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in the past. you would welcome the creation of a european ministry of finance. do you think that attitudes are ready for that? not as president of the ecb, but as a citizen, i can imagine a development for β tomorrow β and β the day after tomorrow β. tomorrow, it would be necessary that we could impose on a country the essential decisions after several refusals to apply the recommendations formulated by european governance. thus, one could prevent a particular economy from adversely affecting the financial stability of the rest of the area. this requires a change in the treaty, now being specifically envisaged by governments in the euro area, which i welcome. as for β the day after tomorrow β, one can consider a deeper institutional change, with a genuine european executive. in any case, europe β s historical development depends entirely on the lessons our democracies will draw from the crisis, on the conclusions the people of europe will draw from the events experienced since 2007. what are you going to do now? first of all, i β m going to read a lot and think a lot. then, knowing me as i do, i know that i β m going to stay active. bis central bankers β speeches | jean - claude trichet : interview with le monde interview with mr jean - claude trichet, president of the european central bank, conducted by messrs erik izraelewicz and clement lacombe and ms cecile prudhomme on 27 october 2011, and published in le monde dated 30 β 31 october 2011. * * * new agreements were reached on the night of wednesday 26 october to thursday 27 october by the heads of state and government of the euro area, three months after the summit of 21 july. is this, at long last, the end point of the crisis? this agreement must be applied rigorously and quickly in all its dimensions, including the improvement of governance. decision - makers must strive to be ahead of events, even if the speed of decisions in our democracies is not necessarily that of the markets. a key challenge for the euro area is to communicate with investors and savers in the rest of the world, who have difficulty in deciphering european decision - making. provided that their decisions are implemented quickly, the euro area countries have the means to improve the perception that the rest of the world has of europe. nevertheless, there are still uncertainties β¦ which element needs the greatest vigilance? progress has to be made on all points in a resolute way. in respect of governance, in the past, at the ecb, we have found ourselves preaching in the wilderness, when negligence by governments, markets and by many economists was the rule. we knew a time when markets did not distinguish between the signature of greece and that of germany, when a majority of observers felt that the stability and growth pact was a too tight corset which prevented europe from breathing, and when the whole world believed that imf loans had become useless. that was still the case in early 2007! your successor, mario draghi, has indicated the ecb is going to continue its purchases of government bonds. does this mean he has given in to political pressure? mario has repeated what the council had communicated previously. hasn β t the independence of the ecb been affected nonetheless? the question doesn β t arise. the treaty requires us neither to receive nor to seek instructions from anyone. we did not ask for permission to take exceptional measures on 9 august 2007 to confront the first waves of financial turbulence! we were criticised by germany and france when we refused to lower rates in 2004, and by ten out of 12 countries when we increased them in december 2005. all | 1 |
jens weidmann : the monetary union as a community of stability speech by dr jens weidmann, president of the deutsche bundesbank, at the bundesbank β s parliamentary evening, regional office in hamburg, mecklenburg - west pomerania and schleswig - holstein, hamburg, 29 august 2013. * * * introduction madam president, ladies and gentlemen i am glad of this opportunity to speak to you at this parliamentary evening. i would like to begin with a short anecdote about the economist who lost his keys. one night a policeman notices an economist standing beneath a lamp - post looking for something. the policeman asks if he can be of assistance, to which the economist replies, β i β ve lost my keys and can β t find them. β the policeman asks, β are you sure this is where you lost them, sir? β and the economist answers, β no, i lost the keys over by the car, but the light is better here. β people like to tell this story when rebuking economists because they didn β t see the financial and debt crisis coming. indeed, financial stability reviews and other economic studies prior to the crisis do contain references to shifts within the financial system. yet the macroeconomic risks that this development on the financial markets produced did not receive nearly as much attention as they warranted. this is because the economic models they used had blind spots. as a result, the financial markets were rudimentarily modelled at best. looking back, one might say that impressive progress has been made in financial economics and macroeconomics over the past decades β but unfortunately they have advanced independently of each other rather than alongside each other. it is only recently that researchers have started to focus more strongly on the interaction between the financial sector and the real economy. yet that isn β t the only moral of the story of the lost keys. even when combating the crisis, there is a risk that we only see the obvious, what β s right in front of our noses β like the fluctuations in the financial markets. but if we want to overcome the crisis once and for all, we have to illuminate the dark corners as well. only if we identify and remedy the weaknesses in the framework of monetary union will we ensure that the monetary union remains a community of stability. for this reason, my speech this evening consists of two parts. first, i would like to examine the main features of the current monetary union framework. then i will discuss the options we have for | end to the preferential treatment given to sovereign risk in bank balance sheets. banks β substantial exposure to sovereign risk β which even increased in bis central bankers β speeches some quarters during the crisis β owed something to the 0 % risk weight for government bonds and the absence of upper limits for lending to governments. putting an end to this practice of privileging sovereign debt over corporate loans would also represent a major step towards making lending to businesses more attractive again. that β s not the only regulatory measure that β s of decisive importance. higher capital requirements are key to ensuring that banks can withstand greater losses under their own steam, thereby shifting risk back to shareholders. this process got underway with the basel iii regime and now needs to be rigorously implemented. having a mechanism that facilitates the orderly resolution or restructuring of large, international and highly interconnected banks in the event of difficulties β otherwise known as the β too big to fail β problem β is equally important in future. progress has been rather mixed so far on the implementation of internationally agreed standards for resolution regimes. role of monetary policy finally, i would like to turn to central banks β role in resolving the crisis. the causes of the crisis are structural. this is why only structural measures can resolve the crisis. monetary policy β that is, the eurosystem β has already done a great deal to contain the crisis. the eurosystem has cut key interest rates and it is supplying banks with practically unlimited amounts of liquidity. on top of this, in july ecb president mario draghi provided forward guidance on the ecb β s future monetary policy stance, indicating that key interest rates would remain at present or lower levels for the foreseeable future. though the design details of these monetary policy measures are debatable, the action itself was essentially correct. however, the longer the phase of low interest rates continues, the blunter the loose monetary policy instrument becomes ; risks to financial stability increase and the exit becomes more difficult. the eurosystem also intervened in the government bond markets, however, and raised the prospect of further interventions subject to certain conditions. you will be aware that i take a critical view of these steps. for by purchasing government bonds of countries that are finding it difficult to place their bonds in the market, central banks are redistributing the burden of unsound fiscal policy throughout the euro area. ultimately, this is tantamount to mutualising liability for the individual countries β debts via the central bank. doing so | 1 |
they are not unachievable. and we all have an interest in encouraging progress toward that objective. implications for policy and risk management what are the implications of these challenges for central banks and supervisors? the changes in the financial system we β ve seen over the past decade don β t change the principal objectives of policy - to ensure that the core financial institutions maintain an adequate cushion of capital in relation to risk, and to build greater resilience into the infrastructure that supports the financial markets. we have very limited ability to predict the sources of stress to the financial system, but if the cushions at the core of the system are robust, the risk of a systemic crisis will be diminished, and central banks will have greater ability to mitigate the risk of broader damage to the economy. the pace and extent of the changes in financial markets requires supervisors to work harder to understand the consequences of changing market practice for the incentives and constraints we impose on financial institutions. let me give two examples of evolving market practices that may help alleviate one concern only to exacerbate another. collateral plays an increasingly important role in counterparty credit risk management, particularly for highly leveraged counterparties. the increased importance of variation margining plays a critical role in counterparty credit risk management. these changes help limit the exposure of the core financial institution to losses among their leveraged counterparties, but they also act to exacerbate volatility, with asset price declines forcing further margin calls, adding for further market declines. where initial margin is thin in relation to potential exposure, counterparties are more exposed to adverse movements in asset prices, and in a situation of stress the actions they take to reduce their exposure to further losses are likely to have a greater negative impact on market dynamics. in market conditions where initial margin may be low relative to potential future exposure, the selfpreserving behavior of leveraged funds and their counterparties may be more likely to exacerbate rather than mitigate an unexpected deterioration in asset prices and market liquidity. as financial firms demand more collateral, funds are forced to liquidate positions, adding to volatility and pushing down asset prices, leading to more margin calls and efforts by the major firms to reduce their exposure to future losses. in the context of the previous discussion of externalities, firms β incentives to minimize their own exposure can amplify the initial shock and impose on others the negative externality of a broader disruption to market liquidity. the fact that this potential adverse dynamic exists | timothy f geithner : hedge funds and derivatives and their implications for the financial system remarks by mr timothy f geithner, president and chief executive officer of the federal reserve bank of new york, at the distinguished lecture 2006, sponsored by the hong kong monetary authority and hong kong association of banks, hong kong, 14 september 2006. * * * i want to thank joseph yam for inviting me to hong kong for this occasion. we are approaching the 10 - year anniversary of the financial crises of 1997 - 99. those crises were remarkable both in the scope of countries and markets they affected, and for their speed and severity. the circumstances leading up to the crises varied across countries and regions, as did the magnitude of the resulting damage to the real economy. but each of these events had one dynamic in common the confluence of a sharp increase in risk perception, and the subsequent actions taken by financial institutions and investors to limit their exposure to future losses. as asset prices declined and volatility increased in response to increased concern about risk, firms moved to call margin, to reduce positions and to hedge against further losses. these individual actions had the aggregate effect of inducing even larger price declines and further heightening perceptions of risk, ultimately propagating and amplifying the effects of the initial shock. the dynamic i just described was not unique to the crises of the late 1990s, nor was the damage to overall economic activity they left in their wakes. systemic financial events with spillovers to the real economy have been a persistent feature of the economic environment, and both financial market participants and policymakers have grappled with the challenge of how to reduce their incidence and to minimize their severity, longevity and impact on the broader economy. there is a lot we do not understand about these challenges, but we know more today than we once did. in the case of the crises of the late 1990s, despite the broad - based nature of the financial market turmoil, in countries where capital cushions in the financial sector were strong relative to risk, where there was a greater diversity of institutions in the financial system to absorb the losses, and where monetary authorities were in a position to provide liquidity to restore confidence, the financial and macroeconomic impact of the crises was relatively modest. where those conditions did not exist, the damage was acute. the u. s. economy appears to have become more resilient to financial shocks. over the past two decades, the u. s. economy has experienced several episodes of significant financial market | 1 |
still very sluggish. this was clearly a sign of resilience in the face of a very severe shock, which, i want to re - emphasize, emanated from unfavourable conditions, both globally and domestically. bis central bankers β speeches i will now go on to talk about the relationship between the reform process and growth on the one hand and between boundaries and resilience on the other. reforms and growth the core premise of the reform process initiated in 1991 was that greater competition, both internal and external would help accelerate economic growth. the entire spectrum of reforms, from the abolition of industrial licensing to the sharp reduction in trade barriers and the termination of allocative controls on finance, were intended to simultaneously introduce competitive forces into the economy, while freeing up the choices that producers had in terms of what, where and how to produce. these choices, in turn, could be supported by a financial system that was allowed to make its own risk - return calculations. although some essential requirements of a truly competitive market economy, notably the elimination of exit barriers, were not introduced with the same degree of enthusiasm, the reforms that were done turned out to have a powerful impact. of course, it did not happen all at once. as the line in slide 2 indicates, the early growth dividends from the 1991 reforms were somewhat short - lived. growth accelerated to cross the seven per cent threshold during the three years from 1994 to 1997, but slumped back to a rather tepid five per cent for the five years following. this performance legitimately raised questions about the merits of the entire reform process ; if the growth dividend was going to be this small, was it worth all the institutional disruption and political challenges that it entailed? as it turned out, the acceleration in growth that took place from 2003 onwards quelled that particular debate. looking back over that period, a reasonable interpretation of events is that the reform process took long time to fall into place. trade reform, for example, manifested in a two stage transition, first from quantitative restrictions on imports to tariffs and then the lowering of tariff rates to internationally comparable levels. similarly, financial sector reforms did not fall into place all at once ; they unfolded slowly, across domestic banks, market mechanisms and liberalization of the capital account. the exchange rate regime went through some intermediate steps before current account convertibility was achieved. while industrial licensing for domestic investors was eliminated early on in the process, the policy regime for foreign direct investment also unfolded | the issue of inflation, which i raised in the context of vulnerability to global forces in the form of rising energy prices. this clearly calls for an integrated energy strategy, with the objective of both conserving overall use of energy and shifting the balance to domestic resources, preferably renewable ones. however, from a somewhat broader perspective, the continuing vulnerability to inflationary shocks from energy can also be mitigated by addressing other sources of inflation, over which there is a greater degree of control for domestic policy. in this context, i would like to emphasize the very real threat from food inflation. a growing demand - supply imbalance in some major food items β protein sources, vegetables and fruits β is helping entrench food inflation. slide 8 shows clear signs of an escalating trend. this raises the average rate of inflation, making the system even more vulnerable to external energy shocks or, for that matter, any other source of inflation. there are some direct growth - resilience implications of this pattern. it is a historical given that people diversify their diets as they become more affluent. one key common characteristic of long - term development is that the food economy has accommodated this by more efficient supply ( either through production or trade ) of the foods that people want more of. if this does not happen, households tend to spend more money on food and less on other things, which acts as a damper on the growth of demand for non - food products. as was suggested earlier, aggregate private consumption expenditure can be a stabilizing force ; the more diversified it is, the more it can contribute to stability. but, macroeconomic implications apart, from a development and welfare perspective, it is a matter of concern that increased access to better nutrition is hindered by rising food prices. rapidly expanding supply is really the only solution to this problem. second, continuing with the theme of diversification as way to promote growth with resilience, the sectoral composition of gdp and employment suggest key policy priorities. slide 9 displays a striking contrast between the drivers of gdp growth and the pattern of employment. while agriculture has been steadily shrinking in terms of its share of gdp, its share in employment remains both dominant and relatively static. in effect, a constant proportion of the labour force is generating a declining share of output. on the other hand, industry, which is expected to be a natural absorber of workers from agriculture, providing them more productive and better paying jobs, has not just about maintained its | 1 |
