this venture. in closing, i wish to thank all those who have helped us in getting to where we are today, and seek your continued assistance as we traverse this very difficult terrain. in this regard, i wish to make special mention of the stock exchange technical committee ( setc ) first initiative, the commonwealth secretariat, the west african institute for financial and economic management, the team of local lawyers headed by mr eke halloway, as well as market practitioners in neighbouring countries who have been unrelenting in sharing their experiences and expertise with us. naming people in these situations can be invidious, but let me crave your indulgence to mention mr maroof matin, the resident consultant provided by first initiative, mr jacob kanu of first discount house, mr melvin tucker, former deputy governor and other members of the stock exchange technical committee. to all of these, i say thank you very much and please let us continue to work together for a more prosperous sierra leone. thank you for your attention. | james d rogers : inauguration of the sierra leone stock exchange a€ “ a significant milestone welcome address by dr james d rogers, governor of the bank of sierra leone, at the inauguration of the sierra leone stock exchange, freetown, 27 july 2007. * * * mr chairman your excellency the president honourable vice president honourable minister of finance honourable ministers honourable members of parliament distinguished ladies and gentlemen i am extremely delighted to welcome all of you, and in particular his excellency the president and the honourable vice president to this inauguration ceremony the sierra leone stock exchange, a project pioneered by his excellency the president and into which much time and resources have been invested by the bank of sierra leone over the past several years. in 2002 the first step was taken with the establishment of the stock exchange technical committee ( setc ) under the chairmanship of the deputy governor of the bank. i wish to note that the present deputy governor is the second chairman of the committee, and has professionally steered us to this point. i want to particularly thank his excellency the president for accepting our invitation to launch this project. during his administration, his excellency has given support, encouragement and advice to the bank in every sphere of its activities, and i wish on behalf of the board and management to express my thanks and appreciation to him. specifically in the preparatory work towards the realization of this project, his excellency has been most generous with his time and advice. i therefore wish to thank you, sir, on behalf of the bank and on my personal behalf, for all you have done in furthering this project and supporting the bank in all its activities. please permit me, on behalf of us all, to wish you a peaceful transition as you prepare to hand over the reins of office at the end of a difficult, but by any measure successful administration, which has seen the re - establishment of peace and stability in our dear country. the vice president has likewise shown understanding and encouragement for our efforts and i wish to extend to him our thanks and appreciation for his support over the years. your excellency, honourable vice president, distinguished ladies and gentlemen, the development of a capital market including the establishment of a stock exchange in sierra leone has been accorded high priority in our activities in recent years. any programme of financial sector reform, must of necessity include capital market and stock exchange development to ensure completeness of the financial system. with only a money market, there has been limited space for raising long | 1 |
in today ’ s situation, the forward guidance is intended to signal low interest rates for an extended period of time in order to sustain inflation and boost growth. other unconventional monetary policy actions are also in use. with large - scale securities purchases, the central banks in the us, the uk and japan have sought to reduce long - term interest rates and thereby funding costs for firms and households. the provision of liquidity has also led to higher equity and securities prices. the us federal reserve started tapering asset purchases last year, resulting in a slight, renewed increase in long - term interest rates. chart 4 : gdp for trading partners growth among our trading partners picked up in the latter half of 2013, particularly in the us. although euro - area growth has also improved, unemployment and debt levels remain elevated. emerging economies are growing at a clearly faster pace than advanced economies, but the pace has slackened somewhat. a number of emerging economies have bis central bankers ’ speeches been affected by capital outflows and currency depreciation. the tapering of asset purchases by the us federal reserve has likely also contributed to these developments. countries with large current account deficits are particularly hard hit. chart 5 : consumer prices abroad inflation has fallen in many countries over that past few years. euro area inflation fell to a very low level in 2013, fuelling fears of deflation. however, a portion of the decline in inflation is related to developments in food and energy prices. furthermore, the decline has been most pronounced in periphery countries. in those countries, negative or very low price growth reflects a need for improving competitiveness. in the core countries, such as germany and france, inflation has remained on a steadier course. long - term inflation expectations seem to be firmly anchored in most advanced economies. chart 6 : gdp for mainland norway growth in the norwegian economy slowed through 2013. the slowdown was most pronounced in the construction and oil supplier industries. some export industries were also affected by weak demand in europe and high cost levels. growth in household demand was moderate in 2013. household saving increased further and is now at a historically high level. unemployment edged up through 2013. capacity utilisation in the economy is still assessed to be close to a normal a level. chart7 : the krone exchange rate after appreciating over a longer period, the krone showed a pronounced weakening in 2013. both domestic and international conditions contributed to the depreciation. signs of weaker growth in the norwegian economy probably | of workers in the economy. the discussion on productivity sounds very theoretical. however, for illustration, if we were to close the productivity gap vis - a - vis the oecd average, we would increase the standard of living by about a third, which is about the increase we would gain in per capita gdp. in this regard, we can look at, for example, the construction industry, which employs about 7. 5 percent of those employed in the business sector – a clear domestic industry – and let ’ s examine the output per worker in this industry over a long period of time. productivity in the industry declined in the 1970s and 1980s, and has remained at a virtual standstill since the 1990s, in contrast to an increase in productivity in manufacturing, which was accelerated since the exposure program in the 1990s, and the agriculture industry in which there was a moderate increase in productivity over the entire period. the construction industry, which “ benefits ” from the availability of foreign workers, whose salary is low relative to domestic workers with similar characteristics, suffers from a significant lag in technology. the government ’ s recent decision, to allow foreign contracting firms to enter into residential construction projects, if implemented at a significant scope, is likely to contribute to a turnaround in the trend of productivity in the industry – companies that will bring advanced bis central bankers ’ speeches technologies to israel will force the local contractors to increase efficiency too, and in the long term will contribute to an increase in the wages of domestic workers in the industry. the level of public services shows a mixed picture – in industries in which adequate investment was made in recent years, whether in physical infrastructure or in an appropriate work force, we benefit from the return on the investment, in the form of high quality of level of services. yet at the same time, in industries in which appropriate investment was not or is not made, the service level is low or is expected to be negatively impacted. it is important to emphasize that the return on public investment, or the harm from a lack of such investment, are not seen immediately. we currently benefit from past investments, and begin to feel the impact in areas in which investment was not sufficient. i will illustrate with several examples from various industries : the current level of health services is good by international comparison, as indicated by public satisfaction surveys ( and as reflected as well in a relatively high life expectancy, low infant mortality, etc. ). however, various indicators show that the physical and human infrastructures are very | 0 |
, however, that a successful transition is not just a matter of isolated changes in the energy sector. we must also consider the potential risks associated with this transition given the interplay among economic activities. according to some experts, “ transitions are systemic in nature, characterized by coevolution between different actors, institutions, supply and distribution chains, ” among others. a low - carbon transition could trigger a chain reaction that might affect the performance and viability of various loan and investment portfolios, which eventually could pose risks to the stability of the financial system and to the real economy. in this light, a progressive approach to transition must be considered without compromising environmental sustainability. the finalization of the principles - based taxonomy will play a critical part here, particularly in opening the door for the inflows of capital to relevant economic activities. the bsp ’ s sustainable finance framework which was released in april 2020 encourages the offering of green and sustainable finance instruments to support such economic activities. but at the same time, the framework safeguards the stability of the financial system against potentially 1 / 2 bis central bankers'speeches significant and protracted impact of climate change and other environment related risks. leveraging on good governance and effective risk management systems, the framework also expects banks to embrace sustainability principles and take strategic, concrete, and progressive actions in response to the climate call. the bsp will be issuing its second - phase regulation to enable the banking industry to make safe and sound response to risks arising from the transition to a low - carbon economy. this supplementary issuance will provide granular expectations on the integration of climate change and other environmental and social risks in banks ’ credit and operational risk management frameworks. banks may gradually consider the future implications of “ stranded asset risk ” in their credit portfolio. no doubt, the energy transition is a complex issue and comes with both risks and opportunities. we are, however, fortunate to have a remarkable set of expert panelists who are at the frontlines of energy transition to provide us with insights on the opportunities, challenges, and potential solutions to accelerate renewable energy and energy efficiency in the country, including financing thereof. on this note, allow me to