the board of directors and senior management to emphasise the importance of internal control through their actions and words. banks should regularly reorient and train their personnel so that they fully understand the importance of internal controls in their respective stations. the boards of banks should specifically pay attention to creating and sustaining a culture of effective control in the banks. 19. fifth, even though the government β s capital infusion has helped public sector banks ( psbs ) to improve their balance sheets, i would like to stress that psbs should not become too dependent on this source. depending upon individual situations, psbs should access the capital market for mobilisation of capital. 20. sixth, i have referred to the importance of the ibc and the new bankruptcy regime earlier. there are, however, delays in the resolution of cases, as a significant number of them have extended beyond 180 or 270 days. the government has already announced two new national company law tribunal ( nclt ) benches at indore and amravati. nevertheless, more number of benches as well as members are required. on our part, we are opening a new rbi professorial chair at the indian institute of corporate affairs ( iica ), manesar, haryana which is starting a two year graduate insolvency programme to increase the pool of trained insolvency professionals. 21. seventh, in the light of various developments in the financial sector such as the use of complex financial products and rapid technological innovations which give rise to interconnectedness and spill over effects within and between entities, there has been a move globally towards building specialised teams of bank supervisors. even in the indian context, some incidents in the financial sector have underscored the need for specialisation in supervision and regulation. the build - up of risks among regulated entities due to exposure concentrations, non - transparent market practices and the associated contagion effects in the banking sector have significant implications for financial stability. considering these issues, the reserve bank has now decided to build a specialised regulatory and supervisory cadre for regulation and supervision of banks, non - banks and co - operatives. this specialised cadre in the reserve bank will play a pivotal role so that sound banking and non - banking sectors efficiently intermediate the financing requirements of the entire economy. 22. eighth, the reserve bank has been at the forefront of creating an enabling environment for growth of digital technology for new financial products and services. we are strengthening the surveillance framework and have issued draft guidelines on framework for regulatory sandbox. | direction, we have reduced the periodicity of the nbfc supervision to 12 months from 18 months earlier. we expect the board of directors of companies themselves to act diligently and take necessary action based on reserve bank β s supervision reports. 26. further, our objective is to harmonise the liquidity norms between banks and nbfcs, taking into account the unique business model of the nbfcs vis - a - vis banks. in this context, the final guidelines on the liquidity risk management framework which we have proposed recently will be issued shortly. 27. let me also make a reference to urban co - operative banks ( ucbs ). our experience suggests that the board of directors of ucbs require greater expertise and skill to conduct banking business professionally. the reserve bank is in the process of issuing guidelines on this issue. a need is also felt for establishment of an umbrella organisation for ucbs which may extend loans and refinance facilities, setup it infrastructure and provide support for capital and liquidity. the structure, functions and the regulatory guidelines of this organisation are being examined by the reserve bank. mergers and consolidation in the sector will also help in reducing operating costs, encouraging greater risk diversification and economising capital. we propose to put in place a mechanism for encouraging voluntary mergers in the sector through appropriate incentives. we also propose to create a centralised fraud registry for ucbs. 28. i have highlighted several issues in the banking and non - banking sectors. a sound and resilient financial system is a prerequisite for a modern economy that involves all sections of its society in sharing equitably the benefits of economic and social progress. as you would know, reforms are an ongoing process. the reserve bank will endeavour to be proactive in its approach. in the fast - changing financial landscape, we will continue to be watchful to the emerging challenges and respond to them appropriately to ensure a resilient and robust financial system. 1 to be implemented from april 1, 2020 5 / 6 bis central bankers'speeches 6 / 6 bis central bankers'speeches | 1 |
period. the reform process in the euro area today is essentially a process of filling these two lacunae : improving the functioning of national economies through structural reforms ; and creating a well supervised, integrated financial market through banking union. this should provide the conditions for efficient resource allocation and hence sustainable convergence in the future. the illusion of convergence before the crisis in its simplest form, economic convergence can be understood as the process of narrowing income gaps between lower and higher income countries, achieved through faster relative growth in the catching - up economies. according to the standard neoclassical growth model, convergence should be driven by capital flows towards the lower income countries, which i would like to thank jonathan yiangou, neale kennedy and grigor stoevsky for their contributions to this speech. bis central bankers β speeches have low capital - to - output ratios and hence a higher marginal return on capital. an increase in labour productivity in the catching - up economies would also accelerate convergence, as capital deepening would empower production in those economies and organisational processes would gradually reach the standards of efficiency set by more mature regions. when emu was launched, the conditions for economic convergence to proceed according to this model seemed to be present. nominal interest rates between higher and lower income countries converged rapidly. capital flowed towards lower productivity economies where the marginal product of capital was higher, supported by the elimination of exchange rate risk within the euro area. for example, from 1999 to 2008 exposures from banks in higherincome economies towards those in the catching - up economies ( spain, ireland, greece and portugal ) increased more than fivefold. facilitated by these flows, capital accumulation accelerated in these countries : from 1999 to 2007 average growth in capital services in catching - up economies ranged from around 5 % to almost 9 %, compared with a range of 2 % to 3. 5 % in more productive economies. on the surface, these developments appeared to be contributing to convergence : gdp growth in catching - up economies was generally faster than in higher income economies. yet, with hindsight we know that there was no underlying convergence in labour productivity. in particular, strong capital accumulation in catching - up economies did not translate into faster total factor productivity ( tfp ) growth. tfp actually diverged between higher and lower income countries in this period. in fact, there was a positive correlation between the initial level of gdp per capita and average tfp growth rates : the highest tfp growth rates were found in germany, austria, netherlands and | develop a new consumer expectations survey. according to the announcement, a pilot survey will soon be implemented. [ 8 ] aside from serving practical purposes within central banks, additional surveys on household expectations would also help to promote research. the us is clearly ahead in this field, and an important question is whether the results obtained there would also be valid for other countries. 4 conclusion ladies and gentlemen, the discovery of the β clever hans phenomenon β was a major breakthrough for experimental psychology and led to further research on the effects of expectations. for example, evidence was found that teachers β expectations could have an impact on students β performance. [ 9 ] more generally, β clever hans β may highlight the importance of designing experiments properly in order to avoid biased results. of course, our researchers also took this lesson to heart when they devised their pilot study. by resorting to an internet - based survey, they have effectively eliminated any possible impact of face - to - face contact. to conclude, i wish you a pleasant evening and a fruitful conference. and, finally, i am very glad to open this joint event together with governor villeroy de galhau. dear francois, thank you so much for coming and please take the floor. fuΓnoten : 1. samhita, l. and gross, h. j. ( 2013 ). the β clever hans phenomenon β revisited, communicative and integrative biology, 6 ( 6 ) : e27122. 2. goodfriend, m. ( 2007 ). how the world achieved consensus on monetary policy, journal of economic perspectives, 21, pp. ( pages ) 47 - 68. 3. deutsche bundesbank ( 2016 ). the phillips curve as an instrument for analysing prices and forecasting inflation in germany, monthly report, april 2016, pp. ( pages ) 31 - 45 ; coibion, o. and gorodnichenko, y. ( 2015 ). is the phillips curve alive and well after all? inflation expectations and the missing disinflation, american economic journal : macroeconomics 7. 1, pp. ( pages ) 197 - 232. 4. cΕure, b., inflation expectations and the conduct of monetary policy, speech at an event organised by the safe policy center, 11 july 2019. 5. apokoritis, n., galati, g., moessner, r., teppa, f. ( 2019 ). inflation expectations | 0 |
4 per cent in q4 : 2023 - 24. ( performance of private corporate business sector during q1 : 2024 - 25, released by rbi on august 30, 2024 ) 4 gnpa ratio of banks was 2. 7 per cent at end - june 2024, the lowest since end - march 2011. the annualised slippage ratio, which measures new npa accretions as a percentage of standard advances, continued to decline to reach at 1. 3 per cent at endjune 2024. the provision coverage ratio ( pcr ) continued to improve to reach at 76. 5 per cent by end - june 2024. capital to risk - weighted assets ratio ( crar ) stood at 16. 8 per cent at end - june 2024, much above the regulatory threshold. the annualized profitability indicators, namely, return on assets ( roa ) and return on equity ( roe ) stood at 1. 4 per cent and 14. 2 per cent, respectively, at end - june 2024, showing continued improvement. 5 as per a discussion paper on multidimensional poverty in india released by the niti aayog, multidimensional poverty in india was found to decline from 29. 17 per cent in 2013 - 14 to 11. 28 per cent in 2022 - 23 with about 24. 82 crore people escaping poverty during this period. mutlidimensional poverty in india since 2005 - 06 - a discussion paper by prof. ramesh chand and dr. yogesh suri, niti aayog, january 2024. 6 / 6 bis - central bankers'speeches | , universality of education, and particularly, the spread of financial literacy. iv ) however, such aggregative nature of data masks many critical performance related information for understanding the depth and granularity at sub - national level. another speciality of the database ( findex ) used in the world bank study is that it is a survey based reporting system which may have small sample biases and such constraints are natural for household surveys, particularly, when they involve people in the lower rung of the financial inclusion pyramid. likewise, the imf has initiated the β financial access survey β ( fas ) in 2009, in an endeavour to put together cross country data and information relating to the issue of financial inclusion and has published the data in july 2012. 8 according to imf, the fas is the sole source of global supply - side data on financial inclusion, encompassing internationally comparable basic indicators of financial access and usage. it is the data source for the g - 20 basic set of β measuring financial inclusion β, policy research working paper, 6025, world bank. it is based on the first round of the global findex database based on indicators that measure how adults in 148 economies save, borrow, make payments, and manage risk. the indicators are constructed with survey data from interviews with more than 150, 000 nationally representative and randomly selected adults age 15 and above in those 148 economies during the 2011 calendar year rbi annual report 2011 β 12 ( p. 88 β 92 ) contains the detailed india specific survey findings as per the world bank β s policy research working paper and latest status of financial inclusion in india. for more, one may refer http : / / fas. imf. org / bis central bankers β speeches financial inclusion indicators endorsed by the g - 20 leaders at the los cabos summit in june 2012. the fas database currently contains annual data, for the period 2004 β 2011, for 187 jurisdictions, including all g20 economies. the fas data covers data on country - wise availability of bank branches and atms per 1000 sq. km. and per 100, 000 adults, number of deposit and loan accounts with banks per 1000 adults and deposit - gdp and credit - gdp ratios. a glimpse of the data is given in annex 2. while such initiatives are most commendable and fill a major data gap at macro level, it has to be reckoned that data on financial inclusion is needed at both macro and micro levels. the latter can provide distributional characteristics of | 0.5 |
these policies are prolonged long beyond repairing markets β and there the benefits are much less clear. let me list 4 concerns : 1. is ump the right tool once the immediate crisis is over? does it distort behavior and activity so as to stand in the way of recovery? 2. do such policies buy time or does the belief that the central bank is taking responsibility prevent other, more appropriate, policies from being implemented? put differently, when central bankers say, however reluctantly, that they are the only game in town, do they become the only game in town? 3. will exit from unconventional policies be easy? bis central bankers β speeches 4. what are the spillovers from such policies to other countries? for reasons of time, let me focus on the last two. exit the macroeconomic argument for prolonged unconventional policy in industrial countries is that it has low costs, provided inflation stays quiescent. hence it is worth pursuing, even if the benefits are uncertain. central bankers such as governor stein have, however, raised concerns about financial sector risks that may build with prolonged use of unconventional policy. one reason is that leverage may increase both in the financial sector and amongst borrowers as policy stays accommodative. one channel seems to be that a boost to asset liquidity leads lenders to believe that asset sales will backstop loan recovery, leading them to increase loan to value ratios. when liquidity tightens, though, too many lenders rely on asset sales, causing asset prices and loan recovery to plummet. because lenders do not account for the effects of their lending on the β fire sale β price, and subsequently on lending by others, they may have an excessive incentive to build leverage. leverage need not be the sole reason why exit may be volatile after prolonged unconventional policy. as feroli et. al. argue, investment managers may fear underperforming relative to others. this means they will hold a risky asset only if it promises a risk premium ( over safe assets ) that makes them confident they will not underperform holding it. a lower path of expected returns on the safe asset makes it easier for the risky asset to meet the required risk premium, and indeed draws more investment managers to buy it β the more credible the forward guidance on β low for long β, the more the risk taking. however, as investment managers crowd into the risky asset, the likelihood of possible fire sales increases if the interest rate environment turns. everyone may dump the | risky asset at that point in order to avoid being the last one holding it. ideally, market players would exit trades gradually, and asset prices would fall gently, as probabilities of the interest rate environment turning increase. but a rise in long rates may upset an incipient recovery. the central bank β s attempt, however, to hold long rates down till the last possible moment by reassuring markets that policy rate hikes are a long way away, is not without danger. if economic data turn up strongly, its reassurance may not carry credibility, and market players will exit trades en masse. leverage and investor crowding may therefore exacerbate the consequences of exit. the consequences of exit, however, are not just felt domestically, they could be experienced internationally. spillovers perhaps most vulnerable to the increased risk - taking in this integrated world are countries across the border. when monetary policy in large countries is extremely and unconventionally accommodative, capital flows into recipient countries tend to increase local leverage ; this is not just due to the direct effect of cross - border banking flows but also the indirect effect, as the appreciating exchange rate and rising asset prices, especially of real estate, make it seem that borrowers have more equity than they really have. exchange rate flexibility in recipient countries, in these circumstances, sometimes exacerbates booms rather than slowing inflows. recipient countries should adjust, of course, but credit and flows mask the magnitude and timing of needed adjustment. for instance, higher collections from property taxes on new bis central bankers β speeches houses and income taxes on a more prosperous financial sector may suggest a country β s fiscal house is in order, even while low risk premia on sovereign debt add to the sense of calm. at the same time, an appreciating nominal exchange rate may also keep down inflation. so when source countries move to exit unconventional policies, some recipient countries are leveraged, imbalanced, and vulnerable to capital outflows. recipient countries are not being irrational when they protest both the initiation of unconventional policy as well as an exit whose pace is driven solely by conditions in the source country. having become more vulnerable because of leverage and crowding, recipient countries may call for an exit whose pace and timing is responsive, at least in part, to conditions they face. the case for international monetary policy coordination hence, my call for more coordination in monetary policy. i do not mean that central bankers sit around | 1 |
from before to the crisis. many of the features currently being discussed are in fact explicitly embedded in the shariah requirements. the in - built check and balances in islamic banking avoids the excesses and over leveraging, a feature precipitating the current financial crisis. ensuring that the shariah requirements are embraced in its entirety is vital to ensuring the robustness and resilience of islamic finance. islamic finance must also draw upon the lessons derived from the current crises. it is vital that the regulatory regime based on the prudential standards issued by the islamic financial services board be implemented. this will further ensure the stability and soundness of the system. liquidity management in the islamic financial system and the institutional arrangements for resolution are among the other areas that need further development. of critical importance is for the board and management of islamic financial institutions to institute higher standard of leadership and a comprehensive governance culture and framework. mutual recognition in shariah and human capital challenges on this occasion, i would like to touch on two areas confronting islamic finance firstly on, the issue of mutual recognition in shariah and secondly the human capital development in the industry. malaysia takes cognisance of the diversity of shariah views within the region and among jurisdictions. although islam welcomes diversity of views, there is also a need to promote greater harmonisation among jurisdictions on the specific issues relating to islamic finance. such convergence is important for the long - term sustainability of the sector. malaysia has taken the initiative to organise regional shariah scholars dialogue in 2006 and 2008 as part of the efforts to foster greater engagement among the shariah scholars in the region. indonesia has been active in these dialogues. moving forward, the newly established international shariah research academy ( isra ) has been entrusted to intensify the regional shariah dialogues as well as to enhance further the international engagement among shariah scholars in our pursuit for shariah harmonisation. most encouraging is the greater appreciation and understanding that has been achieved in these deliberations of the shariah practices that are peculiar to the respective jurisdictions. the demand for skills in islamic finance throughout this region and other international financial centres has generated further growth in islamic finance. in this regard, malaysia has also embarked on several initiatives towards creating a supply of qualified human capital both in shariah and islamic finance. the international centre of education in islamic finance ( inceif ) is established to be a premier university in islamic finance, to | state bank of pakistan governor β s speech share purchase agreement with the consortium of chinese exchanges january 20th, 2017 bismillah hon β ble senator muhammad ishaq dar, finance minister of pakistan mr. zafar hijazi, chairman secp mr. munir kamal, chairman, pakistan stock exchange ambassador peoples republic of china distinguished guests, ladies and gentlemen, assalam - o - alaikum and good morning! i am very thankful to pakistan stock exchange to invite me today at this historic occasion in our economic history. can a single word be used to describe the prosperity of developed countries in the past few decades? if i were to answer this question, i would say collaboration. in this global world, it is not possible for economies to grow in isolation. hence, it should not come as a surprise to anyone that the most successful countries are the one that work in tandem with their neighbors and / or trading partners. pakistan and china are taking that exact path beyond which a great future awaits! before i move any forward, please allow me to take you to a short visit down the memory lane when pakistan economy was challenged with multiple headwinds. be it war on terror that led to lower than desired security situation in the country, energy shortfalls, insufficient foreign exchange reserves, or lack of foreign investment ; we have rebounded strongly than what was anticipated of us. with adequate economic policies and the assistance of international agencies, we have firmed up our feet on the ground. however, we did not stop there ; we continued with our efforts to take our economic growth and public well - being to a higher level. to achieve those goals, pakistan required the necessary impetus in the form of capital investment and opportunities. this is where the role of our closest friend and ally china has been instrumental! state bank of pakistan it is an applaudable step of a country like china to get integrated with the rest of the world. for this purpose, the country has rightly focused on the strategic location of pakistan. the investment of china in pakistan as just one route of its corridor has now begun a string of partnerships that would further strengthen the bond between the two countries. ladies and gentlemen, one of the outcomes of those efforts is the reason that we have gathered here. the signing ceremony of share purchase agreement by the consortium of chinese exchanges and local financial institutions is a surely a landmark event for the asian capital market. the investment of the consortium will not only enhance the credibility of pakistan stock | 0 |
first in asia and the third in the world in terms of regulatory environment for financial inclusion. and together, we are committed to continue to find better ways to grow microfinance. one such strategy is through mentoring of our microentrepreneurs under the cma program. the mentoring is aimed at improving their enterprises by providing support suited to their specific business needs. it covers, among others, helping products and services become more competitive in local and / or international markets ; providing guidance in identifying critical processes and areas for improvement ; offering technical advice on infusing innovation into enterprises ; and facilitating the development of business competencies. the end goal is for microenterprises to eventually transition into small and even medium enterprises. this mentoring program was piloted last year. this year we plan to fully refine the program based on lessons learned from the engagement of the university of the philippines institute for small - scale industries ( up issi ) which mentored 13 past cma winners for about 7 to 8 months. let me share some key lessons. bis central bankers β speeches one is the challenge of informality β this is where the informal status of microenterprises or their lack of legal personality to conduct business limits their capability to expand and market their products. another is the limited capacity of microenterprises when it comes to financial recording and documentation which makes them susceptible to poor accounting and planning. this affects their ability to make sound business decisions. at the bsp, we recognize that informality and lack of capacity remain major hurdles that impede the growth of microenterprises. as a response, the bsp has issued guidelines on sound credit risk management practices ( circular 855 ) that provide an empowering approach to support small businesses. for instance, microfinance loans and other credit accommodations not exceeding p3 million are exempted from the submission of financial documents such as income tax returns ( itrs ) and other supporting financial statements. similarly exempted are start - ups during the first three years of their operation or banking relationship. the objective here is encourage microenterprises to build banking relationships that will help them grow for the long term. broader government initiatives converge with this way of thinking. for instance, the go negosyo act and negosyo centers provide support for msmes such as facilitation of business registration and training in finance and marketing. negosyo centers can also link msmes to value chains that will enable them to access secured and sustainable markets to | keep them more viable. we also have the barangay micro business enterprises ( bmbes ) act that seeks to encourage the formation and growth of micro business enterprises by intergrating them with the mainstream economy through incentives, marketing assistance, as well as training programs in production and management. in addition, microfinance institutions ( mfis ) and other financial service providers support msmes through financial products and other services critical to the entry, survival, productivity, and growth of enterprises. i am happy to share that the issi diagnostics also highlighted positive findings. for instance, issi found that especially when faced with high market demand, microenterprises are resilient to operational issues β in filipino we describe them as β madiskarte β. this indicates that given appropriate training and mentoring as well as adequate funding support, our microentrepreneurs can favourably respond to business opportunities. in other words, ladies and gentlemen, we stand to gain more benefits by having an increasingly nurturing environment for microenterprises. given this, i am confident that the nomination process for cma that we are launching today will generate an even better harvest for this year. in this connection, we all look forward to meeting more successful and innovative microenterprises that have the capacity to grow as well as the readiness and the desire to contribute to making lives better not only for their families but also for their communities. indeed, we want msmes to develop to their full potential and to help drive economic growth that is broad - based and inclusive. mabuhay ang microentrepreneurs! mabuhay ang ating mahal na bansang pilipinas! mabuhay po tayong lahat! bis central bankers β speeches | 1 |
. let me conclude by mentioning how much we have achieved in europe over the last fifty years. the eu has reached a diversified but, broadly speaking, very ambitious level of integration : it is complex because the degree of integration is largely dependent on which areas are at stake, it is ambitious since, in some areas precisely, the system is completely integrated and relies on one single policy. the euro, in that regard, is both the symbol of our achievements and our best hope for the future of european integration. thank you. | monetary, financial, macroprudential, fiscal and structural policies? the latter will comprise five prominent decision - makers, moderated β or, should i say, stimulated β by a β pillar β of our series of symposiums : martin wolf, whom so many of us read regularly in the financial times. having briefly outlined the programme and mentioned the names of the chairs of each session, i will not list all the eminent speakers, discussants and panellists whom i wish nevertheless to thank most warmly in advance for their contributions. yet i would like to highlight their diversity in terms of background and experience. i would also like to share with you some thoughts on each session, which β far from pre - empting future discussions β aim to spur the debates with our audience. the first topic today concerns the challenges of conducting monetary policy with large public debts. numerous questions arise including fiscal dominance, the trade - off between debt sustainability and fiscal discipline, multiple equilibria and financial instability. first, i will comment briefly on how high public debt increases the risk of fiscal dominance on monetary policy. low interest rates may very well be justified by specific business cycle conditions or risks of undershooting the inflation target. they also facilitate the sustainability bis central bankers β speeches of higher public debts. hence the need to ascertain whether risks related to public debt sustainability considerations might in turn jeopardize price stability. another paramount risk of very low interest rates is to entertain the illusion that governments can continue to borrow rather than make difficult and yet necessary choices and indefinitely put off the implementation of structural reforms. such risks are very real in the euro area. very high public debts are also a factor of financial fragility. market participants therefore expect central banks to intervene on public debt markets to safeguard financial stability. indeed, in extreme circumstances a central bank should mitigate the effects of confidence shocks on sovereign yields by purchasing government bonds. such an action may be vindicated if there are risks to macroeconomic or financial stability or even if self - fulfilling runs on public debt may be a threat to market access, or lastly to avoid the deflationary consequences of a public debt event. however, one may be tempted to underestimate risks for inflation, especially since they only materialize with a lag, and such interventions could also increase moral hazard in terms of government incentives to keep their finances in order. these considerations explain why, when we set up the omt, we required central bank interventions to be | 0.5 |
central banking, and independence this is a challenging moment for central banking. opinion polls show that trust in government and public institutions is at historic lows. 2 in this environment, central banks cannot take our measure of independence for granted. for monetary policy, the case for central bank independence rests on the demonstrated benefits of insulating monetary policy decisions from shorter - term political considerations. but for a quarter century, inflation has been low and inflation expectations anchored. we must not forget the lessons of the past, when a lack of central bank independence led to episodes of runaway inflation and subsequent economic contractions. as for financial stability, the crisis and the severe recession that followed revealed serious flaws at many private and public institutions, including shortcomings in supervision and regulation. the crisis and its aftermath led central banks to take extraordinary actions, actions that challenged the ingenuity of experts in the field and were understandably difficult to explain and justify to a skeptical public. while these actions were authorized by law and on the whole necessary to avert the complete collapse for example, see pew research center ( 2017 ). - 3of the financial system β s ability to service households and businesses, they may have also contributed to the erosion of public trust. central banks are assigned narrow but important mandates. for monetary policy, the fed β s mandate is to keep inflation low and stable and to achieve maximum employment. for financial sector supervision and regulation, part of our mandate is to foster the safety and soundness of individual institutions. in addition, we have a responsibility, shared with other government agencies, to promote financial stability. i view this responsibility as being highly complementary to other aspects of our mission : financial stability promotes sustainable economic growth, and a stable, well - functioning financial system is an effective transmission channel for monetary policy. indeed, there can be no macroeconomic stability without financial stability. within our narrow mandates, to safeguard against political interference, central banks are afforded instrument independence - - that is, we are given considerable freedom to choose the means to achieve legislatively - assigned goals. while the focus is often on monetary policy independence, research suggests that a degree of independence in regulatory and financial stability matters improves the stability of the banking system and leads to better outcomes. 3 for this reason, governments in many countries, including the united states, have granted some institutional and budgetary independence to their financial regulators. technical implementation and oversight are two areas where instrument independence may be especially helpful. see hogue, labonte, and webel ( | things : that our main problems are structural ; that our chief task is to improve and boost productivity ; that we ought to seize the moment to reform our regulations and institutions ; and because whatever we do to improve productivity does not run counter to exiting the crisis but, quite on the contrary, may help us emerge more rapidly from it. to conclude, let me reiterate what i said earlier. if i β ve talked of only one area of structural reform, namely labour reform, it is because i think it is the most important one for relaunching corporate start - ups and reducing unemployment. but is it not the only area of reform, and nor are others less necessary. giving a greater degree of legal security to rental contracts, and liberalising the related terms, is absolutely necessary for reducing rental costs and for making a smoother real estate adjustment, without a collapse of the value of the wealth in which spaniards have their assets concentrated. re - launching privatisation, liberalisation and the boosting of competition in numerous sectors is vital because, by reducing unwarranted business margins, workers'real wages can be increased without harming competitiveness. and thus we could say for many more areas of reform. but we'd need many more speeches to talk about this. and fear not, i won't be making them today. thank you. | 0 |
any severe disruption in the monetary policy transmission mechanism and thus ensured that the policy easing could produce its intended effects. this example illustrates that, as i have argued before, once non - standard measures are appropriately implemented, they can be thought of as being independent from the process of interest rate setting. there is however a prerequisite for such independence : an appropriate operational framework involving the remuneration of banks β reserves. this feature ensures that banks can hold increasingly large amounts of liquidity without suffering an increasingly hefty opportunity cost. a full allotment procedure such as that applied by the ecb could thus completely offset the effects of the money market freeze. if reserves had not been remunerated, however, banks under financial distress would have had to go above the minimum reserves to build appropriate liquidity buffers with the ensuing increase in their opportunity cost. the ecb could have induced banks to satisfy their demand for liquidity only through a contemporaneous reduction of the opportunity cost of reserves, which is the policy interest rate. the separation principle would have been broken. 13 a similar application of the separation principle has been made with the more recent smp, which the ecb introduced in response to the repercussions of the euro area government debt crisis. under the smp the eurosystem buys securities in dysfunctional debt market segments in order to safeguard the transmission of monetary policy. this framework has enabled the ecb to quickly respond to the market tensions resurfacing over the summer of 2011. let me briefly recapitulate the most recent measures. on 10 august, the ecb has again provided liquidity at a maturity of six months. on 15 september, the ecb has announced three additional us dollar operations with a maturity of about three months, which cover the end of the year. importantly, the ecb has, in ecb ( 2010 ), annual report. for a formal discussion of these different dimensions of monetary policy, see curdia and woodford, β the central - bank balance sheet as an instrument of monetary policy β, mimeo, april 2010. bis central bankers β speeches response to disorderly conditions in euro area debt securities markets, resumed the active implementation of the smp on 8 august to buy debt securities, though only in the secondary government bond market. the smp aims to create a better functioning transmission mechanism of monetary policy to all parts of the monetary union and is in full compliance with the prohibition of monetary financing. the | vitor constancio : the establishment of the european systemic risk board β challenges and opportunities introductory remarks by mr vitor constancio, vice - president of the european central bank, at the eurofi financial forum plenary session 14 on β implementing the de larosiere agenda β, brussels, 29 september 2010. * * * the european systemic risk board ( esrb ) will be established in january 2011 as the body responsible for the macro - prudential oversight of the eu financial system. it is mandated to actively monitor the various sources of risk to financial stability in the eu β across member states and financial sectors β with due consideration of also global developments. it should identify the risks and assess how they could impact the financial system so as to prioritise them. in this context, systemic risk is defined in legislation on the esrb as β a risk of disruption in the financial system with the potential to have negative consequences for the internal market and the real economy. β the esrb should issue warnings on significant systemic risks and issue recommendations for policy action to address such risks. the creation of the esrb is a response to one of the key lessons of the financial crisis regarding the need for an enhanced macro - prudential oversight of the financial system as a new policy function. the value added of a macro - prudential function to safeguard financial stability is its focus on detecting, assessing and addressing vulnerabilities that arise from the interconnections between financial institutions and markets, as well as from macroeconomic and structural developments, including financial innovation. it will thus take a system - wide perspective, which will complement micro - prudential supervision, whose purpose is to assess the soundness of individual financial institutions. the design of a framework for the conduct of macro - prudential oversight as new policy function involves significant challenges, but also represents a unique opportunity for reinforcing the arrangements to safeguard financial stability. in particular, the following three main components should underpin a macro - prudential framework : first, the necessary conditions for an enhanced monitoring of the financial system as a whole, in order to identify potential threats to financial stability ; second, the instruments for translating financial stability assessments into concrete policy action aimed at enhancing the resilience of the financial system ; and third, appropriate governance structures, including mechanisms for ensuring an effective interplay between, and coordination of, macro and micro - prudential responsibilities. as regards the first, one of the basic prerequisite | 0.5 |
specific development that has been of serious concern to me as well as to international bankers watching our banking industry from overseas. financial institutions are subject to an obligation of secrecy. in a democratic society citizens are entitled to the protection of their privacy. the obligation to maintain banking secrecy applies to all those who are employed by banks as well as to the banksaβ¬β’ external auditors and board members. however, while the importance of public interest cannot be readily disregarded privacy of individuals cannot be taken that lightly. confidentiality of information and banking secrecy have been and remain an important pillar of banking business throughout the world. once the trust placed by individuals in banks is lost, it cannot but be a one - way ticket to irrecoverable damages to our financial system and to our economy as well. in the banking industry we are very much aware of the grave consequences of a loss of confidence in banks. all of us, particularly those of us having an elevated sense of responsibility should size up the gravity of the consequences for our economic and financial system, more so at a time when the present international environment is so inhospitable to the plight of small island economies like ours. having said that, i am pleased to learn that the mpcb is proposing to increase its capital from rs 280 million to rs 750 million by the end of next year. let me wish the chairman, members of the board of directors, the chief executive and staff of the mauritius post and co - operative bank ltd. the very best of success. | there is a huge theoretical literature on central banks β solvency. i read the conclusions as follows. nearly all analysts agree that a central bank cannot go technically bankrupt as it bis central bankers β speeches can issue as much currency and reserves as needed to face its payments and commitments. indeed, a few central banks with great reputation have operated in the past with negative net equity for long periods of time. most economists would point, however, that unlimited issuance of base money would certainly endanger price stability in ordinary circumstances. so, while the existence of a central bank cannot be put into danger by its technical insolvency, its ability to fulfill its mandate might certainly be compromised. and so would its independence as the central bank would depend on the government to rebuild its capital. it is very important to understand that the eurosystem is fully protected against such a contingency. it has been created with a solid capital base and has kept strengthening it through retained profits and occasional recapitalizations. the eurosytem is unique, in this regard, amongst advanced economies. both its independence and ability to fulfill its mandate are guaranteed even in very adverse economic circumstances. while it should not lead to complacency and negligence, the existence of such buffers should alleviate any concerns about the potential risks that the expansion of the balance sheet may entail. finally, huge central banks β balance sheets may be seen as influencing the allocation of resources, or effecting implicit fiscal transfers, an issue of special sensitivity inside the euro area. to discuss this question, it is useful to refer to the famous musgrave classification of public policies between three purposes : allocation, distribution and stabilization. there is no doubt that monetary policy is only and exclusively concerned with stabilization β and a very focused part of it : price stability. no monetary policy action should be taken for any other purpose. so to the extent that β unconventional β tools are implemented, there should be no ambiguity as to their close link with the central bank β s mandate of price stability. i believe that has been the case in all major countries and certainly so in the eurozone. 4. how to mitigate unintended consequences? the truth is, however, that the real world does not always fit perfectly with the beauty of musgrave β s classification. some public policies may aim at several objectives. others may inadvertently, have unintended side effects. all public policies with no exception, health, energy, infrastructures, unwillingly affect | 0 |