end this remark by wishing you a successful and meaningful conversation. thank you and stay safe. 1 www4. unfccc. int / sites / ndcstaging / publisheddocuments / philippines % 20first / philippines % 20 - % 20ndc. pdf 2 / 2 bis central bankers'speeches | ##ar, jaffna, a part of mulativu and killinochchi have now returned to their homes. the others mainly from mulativu and killinochchi are also to be resettled systematically without any undue delay, depending on the speed at which the de - mining processes take place. this is an outstanding achievement against all odds, and i believe the successful resettlement is a tribute to the deep commitment of the government, the tremendous efforts of our public service and the dedicated contribution of several international organizations. i am also tempted to mention that this surprising outcome may have been a pleasant surprise to many who at certain times expressed the belief that the government may not have had the inclination nor the urgency to carry out this challenging task so expeditiously. my dear friends, the central bank has also contributed its mite to these normalization processes. we have, so far, over the past 8 months, granted approvals for the establishment of more than 90 banking outlets in the northern province. we have introduced a special loan scheme, also titled “ vadakkin vasantham ” to boost the livelihood development of the people in the north. under this scheme, an initial sum of rs. 3, 000 million has been appropriated to be disbursed at a concessionary interest rate of 9 % per annum to the eligible micro, small and medium scale enterprises, through several participating financial institutions. the repayment period could extend up to 5 years with a grace period of 6 months. i am happy to note that over 9, 000 loans amounting to rs. 1. 8 billion have already been registered with the pfis and disbursements of over rs 1 billion has taken place. my dear friends, the rich resources of the north, including its forests, agricultural land, wet lands, lagoons and bays provide a solid base for many enterprises. even during the conflict period, the northern province accounted for 10 percent of the paddy production, 40 % of red onions, 10 % of chillies, 14 % of green gram and 25 % of ground nuts. these statistics indicate that there would be many viable income generating activities which could be promoted to upgrade the livelihood of the people, with the assistance of the banking sector. it has been estimated that 129, 000 fishermen, representing 20 percent of the total number of fishermen in our country, live in 219 fishing villages in the northern province. in the year 2006, the total fish production from the north stood | 0 |
##cancies per unemployed person on average, despite the weak economic setting. before 2015, this number mostly fluctuated between 0. 2 and 0. 5. moreover, according to our projections, from 2026 onwards, the potential labour force will decrease on average by 80 thousand persons every year. this development may lead to persistently higher wage growth, and, as a by - product, stronger domestic inflation. with geopolitical uncertainties, production off - shoring may no longer be as easy a solution as before. third, take the need to decarbonise our economies. climate change has already caused significant damage – record temperatures and the images of floods and droughts are in all our minds. carbon prices should reflect the true costs of carbon 2 / 4 bis - central bankers'speeches emissions so as to incentivise a rapid and complete decarbonisation process. decarbonisation implies a far - reaching restructuring of the economy. over a transition period, it may contribute to inflationary pressures. however, there is conflicting evidence about the economic effects of decarbonisation – not least due to dynamic and general equilibrium effects of carbon prices and other climate policies that may counteract the initial inflationary impact. for example, on the one hand, according to the imf, decarbonising the generation of electricity will lead to additional 0. 1 to 0. 4 pp of inflation per year globally – if countries do not further delay a credible transition. 5 on the other hand, colleagues at the bundesbank's research centre have shown that shocks to transition risk may have dampened price increases so far. 6 all in all, we do not know how strongly these structural factors will affect prices and whether or not the pre - pandemic price dynamics will show up again on the horizon. i am thus very glad that this conference is taking a close look at structural changes and the implications on inflation. 4 possible implications for monetary policy but what implications could such developments have for monetary policy? one thing is clear : our mandate is price stability! perhaps the interplay of structural drivers of inflation that i have just outlined will lead to some sort of sweet spot for monetary policy – with inflation at about 2 % and the level of interest rates not too high but at a safe distance from the effective lower bound. but if there is more price pressure in the medium - term, we must take action against it. at first glance, it may seem as if tighter monetary policy and | , we have seen prices of digital consumer goods fall significantly. digitalisation may sometimes also contribute to price transparency, which, by diminishing firms'local market power, could affect inflation indirectly. the effect of demographic trends on inflation is less obvious. if the dominant effect were greater willingness to save for retirement, one channel would go through a decline in the natural rate of interest, implying that monetary policy could turn out tighter than intended – leading to lower inflation. 