ed sibley : remarks β national supervisors forum agm remarks by mr ed sibley, deputy governor ( prudential regulation ) of the central bank of ireland, to the national supervisors forum agm, 7 november 2021. * * * good morning. i am delighted to have the opportunity to join the nsf agm today. 1 i would like to thank joe tobin, chairperson of the nsf and the members of nsf executive for the invitation to speak with you today at your annual conference, the theme of which is the fifth anti money laundering directive. over the last 20 years or so, the nsf has played an important role in supporting credit unions β supervisory and board oversight committees in supervising credit unions β governance affairs relating to policies and procedures, and relevant legislation and regulations. this support is arguably even more important today than when the nsf was formed in 2002, due to the pace of change and growing complexity in the financial services industry and the implications for the future of the credit union movement. in my remarks today, i will : outline how the central bank considers its role regarding credit unions within our overall mandate and the wider environmental context relevant to the credit union movement ; discuss the changing financial services system and the implications for credit unions ; in line with the theme of the conference, consider anti - money laundering and counter terrorism financing requirements ; reflect on developments in the credit union sector and the critical enablers needed for credit unions to address future challenges and to embrace the opportunities of change ; and briefly summarise the key themes of the central bank β s newly published strategy. through my remarks, i hope that you will appreciate how important we consider the continued success of the credit union movement, as a necessary component part of the wider financial services system serving the needs of the people of ireland and the wider irish economy. i will also emphasise the role of board oversight committees in ensuring that credit unions are able to meet the challenges ahead. i do want to start by recognising the efforts of credit union boards, management, staff and volunteers to continue to support your members through the pandemic. much of the central bank β s focus over the last 18 months has been on mitigating the effects of the pandemic on the financial sector β including a focus on operational and financial resilience for all sectors. credit unions have played their part and demonstrated resilience in practice. notably they have continued to provide service to members β in person, remotely and online as appropriate | all these aspects in the running of the central bank. we also see diversity and inclusion as vital to ensuring we have the right mix of people to deliver our complex and diverse mandate and that all our people have the chance to reach their potential. conclusions let me conclude. in these remarks, i have pointed out that the development of the european and irish financial system in the coming years turns critically on major policy decisions. for the eu27, the potential gains from the deepening of banking union, capital markets union and monetary union require policy makers to move forward in taking the steps required to facilitate further cross - border integration. at the same time, the extent and nature of international trade in financial services between the eu27 and uk financial systems ( and vis - a - vis other parts of the global financial system ) will depend on the outcome of the current negotiations. under all scenarios, the central bank of ireland stands ready to fulfill our mandate to safeguard stability and protect consumers. the consistent application of a core set of principles will guide our regulatory and supervisory work, such that firms know that we will maintain our focus on ensuring that regulated entities meet our expectations and are subject to robust supervisory engagement. finally, let me congratulate the organisers of the european financial forum on putting together an excellent programme : it will be a fascinating and stimulating day for all participants. acknowledgements : i thank eoin battigan, lorna bowles, sean fitzpatrick and siobhan kirrane for their assistance in preparing this speech. 4 / 4 bis central bankers'speeches | 0.5 |
m r pridiyathorn devakula : a brief comment on credit risk analysis opening address by mr m r pridiyathorn devakula, governor of the bank of thailand, at the apec financial regulators training initiative regional program - credit risk analysis, bangkok, 26 august 2002. * * * distinguished guests, ladies and gentlemen, it is a pleasure for me to be here at the opening of the asia - pacific economic cooperation ( apec ) financial regulators training initiative regional program on credit risk analysis. the bank of thailand is indeed privileged to have the opportunity to host this distinctive event initiated by apec. i also wish to personally extend a warm welcome to all the participants and to express our deepest appreciation to the distinguished speakers who have kindly agreed to come to share with us their knowledge and wisdom on various aspects of credit risk analysis. needless to say, amongst other risks, credit risk or the possibility that a borrower will default, represents a key risk in the banking business. the example of the thai financial system where roughly 400 billion baht of non - performing loans, commonly known as npls still remains since the 1997 financial crisis shows the painstaking effect of credit risks at the national level. global trends along with advance technology and financial innovations have further added complications to the matter by enabling financial institutions to change their activities and risk profiles at a speed and scale which could not be imagined a few years ago. these developments have spurred the necessity of our having to better understand and perform more analysis on banking risks. after all, banks do live and prosper by accepting risks, but these risks have to be managed with proper care. as we have all seen, well - managed banks have tended to stay resilient to the banking crisis and provided a backbone for restoration of financial stability. we must therefore, continuously adopt new techniques and technologies in risk analysis to ensure appropriate risk management of all financial institutions in the future. of course, prevention is always better than the cure. as financial regulators, one of our main tasks is to provide a prudential framework ensuring the overall improvement of risk management of financial institutions. in the case of thailand consolidated supervision as well as prompt corrective action will be introduced under the new financial institutions act. study is also on the way to prepare ourselves for the implementation of the bis new capital regime, and we look forward to their conclusion for an explicit framework that will complement our current practices where we ask the board to understand the nature of their organizationaβ¬β’ | mugur isarescu : integrated supervision opening speech by mr mugur isarescu, governor of the national bank of romania, at the seminar β integrated supervision β, jointly organised by the romanian financial supervisory authority and the national bank of romania, sinaia, 22 january 2014. * * * distinguished guests, ladies and gentlemen, it is a pleasure for me to warmly welcome you to this seminar on integrated supervision. the newly established romanian financial supervisory authority and the national bank of romania decided to jointly organize the conference on this challenging topic that has recently come into the spotlight. i particularly want to thank our guests from the national supervisory authorities of austria, the czech republic, germany, poland, united kingdom and ireland. i also welcome the experts from the world bank, the international monetary fund and the european commission who will generously impart their knowledge to all of us. i do wish all of you a pleasant stay here in sinaia. this three days long seminar is an excellent occasion to learn, to exchange views and to generate professional ties. allow me to say a few words about where you are. this is a premise of the national bank of romania β s training center, situated in cumpatu district, in this lovely resort, sinaia. the name sinaia is an eponym of mount sinai. by the end of the 17th century, a group of wallachian monks, led by mihail cantacuzino, a landlord of those times, went on a pilgrimage to palestine and the sinai peninsula. they were hosted at saint catherine monastery. once returned, they established a convent quite here, in the heavily forested area, at the bottom of the carpathians. the new monastery was called sinaia, in the memory of their journey to the sinai peninsula. a century later, the first king of romania, carol i fell in love with the place and built peles castle, his summer residence. following the establishment of the peles castle a railroad connecting the capital to the king β s new summer residence was built. little by little, sinaia became popular among the members of the high society : they started building summer residences as well as hotels, villas. you can visit the peles castle and the sinaia monastery on friday. and now about this seminar. the topic of this seminar is integrated supervision to ensure financial stability. it relies on several conceptual layers. first of all, to understand that the frontiers among financial activities have been blurred by financial innovation and the formation | 0 |
juyeol lee : opening address - 2018 bank of korea international conference speech by mr juyeol lee, governor of the bank of korea, at the 2018 bank of korea international conference, seoul, 4 june 2018. * * * ladies and gentlemen, it is a pleasure for me to bid a warm welcome to you all, to the 2018 bank of korea international conference. i would like to express my sincerest gratitude to professor robert hall, of stanford university, and masaaki shirakawa, former governor of the bank of japan, who will deliver keynote speeches this morning, and to all of our distinguished moderators, speakers and discussants. let me also say how deeply i appreciate the invaluable contributions of professor thomas sargent to this conference, all the way from the planning stage. this year marks a decade since the global financial crisis upon the failure of lehman brothers. the global economy suffered the worst crisis since the great depression of the 1930s, and was long unable to recover from the recession that followed. fortunately, the global economy is now reemerging from the aftermaths of the crisis : growth has gained momentum, and the markets have stabilized. this is a result of many countries β work in cooperation to make their financial systems more stable. it is also due to their unprecedentedly bold and active monetary policies to support the recovery. central banks are now working to normalize the post - crisis policies. the environment for monetary policy has also changed significantly from the one prior to the crisis. in this differing environment, therefore, we have inevitably come to a position to consider how to perform our existing roles, as well as whether there are any new roles demanded to us. let me start by talking about some of these changes in the monetary policy environment facing many central banks today, and about the policy concerns arising from them. first are the concerns about the changing slope of the phillips curve. prior to the crisis, a fall in unemployment during recovery tended to result in a rise in inflation : that is, the phillips curve used to slope downward in the short - run. however, we are now having doubts about this relationship, hence are facing difficulties in deciding the policy. secondly, there are concerns that the neutral rate of interest οΌ an important guiding measure for policy stance οΌ may have fallen significantly. a lower neutral interest rate means that we have smaller room for policy rate cuts in face of the economic downturn. it makes the interest rate more likely to reach its lower bound, making | seung park : economic situation and monetary policy in korea contribution by mr seung park, governor of the bank of korea, to the korea times, 24 september 2003. * 1. * * the korean economic situation and outlook from early this year, korea has been experiencing the most difficult economic situation since overcoming the 1997 currency crisis. last year β s strong gdp growth of 6. 3 percent was achieved against the backdrop of the depressed world economy. this year, though, korean gdp grew only 3. 7 percent in the first quarter compared to the same period of the previous year before sliding further to 1. 9 percent in the second quarter. although economic activity appears not to have worsened from its trough in the second quarter, no clearly marked recovery trend has yet become evident. this lackluster economic performance came primarily from unfavorable external factors. the recovery of major economies worldwide and most significantly that of the u. s. proved to be delayed. uncertainty also mounted in response to the war in iraq, the north korean nuclear issue and the widespread outbreak of sars within east and southeast asia. unsurprisingly, domestic demand contracted greatly, particularly in the form of consumption and facilities investment. lately, external conditions have been showing a gradual improvement. after the early end to the war in iraq, the economies of the u. s. and japan have shown clear signs of a recovery. euroland has not yet shaken off its recession, but there too indicators of consumer and business confidence are picking up. china is again seeing strong economic growth now that sars has been contained. all in all, the general outlook for the global economy is brightening. in addition, hopes are growing that the north korean nuclear issue can be peacefully resolved as, prompted by the holding of multilateral talks, all the countries involved have stepped up their efforts to bring this about. the effects of the various pump - priming measures taken by the bank of korea and the government are expected to become progressively more tangible. for its part, the bank of korea has lowered its policy rate twice this year. meanwhile, fiscal expenditure is being expanded by the drawing - up and approval of a 4. 5 trillion - won ( nearly 38 billion - u. s. dollar ) supplementary budget. measures to reduce the tax burden have also been taken including the lowering of the rate of special excise tax and the granting of increased tax credits for investment. given the upturn in global conditions and the emerging effects of the economic stimulation | 0.5 |
lie ahead. although there is still time to make them, delay will sharply increase the pain of adjustment. the time to act is now. in my view, the problem is not principally one of economics or fiscal policy ; it is one of governance. the real threat to the fiscal standing of the united states is that of inaction caused by a long period of political polarization and dysfunction. that would be a self - inflicted wound. and that is a problem that can β t be derived from the traditional fiscal metrics. we may have more room than other economies around the globe, but i do not intend to project any sense of complacency around this topic. the authors β basic message seems just right to me : we don β t know where the tipping point is ; wherever it is, we are clearly getting closer to it, and the costs of misestimating its location are enormous and one - sided. the benefits to long - term fiscal consolidation β conducted at the right pace, and without jeopardizing the near - term economic recovery β would be substantial. balance sheet losses and remittances the authors β work on federal reserve income and remittances to the treasury overlaps with a paper published last month by federal reserve board staff members seth carpenter, jane ihrig, beth klee, daniel quinn, and alexander boote. 9 both papers provide a basis for public discussion of these matters, which is a highly positive development. some of the assets this is the alternative baseline scenario presented in adler, akabas, and collins, β key takeaways, β in note 6. see seth b. carpenter, jane e. ihrig, elizabeth c. klee, daniel w. quinn, and alexander h. boote ( 2013 ), β the federal reserve β s balance sheet and earnings : a primer and projections, β finance and economics discussion series 2013 β 01 ( washington : board of governors of the federal reserve system, january ). bis central bankers β speeches acquired through the federal reserve β s large - scale asset purchases ( lsaps ) may be sold at a loss, and it is important to be transparent about this possibility. thus far, the federal reserve β s asset purchases have greatly increased our income and remittances to the treasury. indeed, remittances have run at an annual level of about $ 80 billion from 2010 to 2012. both papers show that remittances are likely to decline substantially | . haircutting the subordinated debt in slovenian banks attracted a lot of public attention and even anger in recent months in slovenia. why was it necessary to perform this haircut in slovenia, but not, for instance, in ireland or other countries? this is not specific to slovenia. europe has learned the lessons from the past crises and has adopted a principle of responsibility for investors in bank bonds. all investors who put their money in these bonds have to know that they will be part of the effort if anything bad bis central bankers β speeches happens because bonds are an investment, not a deposit. these are the bail - in rules that have been decided by the european authorities and are intended to protect taxpayers, who should not be responsible for the situation of banks. when saving a bank, taxpayers should come last, with shareholders coming first, followed by bond owners. this distribution of responsibilities is now clear. this is not a decision of the ecb, it is a decision of the european council and the commission, but one that we support. true, but the decision is very recent and people didn β t know before that something like that could happen at all. slovenia is not the first case. it has already happened in spain, for instance. but it β s a change in the regime, with the aim that taxpayers and depositors are better protected and are not liable for the errors committed by banks. the bank asset management company ( bamc ) was set up last year in slovenia and is now being criticised for not being transparent enough. what should be the first priorities and challenges for the bamc? the bamc had a good start. it has built up expertise and human capital, started operating and has already been receiving a first batch of bad loans. it now needs to continue its work and to receive the next instalment of bad assets, subject to the authorisation by the european commission. secondly, it needs to continue building up the institution itself so that it is credible and independent. it is not only about restructuring the banking sector but also about making the slovenian economy function better. bad loans are loans to the economy. for this reason, the bamc should take decisions that are in the interest of slovenian taxpayers and of the slovenian people. it should keep resisting vested interests. for this purpose it has to be independent and in this way it will best protect the interests of taxpayers and workers in slovenia. the good news is that moody β s has just increased the ratings of the recently recap | 0 |
mr hartmann reflects on recent developments in international payment systems speech delivered by mr wendelin hartmann, member of the directorate of the deutsche bundesbank and chairman of the committee on payment and settlement systems of the g10 central banks, at the conference of the belgian financial forum celebrating 25 years of the belgian automated clearing house - cec ( concluding session ), held at the national bank of belgium, brussels, on 23 november 1999. * * * ladies and gentlemen, the belgium clearing house cec ( centre for exchange and clearing ) is celebrating its 25th anniversary this year, and today β s speeches have shown that it can justifiably be called a success story. the early standardisation and centralisation of retail payments in belgium offers many advantages from the point of view of cost and efficiency and might well act as a model for solving the many different problems in cross - border payments in europe. as the representative of a central bank of a country with a much less centralised payment settlement, albeit with a high degree of standardisation, i am, of course, able to envisage other solutions as well. it is probably no exaggeration to say that today β s conference has fully met its objective. it has given all those involved in european retail payments - the financial industry as the service provider as well as the users and regulators - the opportunity of presenting their different standpoints, thus offering a platform for a very interesting and constructive exchange of views. considering the current developments in international payments highlighted by preceding speakers i would like to conclude that cross - border retail payments - including those in the euro area, in particular - are still in need of considerable improvement in terms of quality, efficiency and prices. the aim must be a dramatic reduction of the existing marked differences between domestic and cross - border payment services and their complete elimination in the longer term, so that the motto of this conference, β one eurozone for retail payments β, can become a reality. eu directive on cross - border payments the fact that the european parliament and council directive on cross - border payments has now been implemented in almost all the eu member states means that a major step towards greater transparency and a better service level has already been taken. however, this measure alone will not be sufficient to meet the requirements of an efficient single market and the expectations of european consumers. given a single currency and the use of electronic transmission media, the general public naturally does not understand why a credit transfer from brussels to frankfurt should be several times | functioning financial system and the gradual improvements in financial conditions in canada next year ; β’ the past depreciation of the canadian dollar ; β’ stimulative fiscal policy measures ; β’ the rebound in external demand in 2010, particularly in emerging markets, and the associated firming of commodity prices ; β’ the strengths of canadian household, business, and bank balance sheets ; and β’ the end of the stock adjustments in canadian and u. s. residential housing. a wider output gap and modest decreases in housing prices should cause core cpi inflation to ease through 2009, bottoming out at 1. 1 per cent in the fourth quarter. total cpi inflation is expected to dip below zero for two quarters in 2009, reflecting year - on - year drops in energy prices. the bank views the possibility of deflation in canada as remote. indeed, with inflation expectations well anchored, total and core inflation should return to the 2 per cent target in the first half of 2011 as the economy moves back to its production potential. of course, global developments pose significant upside and downside risks to the inflation projection. the bank judges that these risks are roughly balanced. uncertainty and the need for policy action as i noted at the outset, in the current environment the bank's projections β and those of all forecasters β are subject to an unusually high degree of uncertainty. as we have consistently emphasized, stabilization of the global financial system is a precondition for economic recovery globally and in canada. to that end, throughout the world, policy - makers have acted aggressively and creatively. central banks have provided unprecedented liquidity to keep the financial system functioning. last october, extraordinary steps were taken by all g - 7 countries to prevent systemic collapse and to promote the effective functioning of money and credit markets. the task is far from complete. decisions taken in the coming weeks in the united states and in other major economies to isolate toxic assets in order to create a core of " good " banks will be critical. in addition, g - 20 countries need to act in concert to improve domestic and international regulatory frameworks. in this regard, measures to improve transparency and integrity, to implement a macro - prudential approach to regulation, and to adequately resource the imf are vital. if these national and multilateral measures are not timely, bold, and well - executed, canada's economic recovery will be both attenuated and delayed. the reality is that the financial crisis and subsequent recession originated beyond our borders and the necessary triggers for a | 0 |
muhammad bin ibrahim : outstanding contributions to the development of islamic finance in malaysia welcoming remarks by mr muhammad bin ibrahim, governor of the central bank of malaysia ( bank negara malaysia ), at the royal award for islamic finance gala dinner and award presentation, kuala lumpur, 14 november 2016. * * * bismillahhirahmanirrahim. mengadap seri paduka baginda yang di - pertuan agong almu β tasimu billahi muhibbuddin tuanku alhaj abdul halim mu β adzam shah ibni almarhum sultan badlishah, seri paduka baginda raja permaisuri agong tuanku hajah haminah. ampun tuanku beribu - ribu ampun, sembah patik mohon diampun. patik serta seluruh dif - dif jemputan pada malam ini dengan penuh hormat dan takzimnya merafak sembah menjunjung kasih atas limpah perkenan seri paduka baginda tuanku berdua berangkat bercemar duli ke majlis makan malam anugerah diraja kewangan islam tahun 2016. ampun tuanku. seterusnya patik ingin memohon perkenan seri paduka baginda tuanku untuk menyampaikan ucapan kepada para hadirin dalam bahasa inggeris. kebawah duli yang maha mulia paduka seri sultan nazrin muizzuddin shah ibni almarhum sultan azlan muhibbuddin shah al - maghfur - lah, sultan of perak darul ridzuan, and duli yang maha mulia raja permaisuri perak tuanku zara salim. your royal highnesses, your excellencies, distinguished guests, ladies & gentlemen. it is my pleasure to welcome the distinguished audience to the gala dinner for the royal award for islamic finance ( raif ) tonight, which is held to honor an individual for outstanding contributions to the growth and development of islamic finance. allow me to express our utmost gratitude to his majesty seri paduka baginda yang di - pertuan agong and her majesty, and his royal highness sultan of perak darul ridzuan, the royal patron of | ##rs has also changed. statutory boards used to dominate, but now form only 3 % of total issuance. instead, the debt market has a stable base of large corporates and financial institutions issuing bonds well over s $ 1 billion in issue size. this has increased liquidity in the secondary market. large international issuers such as ifc, freddie mac, fannie mae and adb, which can tap any market in the world, have chosen to raise funds in singapore. treasury markets have also stayed buoyant, as singapore remains one of the established leading global fx trading centres. the creation and hedging of structured products have boosted turnover in derivative markets. singapore now ranks 6th globally, in otc fx and interest rate derivatives. reforms were also introduced to deregulate the stockbroking industry. the industry has consolidated, operating more leanly on much lower commissions. the bigger local players have expanded their product range and also expanded overseas. more foreign players have entered the market. overall, investors have benefited from lower trading costs. sgx became the first demutualised, integrated stock and derivatives exchange in the asia - pacific in december 1999. it is now well placed to grow its business, and respond to developments in regional capital markets. more foreign companies are choosing to list in singapore. to date, there have been 47 listings by chinese companies, and a few indian listings are in the pipeline. sgx has also actively pursued alliances with other exchanges. its first securities co - trading linkage with the australia stock exchange allowed investors in the two countries to trade in each other β s market directly. sgx is also exploring linkages with asean securities markets. if this succeeds it will benefit the region as a whole. we have also grown as a processing centre. large financial institutions have centralised their regional and global processing operations in singapore. these house high value - added, mission - critical systems as well as back - office processing activities. in brief, our financial sector has become more dynamic and vibrant. many persons and institutions have participated in this process. their support, hard work and spirit of enterprise made this possible. i thank them all. developments in the banking sector let me now focus on the banking sector. the asian financial crisis underscored the importance of sound, resilient financial systems underpinned by strong domestic banks. the lessons of the crisis played a major part in re - shaping the banking industry. meanwhile, global trends such as consolidation among the major international | 0 |
leverage ratio that is now being implemented globally as a backstop to the risk measure as part of the overall basel iii package, is more or less a given for the indian banks. we have also been calibrating risk weights on sensitive sector exposures like commercial real estate as a macro prudential tool to help arrest building of asset price bubbles, much ahead of the prescriptions on countercyclical and capital conservation buffers which have since appeared as part of the basel iii reform pack. 7. in regulation - making we have followed a gradualist approach and have generally been wary of complex and opaque instruments / products. for the same reason, we insisted on the lenders having a β skin in the game β in securitisation transactions, which curtailed reckless origination of loans without proper appraisal with the sole purpose of distributing the same to investors at a later date. we all know now that inadequacy of the market infrastructure to deal with the opacity and complexity of derivative products was the single - most important reason for the financial crisis. we, in india, have exercised extreme caution on the financial derivatives, baulked at opaque structures with complex pay - offs and have insisted on banks β ascertaining the suitability and appropriateness of the customers before selling any complex derivative instruments. rbi β s approach to development of the forex and interest rate derivative market has been one of cautious gradualism. regulators have also been conscious about the risks emanating from the activities of asset managers, something which is viewed as a significant vulnerability in the global context today. in this regard, there are restrictions around extent of lending and leverage the asset managers in india can undertake and also limits on their use of derivative products. 8. while we have been cautious on introduction of complex products / instruments, we have not been found wanting on efforts towards deepening and widening of financial markets. india is amongst the first few countries in the world to have a screen based electronic anonymous order matching system for secondary market trading in government securities. similarly, indian equity markets are amongst the best in the world in terms of use of technology, institutional mechanism, and products. in order to promote transparency, price discovery, cost effectiveness, better risk management and a market for hedging of risks, exchange traded currency futures and interest rate futures have been allowed to trade in india. few other developmental measures initiated by rbi are : β’ permitting banks to provide partial credit enhancements to bonds issued by | ##r and banks would need to leverage it to their advantage. the impact of disruptive technology is already evident in the form of competition from non - banks such as e - commerce companies, p2p lenders, crowd funding, which is likely to only intensify going forward. 15. let me conclude by saying that the indian banking system would continue to remain the prime mover for the indian economy in the foreseeable future. it is, therefore, important for us to ensure that the system remains healthy and vibrant. as regulators and supervisors, we would also need to be vigilant about the emerging risks that the banks could face and proactively suggest measures to enable banks to mitigate them. on the institutional side, enactment of a bankruptcy code to deal with firms in distress and setting up of a resolution authority for liquidation of failed financial institutions would be key enablers. similarly, capacity building would be important for both the banks as well as the regulators. hence, the banks would do well to : ( i ) deal with, rather than postponing the asset quality challenges, so as not to miss on the emerging opportunities. ( ii ) be opportunistic in raising capital ( iii ) be prepared to live with a more intrusive and globalized regulatory framework i conclude by once again thanking the mint team for inviting me to this conference and i look forward to an interesting panel discussion. thank you! bis central bankers β speeches | 1 |
benoit cΕure : sme financing β a euro area perspective speech by mr benoit cΕure, member of the executive board of the european central bank, at the conference on small business financing, jointly organised by the european central bank, kelley school of business at indiana university, centre for economic policy research and review of finance, frankfurt am main, 13 december 2012. * * * ladies and gentlemen, 1 it is a pleasure to welcome you to the conference on β small business financing β organised jointly by the european central bank, the kelley school of business at indiana university, the centre for economic policy research and the review of finance. at the ecb, we regard small and medium - sized enterprises ( smes ) as a crucial component of the euro area economy. indeed, our deliberations on monetary policy systematically take into account the financial health of, and the growth prospects for, euro area smes. in particular, the financing environment and access to finance for euro area corporates are important elements in our policy - making process, both for standard and non - standard monetary policy decisions. to illustrate the importance of small businesses in the euro area, consider the following facts : smes constitute about 99 % of all euro area firms, they employ around three - quarters of euro area β s employees, and they generate around 60 % of value added. at the same time, unlike large firms which are generally more profitable and have access to alternative sources of finance, such as bond or equity finance, smes are highly dependent on bank loans and credit lines. due to asymmetric information and a higher risk of failure2, smes tend to face higher costs for bank finance and higher rejection rates than larger firms. while finding customers β potentially due to weak aggregate demand β is usually cited as a bigger problem for smes than access to finance, it is still the case that they are particularly vulnerable to adverse real - financial feedback loops or supply disruption in the provision of bank credit. nevertheless, the years prior to the financial crisis were a period of smooth transmission of monetary policy, and there was little evidence that euro area smes were constrained over and above levels expected in the context of a sound financial system. after mid - 2007, however, the costs of finance started to rise and access to finance started to deteriorate relative to the pre - crisis period. in some euro area jurisdictions, the financial crisis first and the sovereign debt crisis later led to a reduction of the supply of credit to both | mostly a domestic phenomenon. now the global transmission effects through international active banks and global investors cannot be ignored. this in turn will likely have an effect on the policy decisions of central banks around the globe. this is probably another area where further study and discussions are warranted within the central banking community. see also shirakawa ( 2010c ). references rajan, raghuram g., fault lines, princeton university press, 2010. shirakawa, masaaki, β revisiting the philosophy behind central bank policy, β speech at the economic club of new york, april 22, 2010a ( available at http : / / www. boj. or. jp / en / type / press / koen07 / ko1004e. htm ). _ _ _ _ _ _ _ _, β future of central banks and central banking, β opening speech at 2010 international conference hosted by the institute for monetary and economic studies, bank of japan, may 26, 2010b ( available at http : / / www. boj. or. jp / en / type / press / koen07 / ko1005a. htm ). _ _ _ _ _ _ _ _, β roles for a central bank β based on japan β s experience of the bubble, the financial crisis, and deflation β, β speech at the 2010 fall meeting of the japan society of monetary economics, september 26, 2010c ( available at http : / / www. boj. or. jp / en / type / press / koen07 / ko1009f. htm ). white, william r., β should monetary policy β lean or clean β?, β globalization and monetary policy institute working papers no. 34, federal reserve bank of dallas, 2009. | 0 |
kiyohiko g nishimura : toward overcoming deflationary pressures in japan speech by mr kiyohiko g nishimura, deputy governor of the bank of japan, at a meeting with business leaders, okayama, 18 april 2012. * * * introduction i am privileged and honored to be here today to exchange views with administrative and business leaders in okayama prefecture. i deeply appreciate your continuing support and cooperation in taking part in interviews and surveys conducted by our okayama branch. the quantitative and qualitative information from these interviews and surveys is invaluable to making timely assessments of economic conditions, and thus appropriate policy decisions. this can be especially true in the case of great uncertainty that follows events that profoundly alter economic and financial conditions, such as the lehman shock and the great east japan earthquake. although those events effectively render past statistical data uninformative or even utterly useless, the bank cannot delay its policy responses just for the sake of waiting for new data to be released. even in situations such as these, our regular contact with you provides us with valuable information about what is really happening in the real world in various respects. in fact, our colleagues at foreign central banks consider the bank of japan as fortunate and privileged in this regard. i would like to express my sincere gratitude and also ask for your continued cooperation. let me start today by discussing the economic outlook at present and its risk factors. after that, i would like to share the bank β s basic thinking on the necessary measures to overcome deflationary pressures. furthermore, i will explain the bank β s policy responses geared toward this aim β as put forth during the february and march monetary policy meetings β by answering frequently asked questions. in closing, i would like to touch upon some relevant issues for the economy in okayama prefecture. i. economic outlook at present and its risk factors a. economic outlook at present let me first describe the current domestic and overseas economic conditions and the outlook at present. first, i will start with developments overseas. despite the recent nervousness seen in the foreign exchange and stock markets, the funding environment for financial institutions in global financial markets has been calm and stable against the background of ample liquidity provision by the european central bank and certain progress in efforts to support greece. however, overseas economies as a whole have yet to emerge from a deceleration phase. in the united states, although some improvements have been observed in consumption and employment, such positive movements have not yet gained momentum, as evidenced | toshihiko fukui : bank of japan β s view on developments in economic activity and its conduct of monetary policy summary of a speech by mr toshihiko fukui, governor of the bank of japan, at a meeting with business leaders, osaka, 5 november 2007. * * * introduction in the year since i last spoke to you here, japan β s economy has continued to expand moderately, with a virtuous circle of growth in production, income, and spending in place. although there are uncertainties regarding overseas economies and global financial markets, the economy is likely to continue its moderate but sustained expansion. in the outlook for economic activity and prices ( hereafter the outlook report ), released at the end of last month, we have provided an outlook that, toward fiscal 2008, our economy will grow, under stable prices, at an average pace of around 2 percent, which is somewhat above its potential growth rate. today, i would like to explain the bank of japan β s view regarding developments in economic activity and prices and the basic thinking behind its conduct of monetary policy. i. the current situation and the outlook for japan β s economy i would first like to touch upon the current situation of japan β s economy. japan β s economy as a whole has continued to expand moderately, although the pace of improvement in the household sector has been somewhat slow relative to the strength in the corporate sector. exports to the united states have been somewhat weak, but the overall exports have continued to increase steadily as overseas economies taken as a whole have kept growing. in this situation, firms have continued to reinforce their capacity to supply products by increasing fixed capital with a view to capturing profit opportunities in overseas markets. the increase in corporate activity driven by strong exports, coupled with the extremely accommodative financial conditions, has led to growth in business fixed investment among a wider range of industries, including domestic demand - oriented industries. however, since business fixed investment has continued to increase at a rapid pace for the last several years and the level of capital investment is already high, the pace of growth is likely to decelerate gradually. the september tankan ( short - term economic survey of enterprises in japan ) indicated that steady growth in business fixed investment would continue, and the pace of increase would slow gradually. it also indicated that corporate profits have been high, and business sentiment has remained generally favorable although some cautiousness was reported in certain sectors. the positive influence of the strength in the corporate sector | 0 |