3 possible post - pandemic inflation factors the period of missing inflation came to an abrupt end in 2021, when the pandemic began to lose its grip. the surge in energy prices, supply chain distortions induced by containment measures as well as supply bottlenecks due to strong consumer goods demand all fuelled the return of inflation, in a way never seen since the start of the monetary union. the russian attack on ukraine amplified this return, especially owing to a further drastic rise in energy prices. central banks around the globe had to act decisively to curb high inflation. in the euro area, the ecb governing council increased interest rates ten times in a row, a pace of tightening unseen since the start of the euro. since late 2022, the wave of inflation has been receding. energy price dynamics even reached negative territory, supply - chain strain eased, and core inflation has started to decline. in the euro area, inflation is expected to return to values of around 2 %. this is evidence of the success of the eurosystem's tight monetary policy. but looking ahead, do we need to prepare for a return to the world of too low inflation we were used to in the last decade? i am not convinced – for at least three reasons. first, take geopolitical uncertainties. we have just learned the hard way that costefficient global production chains and trade patterns may come to a sudden halt. of course, it makes no sense to fully abandon the advantages of international division of labour altogether. however, to improve resilience, some form of de - risking seems reasonable, especially in the case of strategically important goods. 4 we should keep in mind that greater security for supply chains is likely to come with some additional price pressures. second, take demographics. previously, many focused on the effect of demographics on propensity to save. now, a shortage of labour is becoming more and more visible in developed countries. for example, in germany, there are currently 1. 2 va | 1 |
zeti akhtar aziz : new opportunities for growth and development in islamic financial markets speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the official ceremony for the completion of the share subscription agreement between bimb holdings berhad, bank islam malaysia berhad, dubai financial llc & lembaga tabung haji, kuala lumpur, 16 october 2006. * * * this occasion marks the successful completion of the share subscription agreement between bimb holdings berhad, bank islam malaysia berhad, dubai financial limited liability company ( llc ) and lembaga tabung haji. it also sets a new chapter in bank islam's drive to chart its future direction in meeting new challenges and in exploiting the new opportunities for growth and development in the islamic financial markets, both in the domestic and global market place. the participation of such key foreign and local institutions in the new share issuance by bank islam malaysia berhad signifies an important turning point in the history of bank islam which has been the pioneer islamic bank in malaysia. the partnership between bimb holdings berhad, dubai financial llc and lembaga tabung haji is significant in several important ways. firstly, it reflects the confidence and trust that international and domestic investors have in the investment and business climate in malaysia, and in the malaysian islamic financial sector in particular. indeed, the islamic financial services industry in malaysia has experienced robust growth in addition to being reinforced by enhanced market discipline and transparency, and the vibrancy of the islamic financial market developments in malaysia. the latest financial indicators show that the islamic banking industry remains well - capitalised with a risk - weighted capital ratio of 14. 8 % as at end - august 2006, while the net non - performing financing ratio has declined to 4. 2 %. clearly, therefore, the industry is strong, resilient and well - positioned to meet emerging challenges and to capitalise on new opportunities for the mutual return of its stakeholders. secondly, this partnership comes at a significant juncture when malaysia is enhancing the international dimension of its islamic banking and financial market, with the introduction of increased foreign participation. in line with the aspiration to position malaysia as an international islamic financial centre ( mifc ), new licences and business divisions to conduct international currency islamic banking business, tax and other incentives have been introduced to attract global islamic financial institutions to make malaysia the hub for their regional business operations. these measures and incentives are also expected to attract international | investors, including from the middle east, to leverage on malaysia as an investment gateway to tap the rapidly growing investment opportunities in the east asian region. thirdly, this partnership also serves to enhance malaysia as a centre of product innovation in islamic finance. indeed, conscious efforts have been made to ensure a conducive environment for innovation in malaysia, including the development of the necessary pool of expertise and talent to drive such innovation. within bank islam itself, there is a track record and brand name for innovation, with the development of new business models and product offerings. this partnership would thus contribute towards accelerating this process and towards serving as a bridge to strengthen the relationship of the islamic financial markets as well as the investment and trade ties between the west asian and north african regions, with east asia. strengthening the capital of a financial institution, however, is not the only factor that will determine its capacity and potential to perform. equally important is the quality of its talent, the systems that it has in place, in particular, its risk management and ict systems and its governance structure, its leadership and its corporate culture. thus, while this capitalisation exercise will put bank islam in a stronger position to tap new opportunities, all the other elements also need to be in place to enable the institution to realise its true potential. sound corporate governance and effective management of banking institutions are vital to ensure their effective and sound functioning. in particular, significant shareholders are expected to play an active role to ensure that capable individuals are appointed on the board and senior management of banking institutions. bank negara malaysia had as early as 2001 required the board and management of bank islam to undertake remedial actions on several operational and control weaknesses. when the weaknesses were not adequately addressed, the process of reconstituting the board and management of bank islam was initiated in 2003. in such an exercise, key shareholders are expected to be proactive in making prudent and responsible action to remove any member or employee that is found to be unsuitable or not having the required calibre so as to avoid a prolonged process in the reconstruction of the board and management of the bank. it needs to be recognized that the responsibility for the safety and soundness at the institutional level rests primarily with the board and the management of each banking institution and the key stakeholders such as the significant shareholders. institutional investors should also have an active role and make swift and bold decisions in ensuring that only capable individuals are appointed and remain on the board and senior management of banking institutions. | 1 |
##e and what business options to offer intermediaries. for a digital euro to be designed and adopted successfully, it must be a collective endeavour. so we are stepping up our engagement with all stakeholders, from banks to payment companies, and from merchants to society at large. and at every stage of the project we will continue to engage with the european commission ( which recently launched a consultation on the digital euro ), the european parliament and the finance ministers of the euro area countries. defining the legal framework will entail reconciling trade - offs arising from several objectives, such as the right of individuals to confidentiality versus the public interest in maintaining the level of transparency required to combat illicit activities, or the benefits of allowing the digital euro to be widely used – also internationally – versus the need to safeguard financial intermediation and stability. but there are ways to resolve these trade - offs, as i have discussed in previous speeches. finally, at the end of 2023 we could decide to start a realisation phase to develop and test the appropriate technical solutions and business arrangements necessary to provide a digital euro. this phase could take three years. conclusion let me conclude. the complementarity of public and private money has guaranteed stability, competition and innovation for decades. the ongoing changes in technology, geopolitics and user preferences must not herald the demise of this careful balance, but rather a chance to extend its success to the digital age. central bank digital currencies will allow public money to continue to play its role in anchoring the stability of the payments system and contributing to its efficiency. and private money will add innovation and diversity to this foundation. the coexistence of public and private money can continue to be a win - win situation – perhaps even more so in the digital age. 1. a payment system based on technologies and practices designed, managed and supervised elsewhere would undermine authorities ’ ability to exercise their supervisory control. a situation in which the digitalisation of payments leads to most prices being quoted in a foreign or private unit of account would greatly reduce the central bank ’ s ability to influence monetary and financial conditions. 2. although many people are unaware of the differences between public and private money, they do know that banknotes protect them from a potential default by their bank. 3. the use of central bank money in payment systems puts the value of private money to the test every day by checking their convertibility into the defined unit of value, so preserving confidence in the currency 4. | speech public money for the digital era : towards a digital euro keynote speech by fabio panetta, member of the executive board of the ecb, at the national college of ireland dublin, 16 may 2022 it is a pleasure to be here with all of you today to talk about the digital euro. when we launched this project, we made it clear that this is a common european enterprise. our collective effort is key to the preparation and eventual success of a digital euro. i would like to take this opportunity to thank commissioner mcguinness and the president of the eurogroup, mr donohoe, for the excellent collaboration. as we prepare to potentially issue a digital euro, we want to engage with and listen to stakeholders and society at large. so i would like to thank the national college of ireland for hosting us today and giving us the opportunity to discuss this project with you. and i look forward to talking to the students who are here today. young people will play a key role in the adoption of a digital euro and we need to hear their perspectives to make it a success. we live in turbulent times. as we face the most serious geopolitical crisis since the cold war, old certainties are increasingly being challenged. the invasion of ukraine has cast further doubt on the reliability of a global order that enabled unprecedented economic interdependence. in the