use cases to address existing pain points, and we are happy to provide policy support. in addition, hong kong's offshore market is the best place to serve the development of the greater bay area ( gba ). enterprises in the gba are able to handle their crossborder settlement, investment, financing and asset management in hong kong for their overseas business expansion. we believe all these initiatives and developments will reinforce hong kong's role as an international financial centre and offshore rmb business hub, and equip ourselves with more experience and capabilities to facilitate further rmb internationalisation and china's economic development as well. digitalisation and innovation i've just explained how the hkma will be focusing on market connectivity and rmb internationalisation going forward. let me now move on to the third and final focus area - digitalisation and innovation. in fact, digitalisation and innovation is at the same time an underlying enabler that makes the previously - mentioned exciting developments possible. for example, if not for digitalisation and the relevant tools, the hkma would be hard - pressed to imagine, let alone begin, the multi - year journey of overhauling the cmu. although digitalisation is so critical to the future of an organisation, regrettably some entities, public or private, are still hesitant to digitalise their processes - possibly because not everyone is fully convinced that the long - term benefits could outweigh the short - term costs of investment and efforts. more often than not, the benefits of digitalisation in terms of the efficiency gained and cost saved are not that easy to measure at the early stages of a digitalisation project. though success may take time to materialise, the hkma has continued to stay very open - minded and push ahead with digitalisation and innovation on many fronts. for instance, we published our new fintech promotion roadmap two weeks ago to further accelerate fintech adoption in the financial services industry. in addition, we have continued our work on a proposed regulatory regime for stablecoins, with the aim of fostering responsible and sustainable development of this nascent development. the hkma continues to invest in digitalisation and innovation because we believe that they can open up new opportunities. let me elaborate a bit here. first is the opportunity to test a concept and validate efficiency gains in a controlled scale. technology enables us to think big to address pain points in a way previously not 4 / 6 bis - central bankers'speeches possible. take our | efforts do not stop here. just to share a few examples of our discussion with mainland regulators on further enhancements. for wealth management connect, we are exploring ways to widen the product scope, enhance sales and promotion arrangements, and allow more financial institutions to participate. we are making progress and i look forward to sharing more with you in the very near term. for bond connect, we are looking to provide more interest rate risk management and liquidity management tools to global investors while expanding the list of southbound market makers. to further develop the recently launched rmb counter in the stock market, we are exploring the inclusion of the rmb counters in southbound stock connect. all of the above will deepen the two - way opening - up of mainland financial markets while further consolidate hong kong's role as an international financial centre. rmb internationalisation but hong kong's edge as the leading offshore rmb business hub is not just a matter of our mutual market access with the mainland. in fact, hong kong has the largest offshore rmb liquidity pool, occupies the top position for global rmb payments, and has a mature rmb business ecosystem which has been enhanced over the years. looking ahead, the long - term economic growth and capital account opening process of china would continue to provide impetus to further advancements of offshore rmb business. market participants would find rmb useful for their crossborder trade settlement as well as investment diversification amid the challenging global macroeconomic conditions. to meet growing rmb business demand, we will continue our efforts in enhancing rmb liquidity, product and infrastructure in our offshore rmb market. meanwhile, the tma has recently formed a working group of experienced rmb 3 / 6 bis - central bankers'speeches specialists from banks in hong kong to gather views on offshore rmb market development. i look forward to the working group's proposals on opportunities and concrete steps in taking things forward. enhancement of our offshore rmb business platform allows us to strengthen our intermediary role which connects china and the rest of the world, and in turn promote wider use of rmb in the international markets. an increasing number of economies, including those in the middle east and the asean, want to use the rmb to settle their trade with china. so we are working with banks to promote more participation in our offshore rmb market from asean and the middle east. we think the industry can really play a big role in overseas promotion events. we also welcome the industry to build | 1 |
been evident in the economy. being a very open economy has meant that ireland is very much affected by international competitive forces. the eu internal market and the wide range of measures taken to implement it are a strong influence. at home, the powers of the competition authority have been strengthened and it has been quite active and effective in pursuing its agenda. nonetheless, there is scope for considerable progress. there are a number of areas, common to ireland and a large number of other european countries, where such progress could be made. the national competitiveness council has drawn attention to our very high utilities β prices in its reports. because of their structure and characteristics, utilities sectors are highly concentrated, and their operations must be subject to special competition and regulatory arrangements. we also have a long way to go in introducing more competition to the services area generally. in its assessment of ireland β s progress with the eu β s broad economic policy guidelines, the eu commission has drawn attention to the need to foster competition in professional services, retail distribution and insurance. there still are significant barriers to entry in many professional services in particular, and, as a consequence, prices here are very high by international standards. fostering entrepreneurship a dynamic economy requires an environment that is supportive of entrepreneurship. there are a number of aspects to this. at one level, the administrative burden of establishing and running a business should be kept to a minimum ; β red tape β should be eliminated where possible. where necessary, public sector efficiency should be improved. educational policies should be supportive of entrepreneurship, and there may be a need to improve access to finance. ireland would seem to score well in this area. although there is, no doubt, always room for improvement, the oecd has confirmed that the regulatory burden on business in ireland is low. there is also the fact that our business taxes are low by international standards. the expansion of the economy, new business start - ups and employment growth are indicative of our positive performance in this area. promoting employment and greater social cohesion the eu ecofin council last year emphasised the importance of a number of labour market reforms. these highlighted the need for greater flexibility of labour markets, to adapt employment protection where necessary to improve employability, and to adapt tax and benefit systems to improve work incentives. it was recognised that employment was the best way to ensure social inclusion. wage flexibility and adequate infrastructure were seen as desirable for coping with regional differences, and the social partners were urged to balance the interests of both insiders - | are segmented, requiring different and more specialized actors in some segments. dtms can be community based or nationwide with different core capital requirements of ksh. 30 million and ksh. 60 million, respectively. ii. agency banking effective 2nd january 2012, dtms were allowed to appoint third parties ( agents ) to offer specified dtm services on their behalf. this followed the successful rollout of agent banking by banks effective may 2010. so far eleven ( 11 ) banks have been granted approval to roll out their agency networks. eight ( 8 ) of these banks have appointed 11, 176 agents, which bis central bankers β speeches had executed over 18. 6 million transactions valued at over ksh. 93. 1 billion over the two year period to may 2012. iii. mobile phone financial services there has been tremendous growth in mobile phone financial services in the country. consequently, a number of institutions have initiated various innovations and new products to conveniently serve their customers and reduce the long queues that were previously experienced in banking halls. mobile phone money transfer services have been a phenomenal success and have put the country at the global centre stage of financial inclusion and innovation. in a country like ours with remote corners not served by financial institutions, mobile financial services has provided the answer. more importantly, our banks have easily integrated into their financial services with these technological platforms. the up - scaled level is now to use mobile phones to send money to savings accounts and credit provision through the same channels. this is already taking place with m - kesho type of products in the market. iv. credit information sharing the credit information sharing ( cis ) mechanism for banking institutions has successfully taken root with mandatory sharing of negative information on a monthly basis. all the 43 licensed commercial banks in kenya and institutions under the deposit protection fund board have been submitting negative credit information to the licensed credit reference bureaus ( crbs ) within the required timeframes. the banking act and the central bank of kenya act have now been amended to allow institutions licensed under both the banking act and the microfinance act to share both positive and negative credit information of their customers. this will go a long way in enriching the crbs database for the benefit of the entire banking sector and create objectivity in reporting. credit information sharing allows the market to build information capital for the financial sector in kenya. this will help build credit histories of borrowers and support a change of collateral technology in use currently. development of information capital will remove information as | 0 |
ben s bernanke : financial education and the national jump $ tart coalition survey remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the jump $ tart coalition for personal financial literacy and federal reserve board joint news conference, washington, dc, 5 april 2006. * * * good morning. we are here today to learn about a report on a topic of vital importance to our economic future : the financial literacy of america β s young people. increasingly, personal financial security requires the ability to understand and navigate the financial marketplace. for example, buying a home, saving for retirement or for children β s education, or even effectively managing the family budget now requires more financial sophistication than ever before. financially literate consumers make the financial marketplace work better, and they are better - informed citizens as well. as a former educator and school board member, and as the parent of two young adults, i am personally convinced that improving education is vital to the future of our economy and that promoting financial literacy in particular must be a high priority. i know that those of you here today join me in this conviction. the jump $ tart coalition is a leader among organizations seeking to improve the personal financial literacy of students from kindergarten to the university level. in particular, through its biennial survey of high school seniors - - the results of which you will hear about in a few minutes - - jump $ tart has brought increased attention to the issue of financial literacy among youth in the united states. over the tenyear history of this survey, the data gathered have become some of the most useful measures of what young adults understand about finances. the federal reserve is strongly committed to jump $ tart β s mission to better educate america β s youth about personal finance. on the regional level, many federal reserve bank staff members work closely with the state coalitions to help achieve this mission. in fact, there is at least one specialist in economic education at each of the reserve banks and at most of the branches. many of these specialists offer training seminars to help educators teach economics and personal finance in their classrooms. the federal reserve also supports a variety of programs and initiatives to increase financial literacy. i want to take a moment to describe just two of these initiatives. the first is a student competition called the fed challenge, a program designed to teach students about monetary policy and the national economy. among other activities, students in this competition take the roles of federal reserve | governors and regional reserve bank presidents in a mock meeting of the federal open market committee. participating reserve banks work in partnership with the board to bring the winning teams to washington, where the final rounds of competition will be held here in the board room. i have had the opportunity on several occasions to serve as a judge in the national finals of the fed challenge, and i can attest that the economic knowledge displayed by the students in that competition is remarkable indeed. the board also recently collaborated with many of the reserve banks on a redesigned federal reserve financial education web portal that brings many of the system β s resources for financial education together in one location. the site, federalreserveeducation. org, offers easy access to educational resources designed to benefit not only students, but also parents and teachers. we will continue to work to expand the resources and programs devoted to this important public purpose. i want to take this opportunity to thank the jump $ tart coalition and their partners for their continued support and commitment to furthering the financial education of our youth. now, it is with great pleasure that i introduce to you laura levine, executive director of the coalition, who will give a report on the status of financial education of youth in this country. | 1 |
fine tuning the regulatory framework and supervisory rigour as risks evolve and new challenges emerge, the reserve bank as a regulator and supervisor constantly focuses on being vigilant, adaptive and proactive with regard to the regulatory frameworks and supervisory systems to safeguard the stability of the financial system. over the past few years, the reserve bank has undertaken a comprehensive review of regulations under the aegis of the regulations review authority ( rra ) 2. 0 constituted by it. apart from withdrawal of many redundant instructions, the rra has also made valuable recommendations to ease compliance and reduce the regulatory burden ; streamline the reporting mechanism ; and bring in more clarity in regulatory instructions. 3 / 6 bis - central bankers'speeches in recent years, the reserve bank has also comprehensively restructured the regulatory architecture for banks ( both commercial and urban co - operative banks ), nbfcs, housing finance companies ( hfcs ), asset reconstruction companies ( arcs ), digital lenders, micro - finance lenders and core - investment companies. thus, the financial sector regulations are now not only in sync with the changing times but also forward looking with the required readiness to take further proactive measures as may be necessary. steps have also been taken to set up self - regulatory organisations ( sros ) for nbfcs and fintech companies. this is a completely new approach to facilitate greater consultation and close interface with the stakeholders in the system. it will make regulations even more dynamic and proactive. in the same breath, i would like to emphatically state that there is no intention to make frequent regulatory changes, but only to ensure that there is greater regulatory clarity and responsiveness to changing circumstances. the reserve bank has also significantly strengthened its supervisory systems, transitioning beyond an entity - focused approach to a more thematic and activity - based approach. we now look at sustainability of business models of banks and nbfcs. root cause analysis of problems and vulnerabilities are undertaken. advance action is initiated wherever we notice or smell a crisis. structural changes have been implemented within the reserve bank by creating a unified department of supervision5 to ensure holistic assessment of the financial sector as well as to analyse the health of multiple entities within a group. the idea is to enhance agility and comprehensiveness of supervision. unconventional methods are also being adopted now. onsite supervision of credit information companies has been made annual and intense. when problems appear too serious in a financial entity, a senior officer of the reserve bank | not be actively offered to customers. hence, understanding their customers and understanding their own product offerings needs to be the starting point of any customer service framework. 7. i have been informed that a recent bcsbi study on the practices followed by banks in respect of charges levied on deposit accounts has brought out several anomalies viz. fixing of charges based on competition instead of on cost plus basis, levying charges without providing any service such as for non - maintenance of minimum balance, levy of intersol charges, etc. visits by bcsbi representatives to bank branches also reveal several deficiencies in implementation of the codes. 8. clearly, more efforts are needed by pccos and banks to ensure that the codes are implemented and in turn, customer expectations are effectively met. i am told that the bcsbi is considering introducing a rating scheme for the banks based on their performance on code implementation and customer service parameters. such an exercise should cajole banks for creating an effective internal framework for ensuring that the principle of β treating customers fairly β gets ingrained into the organizational ethos. treating customers fairly 9. what do we mean by treating the customers fairly? can we define the principles of fair treatment and can we measure and compare quality of customer service within the banking industry? measuring quality of banking services is more difficult than measuring the quality of manufactured goods as services are intangible in nature and there is no β real β product that the customer takes home. even within banking, there are a variety of dissimilar services like retail banking, commercial banking, investment banking, etc. and, hence, standardized quality measurement becomes difficult. it can only be accomplished by focussing on the outcomes of customer experience. do we have the systems in place to seek feedback on what the customers feel about the services and quality of customer care? in the absence of an effective feedback mechanism, can we say that banks ensure fair treatment of their customers? fair treatment of customers is an ideal which we should all strive to achieve. the tcf ( β treating customers fairly β ) principles define standards which the institutions must aspire to meet so that the consumers are benefited and have increased confidence in the financial services industry. specifically, tcf is aimed at : β’ helping customers fully understand the features, benefits, risks and costs of the financial products they buy β’ minimising the sale of unsuitable products by encouraging best practices before, during and after a sale bis central bankers β speeches β’ transparent and non - discrim | 0.5 |