financial realm, old certainties are also beginning to falter. digital technologies, changing payment habits and the race for payments supremacy are testing the complementarity of public and private money, which has long formed a cornerstone of our monetary system. today i will argue that to preserve this symbiosis, public money must keep its role as a monetary anchor in the digital era. a digital euro would fortify our monetary sovereignty and provide a form of central bank money for making daily digital payments across the euro area, just like cash for physical transactions. to succeed, a digital euro will need to add value for users, foster innovation, and enjoy strong political and societal support. preserving the role of public money our monetary system is based on the complementarity of public and private money. central banks provide a trusted and stable monetary base on which intermediaries such as banks build new payment and financial services. this coexistence has been a powerful driver of stability and innovation. but digital disruption and the declining use of cash – the only form of sovereign money currently available to the public – are threatening to upend this balance. | 1 |
29. 11. 18 opening remarks 2nd annual meeting cebra international finance and macroeconomic program pablo hernandez de cos governor ladies and gentlemen, it is a great pleasure for me to welcome you all to the second annual meeting of the cebra ( central bank research association ) international finance and macroeconomics program, hosted by the banco de espana. let me first thank our colleagues from cebra for their efforts in co - organising this conference. cebra is an association that seeks to encourage applied and theoretical research on relevant topics for central banks, among other institutions. its research programmes foster interaction among researchers at central banks and in academia. in this vein, the international finance and macroeconomics program ( ifm ) led by galina hale provides an excellent forum to discuss key policy questions that are also relevant to academia. the title of this conference is : “ risk, volatility and central bank policies ”. allow me to briefly share with you – from a central banker ’ s perspective – some of our current concerns in relation to the three items highlighted in this title. starting with risks, in recent months some institutions – including the banco de espana through its financial stability report – have stressed that, although the financial stability environment remains favourable, global near - term risks have increased or have begun to materialise. in recent years the global economy has experienced a period of sustained and across - theboard growth, supported by unprecedented expansionary and unconventional monetary policies around the world. but this context has also been conducive to the accumulation of certain financial vulnerabilities. in particular, it has led to a “ search for yield ” by investors who have been seeking more profitable and riskier investments. this is evidenced at least by three facts : increasing leverage, the high share of debt at risk and the relatively high valuations of certain assets. now the current phase of ultra - loose monetary policy is coming to an end. in the us, after seven years of interest rates around the zero lower bound, monetary policy is being normalised. other advanced economies, such as the uk or canada, have also started to raise interest rates. regarding the euro area, the ecb governing council anticipates that, subject to incoming data confirming the medium - term inflation outlook, net asset purchases will come to an end in december 2018. in this context, two main developments in international financial markets warrant attention as, in my view, they might currently pose key threats to financial stability and global growth. first | , and the government ’ s new economic stimulus package are expected to underpin the economy. however, attention should be paid to growing risks of downward pressures on the economy induced by a possible further slowdown in overseas economies as well as by developments in foreign and domestic capital markets. with regard to prices, import prices are rising, mainly reflecting the depreciation of the yen. domestic wholesale prices are declining somewhat mainly due to the decrease in prices of electrical machinery. consumer prices continue to be somewhat weak owing to the decline in prices of other imported products and their substitutes, despite the increase in prices of petroleum products. corporate service prices are still falling slowly. this report was written based on data and information available at the time of the bank of japan monetary policy meeting held on february 9, 2001. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on february 9 as the basis for monetary policy decisions. as for the conditions surrounding price developments, the recent yen depreciation is exerting upward pressures on prices. moreover, the balance between supply and demand in the domestic market is projected to be on a gradual improving trend, while an economic recovery is expected to continue at a moderate pace. recently, however, the pace of recovery seems to be slowing and crude oil prices, which had been exerting upward pressures on prices, are falling. in addition to the declining trend of machinery prices due to technological innovations, the decrease in prices of consumer goods arising from the streamlining of distribution channels, and the reduction in communications fees aided by deregulation will continue to exert downward pressures on prices. overall, prices are expected to be somewhat weak for the time being. in the financial market, the overnight call rate is generally moving around 0. 25 percent. interest rates on term instruments have been declining somewhat. the japan premium remains negligible. yields on long - term government bonds have declined to around 1. 4 - 1. 45 percent. the yield spreads between private bonds ( bank debentures and corporate bonds ) and government bonds are mostly unchanged or expanding somewhat. stock prices continue to be weak and are moving around the lowest level recorded since the beginning of 2000. in the foreign exchange market, the sharp depreciation of the yen since late december has come to a pause. the yen is currently being traded in the range of 114 - 117 yen to the u. s. dollar. with regard to corporate finance, private banks | 0 |
##lity and high uncertainty force a need for optionality in the conduct of monetary policy to ensure price stability over the medium term. it is both interesting and important here to briefly explain the difference in the monetary policy actions employed so far by the ecb and the federal reserve in response to the inflationary shocks. the policy actions of the ecb and the federal reserve, diverge since they face very different economic environments and data. in the u. s., where the federal reserve has already raised rates and delivered today the biggest rate hike since 2000, the inflationary pressure has been made more acute by a tight labour market. in the euro area the labour market is not tight. also, domestic demand in the euro area is back to pre - covid levels. in the u. s., it is higher. therefore, the us is facing demand - side inflationary pressure that monetary policy can deal with. in cyprus, the rise in oil prices has a direct impact on the households'cost of living and firms'production costs while the sanctions imposed on russia mainly affect the tourism and professional services sectors of the country and are expected to weigh on economic activity. specifically, they are expected to reduce the level of gdp growth in 2022, as currently estimated, by around 1, 3 percentage points, from 3, 6 per cent as per the central bank of cyprus december projections, to around 2, 3 per cent. inflation is currently expected to hover around 6, 8 per cent in 2022, compared to the december projection of 2, 5 per cent. this impact is associated with the rise in oil and other commodity prices, as well as the disruption in exports of goods and services to russia, 2 / 5 bis - central bankers'speeches which on average constitute about 16 per cent of overall exports of goods and services. important such services exports to russia include tourism, transportation, financial, professional and computer services. in addition, indirect consequences are expected via the impact on consumer and business confidence. nevertheless, the medium - term economic outlook remains positive, supported by disbursements from the european recovery and resilience fund. the allocation for cyprus for the period 2021 - 2026 is €1, 2bn, of which €1bn in grants and €200 million in loans. the total grants allocation for the eu is €338bn, which implies 0, 3 per cent of the total grants package is allocated to cyprus. in terms of the banking sector of cyprus, it | as well as for the good of the cypriot economy, become better and more efficient at serving their clients. i have made this point to the ceo's and chairmen of the banks a number of times and i also called a meeting between the cbc, economy stakeholders like kebe, institute of certified public accountants of cyprus, the cyprus bar association and the cyprus banks to promote and facilitate better and more efficient ways of doing business with the banking sector. whereas as agreed, follow - on meetings have subsequently taken place 3 / 5 bis - central bankers'speeches between the stakeholders, i'm forced to say that i have not seen practical progress. i call on all parties to continue the discussions but more importantly to move from talking to doing. in order to help this situation as well as the economy, at the cbc we also initiated a project to digitise the banking sector's client onboarding process as well as the exchange of customer information between banks. let me be clear : this is not the responsibility or remit of the central bank. however, i decided for this to happen in order to push this technological change in the banking sector. we set this project as a priority and obtained the commitment of cyprus banks to embrace and participate in the project. we are now at an advanced stage of formulating the technical and legal requirements for the project. the project, as envisioned by the cbc, will be a flexible and scalable solution to be implemented in phases. phase one, will be the remote digital onboarding of new customers through a seamless digitalised process and an optimised customer on - boarding experience, thereafter expediting the remote updating of customer data and information. digitalisation of the onboarding process will initially focus on cyprus citizens, allowing for expansion to include eu and non - eu citizens as well as legal entities and, to the extent possible, similar structures. in other words it will learn to walk before it will run. phase two will roll out an interoperability solution with utility service providers and governmental services, allowing for possible incorporation of electronic ids as provided for in the european regulation. phase three will see the information sharing between participating banks when there is an update of customers'data for aml / know your customer compliance purposes or when a new customer is onboarded and such person is already a customer of a participating bank. finally, phase four will deal with information sharing between participating banks for the purpose of account switching. the cbc is committed to make the project | 1 |
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