to imagine a much more benign backdrop for the aftermath of an asset and credit boom than one where growth in employment and income is continuing, the world economy is picking up and the australian economy is relatively free of other domestic imbalances. even so, we anticipate that housing market developments will be a factor at work in reducing the rapid pace of growth in domestic spending to something more moderate. rising house prices and the capacity to collateralise the higher wealth has accommodated a rise in consumption which has consistently outpaced the rise in income over several years. in a world where dwelling prices have stopped rising and even declined somewhat, perceptions of ongoing rapid increases in wealth are presumably now in the process of dissipating. this will weaken positive wealth effects, and could possibly lead to a partial reversal in time. on the other hand, the earlier increases in dwelling prices were very large, and even with the latest data showing declines, a big cumulative rise in wealth has occurred over the past decade, most of which has not been tapped. so there may yet be some expansionary impetus in the pipeline from those earlier gains. consumption, wealth and income * current prices % % ratio of wealth to income % % year - ended percentage change consumption income * disposable income net of depreciation sources : abs ; rba the net effect is therefore hard to judge, but on balance, we are inclined to think that consumer demand will grow more in line with income over the next year or two - that is, by something less than last year β s cracking pace. that, together with some decline in dwelling construction activity, will result in slower growth in overall domestic spending. with the world economy doing quite well, on the other hand, external demand is expected to be stronger - the international environment will be boosting australia, rather than restraining it. it is encouraging that this picture seems, slowly, to be emerging in the available data. risks to this outlook stemming from a rising australian dollar have abated somewhat of late. the result then is expected to be good growth overall, and more balanced growth ( as between external and domestic demand ) than seen for some time. inflation will be affected over the period ahead by the fluctuations in the exchange rate and oil prices, but most likely will be consistent with our 2 - 3 per cent medium - term target. internationally, the scene has turned ( in the space of only twelve months ) from one of concern about deflation to one of inflation going higher. | conditions experienced in the first four or five months of 2004, while as strong as those of late 2003, were nonetheless better than average. consumer demand is not advancing at the same pace this year as it did in the second half of 2003, though tax reductions in the coming year will presumably offer support to consumer spending. employment has continued to rise, and the rate of unemployment is at its lowest for over 20 years. while employment growth last year owed a good deal to the effects of high levels of residential construction and the associated demand for materials, of late it looks as though employment in some of the professional services sectors has begun to increase again, after a slower period since mid 2001. hence, as the anticipated decline in dwelling construction takes shape this year, overall employment levels should continue to increase, even if at a reduced pace from that seen over recent months. growth in the state of queensland, in particular, has been very strong indeed over the past year, and much faster than for the nation as a whole. consumer spending is recorded as having grown by over 8 per cent through 2003, compared with 5 per cent for the rest of australia. dwelling investment spending surged to an all - time high in queensland at the end of last year, while for the rest of the country it was high, but no higher than the pre - gst peak in 2000. employment growth has also been faster in the sunshine state than in virtually all the other states. dwelling investment household consumption expenditure june 2000 = 100 year - ended percentage change % % index index queensland queensland rest of australia rest of australia - 2 - 2 source : abs source : abs queensland has, of course, the highest rate of population growth of any of the states, with net migration from victoria and nsw in particular. so we would expect most aggregates to be rising faster than elsewhere, but in 2003 growth in spending per head still outstripped the rest of australia, and the employment growth sufficiently exceeded growth in the labour force that queensland β s unemployment rate - which is routinely higher than the national average - closed quite a bit of the gap to the other states. in short, queensland had a pretty good year. employment growth unemployment rate three - month - ended average year to latest three months % % % queensland queensland rest of australia rest of australia - 2 - 2 - 4 % source : abs - 4 source : abs the housing market has been a key issue for the economy over the past couple of years and, as you would know, the rb | 1 |
work still ahead. compounding the problem further are the implementation and monitoring processes, such as fsaps and related peer reviews to assess progress made with the implementation of internationally agreed regulatory standards by member jurisdictions. given the extensive range of regulatory reforms currently under way, south africa has since last year been calling for a consolidation phase where emphasis should be placed on the adoption and implementation of agreed international regulatory standards and greater understanding of the impact of new regulatory reforms on emerging market and developing economies ( emdes ). this call was firstly made to avoid unacceptable, uneven, and differing implementation of these new standards, thereby creating regulatory arbitrage opportunities globally, and secondly out of concern for the impact of the cost of new regulatory developments on emdes. also, given the nature of β tenth bcbs - fsi high - level meeting for africa β meeting, we need to alert global regulatory authorities and standard setters that there is a possibility of a widening gap between regulatory standards in advanced economies and those in sub - sahara africa, where a number of countries are only now implementing basel ii. south africa, as a member of the g - 20 and the fsb, is able to participate and, hopefully, influence formulation of policy, but unfortunately a number of our peers on the continent are not as fortunate as us and hence are denied this opportunity. south africa, therefore, welcomes the recent decision by the fsb to allow opportunities for non - fsb members to contribute to this process and it supports the monitoring processes that have been put in place. we furthermore welcome the decision not only for the reasons highlighted above, but also so that we can obtain an independent assessment of the progress that south africa has made in this regard. recent domestic developments on 1 january 2013 south africa implemented the basel iii framework. the implementation period for several of the basel iii requirements that were incorporated into the domestic banking regulations commenced on 1 january 2013 and includes transitional arrangements, bis central bankers β speeches which will be phased in until 1 january 2019. the purpose of the transitional arrangements is to afford banks sufficient time to meet the higher standards while still supporting lending to the real economy. south africa underwent an fsb peer and thematic review in 2013 and recently participated in an imf / world bank financial sector assessment program ( fsap ), which was finalised towards the end of 2014. the purpose of fsaps is to assess the stability of member jurisdictions β financial systems as a whole, and not that of individual institutions. fsaps | may also be problematic for several reasons. the riksbank β s repo rate is and should preferably be a blunt instrument that affects the entire economy, that is the households, the companies and the financial markets. it is not desirable for monetary policy to have a disproportionally large impact on a limited part of the economy, in this case on the indebted households. one should not expect that monetary policy will always be designed so that it is well balanced for just this particular part of the economy. this is exemplified by the monetary policy of recent years in which the repo rate has been set lower than justified by developments on the mortgage market. in the future, we may well end up in the opposite situation with the repo rate being set higher than justified by this particular part of the economy. longer fixed - rate periods desirable it is difficult to determine how large a proportion of variable interest rates is desirable in an economy, but i suspect that we have gone too far in that direction in sweden. and by this i mean from the point of view of systemic risk. for an individual household there may be good reasons for choosing a variable interest rate, but for the economy as a whole it would probably be good if we could limit the proportion of variable rates. this can be achieved in different ways. in some countries, regulations have been used to either limit how large a proportion of the mortgage may have a variable interest rate or how much a variable interest rate may increase during the maturity of a mortgage. in other countries, long fixed - rate periods have become the norm without the need for regulations. the fact that this has not happened in sweden indicates that the financial markets are not working well enough for some reason. this may, for example, be due to the lack of a market for mortgage bonds at really long maturities, or of regulations concerning how mortgages with long fixed - rate periods can be paid off prematurely. limit the build - up of debt despite the need to stimulate the economy i would also like to say something about the interplay between current monetary policy and measures to mitigate the risk factors i have mentioned. is it really justified to introduce measures that may dampen household consumption or activity on the housing market when the riksbank is at the same time trying to stimulate the economy in order to increase several studies based on household data from the financial crisis of recent years show that highly - indebted households reduced their consumption more than households with low debts ( | 0 |
areas such as industry characteristics, investment in r & d and innovation. differences in the timing and extent of past structural reforms in euro area countries are also a source of diversity. to give you an example, the netherlands undertook labour market reforms much earlier than the largest euro area countries. this enhanced its flexibility and increased its ability to adjust to a wide range of shocks. in some other countries, short - term shocks may have had more persistent effects on growth differentials owing to slow adjustment processes caused by the presence of structural rigidities. differences in fiscal policies and other national policies can also give rise to diverse economic situations. there is an additional source of diversity that may be working its way through the system. after the launch of the euro, some countries suddenly benefited from lower short and long - term interest rates, as well as easier access to more competitive credit markets. this encouraged the purchase of durable and non - durable goods, as well as housing, albeit to differing extents in the various euro area countries. this was equivalent to a one - off shock immediately after the launch of the euro. all in all, the degree of diversity observed in the euro area is not substantially different from that seen in the united states. and neither is it substantially different from that seen within the national borders of several large economies ( such as germany, italy and spain ), which is a continuation of historical patterns. diversity in perspective diversity within the euro area should be put in perspective, and i shall now look at three main types of divergence. whenever possible, i will compare the euro area with the united states, as the world β s only other industrialised economy of a comparable size. a ) inflation dispersion in the euro area declined considerably in the 1980s and 1990s and is now on a par with that of the united states. impressive progress has been made, and inflation dispersion among euro area countries has broadly stabilised at a low level since the launch of the euro. to give you an example, the unweighted standard deviation of annual hicp inflation rates still stood at around 6 percentage points in late 1990, but this rate has broadly stabilised at around 1 percentage point since the launch of the euro. this dispersion level is similar to that of the 14 us metropolitan statistical areas ( msas ), but is somewhat higher than that of the four us census regions. although such comparisons are subject to some well - known caveats, i would argue that inflation dispersion in the euro | presidency of nout wellink will result, over time, in higher capital and liquidity requirements as well as in less leverage and procyclicality in the banking system. the proposals on these measures will be issued by year - end. the calibration will take place in 2010. their implementation will be phased in, taking into account expectations for the improvement of financial conditions and economic recovery. but even though this comprehensive package is an achievement, it does not imply that the work is over. the challenges related to finalisation of the package in the coming years should not be underestimated. these include assessing the interplay of the adopted and upcoming measures, and deciding on the overall level of capital in the financial system. what do you mean by the interplay of the various measures, will they complement or reinforce each other? there will be an important interplay of the various measures. we will undertake an impact assessment to analyse their cumulative effect. the aim is not to simply add - up the various measures, but to take into account their interrelation. we need to look at the measures already taken and assess how they combine with the upcoming changes to the definition of capital, the introduction of a leverage ratio and of countercyclical capital buffers. are you not concerned that these measures will hamper efficiency of the banking sector? we need to reach agreement on the overall level of capital in the financial system compared to pre - crisis levels, building on past and recent experience including national stress - testing exercises. in doing that, we need to strike a balance between a level of capital that promotes long - term financial stability without unduly compromising growth and efficiency of the banking sector. this will be no easy feat. we have challenging years ahead of us and i strongly urge the work of the committee to continue at full speed. we mustn β t loose either the momentum or the window of opportunity for reform. how will these new regulations contribute to strengthening resilience of the financial system? speaking towards an audience in the netherlands let me illustrate it with an analogy, drawing on a project well known to you. the dutch have through time developed the delta project β a series of defences to protect the stability of the nation, guarding it against floods. what we are trying to build is the delta project of the financial system that will protect it from risk excesses. if i may say, in this sense we are fortunate that the basel committee is chaired by a dutchman! | 0.5 |
the sound parts from the problematic ones. if the current restructuring strategies lack the potential for improving the sick part, then perhaps it is the due time to pass to a new strategy that treats both parts of the business as separate from each other. this would enable an optimal solution in each specific case versus a unified refinancing strategy that was implemented so far. clearing the lending activity would bring about shifting of the new credit from inefficient refinancing to new development possibilities and economic growth, where the savings - investment balance is in equilibrium. this issue relates not only to the performance of the banking system and the financial stability of the country, but also to the ability of the economy to grow in the future. as i have also mentioned in other events, both the macro and micro factors that encouraged rapid economic growth in the recent years, are no longer present in the global and national economy. the new equilibriums we are living with show that the rapid consumption - driven growth models and credit - based growth models will no longer be present in out economy. this is true owing to supply and demand factors, since the rapid consumption - and creditdriven growth has aggravated the savings β investments balance sheets of agents in the economy. consequently, there should be found a new long - term economic growth model, capable of absorbing the financial resources, particularly the foreign ones, and generating an economic growth. the first step in this regard is the identification of the competitive advantages that the albanian economy generates and the acceleration of structural reforms in the albanian economy in the light of these priorities. it is a pleasure that our timely discussion topics and activities are in line with the agenda of this activity. thus the imf provides a valuable contribution to our economy through discussion of these topics. furthermore, through this activity, the imf enhances the transparency throughout the albanian economy regarding the economic development vulnerabilities from the imf viewpoint, thus participating in the country β s economic debate. i would like to emphasize the latter, because i find it particularly important with regard to the difference between scientific contribution and that of political economy. the imf comes to albania as a participant in this debate with four scientific papers, whose results are based on available and reliable statistics, identified economic models and conclusions based on wellgrounded assumptions and analyses. each of these elements is clearly explained in the working papers that will be discussed today. these elements altogether make the work replicable ( controllable ), open for discussion, and | gent sejko : " learn. save. earn. " speech by mr gent sejko, governor of the bank of albania, at the launching ceremony of the global money week, tirana, 27 march 2017. * * * honourable minister nikolla, dear aab chairman drougkas, dear guests, i have the pleasure to welcome you at the bank of albania premises. in addition to being a second home for its employees, since the opening of the museum, it has become an attractive learning place about finance for students. the global money week an event that involves local stakeholders in more than 140 countries is the highlight of all the educational activities conducted throughout the year. i am proud to say that, thanks to the persistent commitment of the bank of albania regarding financial education, albania has been featuring in the map of countries that organize this week. this persistence ensures the effectiveness of our educational programmes, and keeps active the connection between institutions engaged in the financial education of the public in general and the youth in particular. i take this opportunity to extend my most sincere gratitude for their commitment and support to the ministry of education and sports, the albanian association of banks, and other institutions present here today. under the motto β learn. save. earn. β, this year β s global money week is dedicated to raising awareness of young albanians on the importance of money and their involvement in the economic and financial system in albania and, why not, in the region and the world. the activities that will be organised during this week will especially aim at inspiring albanian children and youth to learn more about money, saving, creating prosperity, increasing employment and entrepreneurship. to illustrate this better, more than 45 activities will be organised and more than 3500 pupils and students will participate in these activities during this very busy week, with educational institutions : universities, high schools and nine - year schools. these numbers make us very proud, since they serve to raise the awareness on highly important issues, such as consumer information and financial inclusion. these two key issues contribute directly the economic wellbeing of households and businesses. financial education, especially of youth, is the best channel to put that effect in practice, as affirmed by the oecd, a reputable international institution. the bank of albania is and will remain dedicated to this mission, with the support of the ministry of education and other partners. their support and cooperation have had a decisive contribution in the success of such activities. also, the elective course β | 0.5 |
and policy makers have an equal responsibility for supporting the cause of msme sector. it is pertinent however to mention that the regulators / policy makers are better as enablers rather than doers. whether it is creating avenues for flow of finance to the sector, creating easy climate for doing business or assisting the firms in distress - both government of india and rbi have been extremely conscious to the needs of the msme sector. a ) smoothening the flow of finance ( i ) trade receivables and discounting system ( treds ) rbi β s initiative on creating a treds platform to serve as an exchange for electronically accepting and settling bills to enable the msmes to encash their receivables, has borne fruition. the system seeks to facilitate financing of trade receivables of msmes from corporate and other buyers, including government departments and public sector undertakings ( psus ) through multiple financiers. out of the three licensed entities, two have already commenced operations. it would be important that the use of treds is made mandatory for, to begin with corporate and psus and later for the government departments. i would urge assocham and the msme ministry to proactively examine this aspect as success of treds initiative can be a game changer for the sector. ( ii ) new institutions / new processes besides the two new universal banks, rbi has issued banking licenses to all ten small finance banks that had received in - principle approval from rbi. seven of them have commenced operations while the remaining three should become operational in next couple of months. the licensing condition of these banks entails focusing on lending to un - served and under - served sections including small business units, small and marginal farmers, micro and small industries and unorganized sector entities. the sfbs will be required to extend 75 per cent of their loans to the sectors eligible for classification as priority sector by the reserve bank with at least 50 per cent of the loan portfolio constituting advances up to rs. 25 lakh. we believe that on account of their prior experience as mfis / nbfcs, these new banks would be able to serve the msme sector with aplomb. along with measures to improve accessibility, there is also a need to concentrate on new modes of delivery. reaching out to the msmes in the remote corners has always been a complex issue in view of lack of brick and mortar branches across the country. one possible solution for this 4 | the achievement of this objective, the sharing of information can be made on the product features and the shariah methodology adopted in ascertaining the permissibility of the products in the various jurisdictions. strengthening risk management capabilities while financial liberalization and innovation have expanded the range of opportunities, it has also led to heightened uncertainties, greater volatility and increased potential of financial vulnerabilities. these developments require financial institutions to move to a higher standard of risk awareness and management. regulatory emphasis has shifted towards a more risk sensitive regulatory capital framework and the assessment of risk management systems and processes in financial institutions. extensive investment has been made by the industry to adopt a comprehensive and robust internal risk management infrastructure. in islamic banking, the requirement to manage risks becomes more important due to the special nature of the financial intermediation process that is guided by the shariah. islamic financial institutions have a multi - facet role. on the asset side, islamic financial institutions enter into diverse modes of islamic financial contracts, each with its own peculiar risk characteristics. basel ii, has to a certain extent, incorporated the identification of credit, market and operational risks that can be assimilated by islamic financial institutions. however, islamic financial institutions need to be ahead in exploring other dimensions of risks in these islamic financial contracts. the risk management infrastructure in islamic financial institutions must therefore be in place to identify, unbundle, measure, monitor and control all the specific risks in islamic financial transactions and instruments to provide for their effective quantification and management. strong risk management capabilities become more pertinent in view of the different contractual arrangements entered into by the islamic financial institutions with the different classes of depositors. demand deposits, under the guaranteed custody contract and investment deposits, under the mudharabah contract, each has its own unique risk and return attributes. islamic financial institutions must ensure that demand depositors are protected from the risks of islamic banking business. in respect of the mudharabah depositors, any adverse shock to the financial performance of the asset portfolio in the balance sheet will be directly transmitted to the liability side, resulting in an adverse impact on the returns to the investment depositors. islamic financial institutions have a fiduciary accountability in ensuring that depositors β funds are prudently managed and that the risk - adjusted returns on investments are maximized. the ability to maximize risk - adjusted returns on investments and sustain stable and competitive returns to depositors will contribute to promoting confidence in the islamic financial industry. | 0 |
such a β default liability β can also not be deduced as a general rule under union law in respect of the individual member states when the central bank β s equity is drastically reduced. in accordance with the principle of financial independence as established by article 130 of the treaty on the functioning of the european union it follows that a central bank must permanently have adequate equity available to fulfil its monetary policy tasks within the eurosystem. however, this does not mean that every loss must be immediately and fully offset by private or public shareholders or the member states. a central bank can in the short and medium - term, even with reduced or negative equity, fulfil its eurosystem monetary policy tasks. in this respect a reduced or negative equity does not preclude from the outset an orderly and stability - oriented monetary policy. only when this situation continues for too lengthy a period β the european central bank β s last convergence report spoke of β a prolonged period of time β β would doubts arise as to whether the central bank can still adequately fulfil its eurosystem monetary policy tasks. only in such an extreme case β and exclusively in this case β would they be recapitalised, not immediately, but β again in the words of the european central bank β s convergence report β β within a reasonable period of time β. conclusion mr chairman, distinguished members of the second senate, i and my colleagues are at your disposal for further questions on these and other issues. bis central bankers β speeches | only to omts but also to main refinancing operations, to cite just one standard monetary policy instrument as an example. the eurosystem uses main refinancing operations to make central bank money available to banks. in principle, these bank loans could also fail, even though the risk of this occurring is slight. therefore, the european central bank β s governing council limits these risks, by requiring the provision of bis central bankers β speeches collateral for main refinancing operations. the european central bank β s governing council has also taken precautions with regard to omts in order to limit the eurosystem β s financial risk. this is done, in particular, by applying a requirement of strict conditionality and the monitoring of the satisfactory implementation of the programme. this strict conditionality, compliance with which is to be independently assessed by the european central bank from the monetary policy perspective, ensures that the member states concerned apply sufficient budgetary discipline and carry out structural reforms, to achieve a sustainable budgetary position. for the implementation of omts, as for other monetary policy operations of the european central bank, creditworthiness and risk management rules apply. in this way an excessive default risk is avoided. it should be added, that the european central bank will not carry out any purchases using omts during the review of an esm assistance programme. this also ensures that market conditions are not directly influenced by european central bank purchases whilst the programme is being assessed by the troika. the comparison between omts and main refinancing operations demonstrates that the financial risks of various monetary policy instruments differ as to their degree but not as regards their principle nature. thus the court of justice of the european union held in its judgment that the precautions foreseen for omts are likely to reduce the risk of losses. it also recalled that a central bank, such as the european central bank, has a duty to take decisions that, like open market transactions, inevitably involve a risk of floss. with regard to the necessity mentioned in the hearing outline, in connection with the potential risks of omts for the federal budget, for a recapitalisation of the bundesbank, i would confirm the position of the european central bank that was provided in the last oral hearing. as far as i am aware, under german law there is no obligation for the federal government to recapitalise the bundesbank, even when its losses are of such a magnitude that its equity base is threatened. | 1 |
the global mainstream, to become a core building block in our efforts towards forging a more sustainable financial architecture going forward. similarly, decisions and solutions to finance need to also be considered on a global scale and not confined to any community or nation. bis central bankers β speeches of equal importance, the benefits of finance should be extended across all segments of society. despite the size and scale of our financial sectors in the global financial system, many households and businesses still remain excluded from formal financial services. globally, as many as 2 billion adults do not have access to a bank account. perhaps even more revealing are the findings that financial exclusion is not limited solely to developing or low - income economies. even in advanced countries such as japan, 3. 4 % of adults remained financially excluded, while in the united states, over 8 % of households are unbanked and 20 % remain underbanked. there is thus a still much important impact that finance can bring about. indeed, in various parts of the world, such greater access is already making a significant impact, particularly for small and medium enterprises, with its market size estimated to double to almost usd14 billion by 2019 from usd7 billion in 2015. there is, however, still scope for such access to be expanded to bring about more balanced and sustainable growth in the global economy. finally, an important aspect of responsible finance requires strong and effective governance. john locke, one of the most prominent 17th century theorists, refers to the concept of a " social contract " in describing the origin of society and its inherent need for governance. the erosion of this social contract and of governance would drastically weaken the foundations of society, setting the stage for its eventual decline in the future. this was evident during the global financial crisis. the experience serves as a strong indication that the own version of the " social contract " in finance should not be overlooked. this extends not only to governance but also to trust, which has traditionally been the social bond between finance and humanity. central to this is the realisation that financial markets cannot operate in the absence of trust, which in turn necessitates minimum standards for governance, ethics and integrity. this involves not only heightened expectations on the fiduciary duty of boards, but the alignment of compensation packages from short - term personal gains towards long - term value creation. in addition, corporate culture also have an important role in entrenching financial goals with ethical values, through the promotion of sound risk taking cultures and ethical codes of | on a regular basis and in times of stress, and acts as the lender of last resort. stemming from this responsibility, the bank has been undertaking initiatives to maintain continuously open core financial markets. the bank is also an active participant in discussions of financial system policy, both in canada and internationally. the recent crisis has prompted initiatives, both at the global and national levels, toward making the financial system stronger and better able to support longterm economic growth. a central aspect of this work is the establishment of a macroprudential framework for financial supervision and regulation. here, the emphasis is on systemic stability, for example, through appropriate capital requirements. finally, the bank is engaged in research to better understand the sources of long - run economic growth, given its importance in anchoring current policy. while progress has been made in our understanding of productivity growth, there is still a good deal that we simply do not know. over the next few years, the bank will continue to explore how relative - price shocks affect the canadian economy, including the reallocation of resources and its impact on productivity growth. the bank will also be further investigating the linkages between the financial sector and the real economy β for example, how firm and household balance sheets adjust to various shocks, and the implications for investment and spending. members of the canadian association for business economics also have an important role here. with your skills and responsibilities, you are in an ideal position to contribute to this research effort. conclusion two years after the onset of a global financial crisis and after three quarters of severe recession in canada, the economic outlook for this country, and much of the world, has improved. the policies that were put in place to bring about the recovery, are starting to bear fruit. although the recovery is likely to be muted, and effective and resolute policy implementation will be required, we are likely to experience positive growth this quarter, and a gradual closing of the output gap by the middle of 2011. a serious challenge lies ahead, however β that of continuing to improve our living standards against a less - favourable demographic backdrop. improved labour productivity is the key to meeting that challenge, and how we set about it will shape our economic well - being for years to come. meeting the challenge will involve all canadians : employees, business owners, researchers, policy - makers, inventors, and entrepreneurs. it will require creativity, adaptive learning, and innovation. the bank has an important role to play. by achieving the inflation target, | 0 |
encouraged to adopt the measures that will strengthen their financial systems? here part of the answer seems to be to seek greater * cae goodhart β the organisational structure of financial supervision β fsi occasional paper no 1, bis, basel, 2000. support from the market. if markets reward high standards by easier access to funds at lower costs, there is little doubt that strong internal pressures would be created to improve standards. perhaps it is appropriate here to say a word about the financial stability forum. the forum was created in 1999, and includes senior representatives of ministries of finance, central banks and regulatory authorities in the major financial markets, as well as representatives of the main international organisations and standard setting bodies. a key reason for setting up the forum was the realisation that there are many bodies whose activities contribute to financial stability and who have a stake in its preservation. the forum, in other words, is a tangible recognition of the fact that financial stability requires vigilance in a number of dimensions. individual financial institutions have to be run on prudent lines, markets have to be open and transparent, and the financial infrastructure has to be robust. all of these objectives have to be pursued at a global level, since the financial industry is global and capital markets are increasingly integrated. yet there is no global authority that can act in all the areas that are required. the forum helps to fill this gap, by facilitating the co - ordination of efforts by the numerous separate authorities having responsibilities in the field of financial stability. iv. conclusion in summary, prudential regulation is becoming more complex and demanding, as well as more important and fascinating. it is demanding a more comprehensive approach than hitherto. it is bringing together multiple disciplines in an attempt to harness the forces of the market to improve the market β s stability. it stresses greater risk sensitivity, flexible supervision, and more reliance on market discipline. this is, of course, no more than a further important step along the road to a more efficient and resilient financial system. but it is an important step. and it will work to the benefit of us all. | s maternal mortality rate is amongst the highest in the world ; the rate is estimated to be around 828 and 351 per 100, 000 live births in rural areas and urban areas respectively. there are also regional disparities between the north and south. the north east has the highest rates of maternal mortality at around 1, 549 per 100, 000 live births and the lowest rates are recorded in the south - east, with 165 per 100, 000 live births. teenage marriage also contributes to low female attendance, retention and achievements in school. about 30 per cent of school age girls drop out of school having already begun childbearing at an early age. the physical and psychological implications of these phenomena cannot be overemphasized. challenges to women β s access to finance the challenges to women β s access to finance include : property rights and control over assets legal regulations and customary rules often restrict women β s access to and control over assets that can be accepted as collateral, such as land or livestock. women are less likely to have land titled under their name, even when their families own land, and are less likely than men to have control over land, even when they do formally own it. biased inheritance rights often bestow land to male relatives, leaving both widows and daughters at a disadvantage ( agarwal, 2003 ). cultural norms and family responsibilities socially accepted norms and expected family roles have a profound effect on the type of economic activities that women can engage in, the technologies available to them, the people and agencies with whom they can interact, the places they can visit, the time they have available and the control they can exert over their own resources such as capital. biased attitude of banks women β s access to financial resources is also limited by biased lending practices that emerge when financial institutions consider them inexperienced and therefore less attractive clients, or when institutions lack the knowledge to offer products tailored to women β s preferences and constraints ( fletschner, 2009 ). bis central bankers β speeches lack of collateral and start - up capital access of collateral and asset - based lending generally constrains borrowers from access to finance. this is much more serious women for obvious reasons. data from the nbs showed that men are twice as likely to secure finance compared to women. a recent world bank report on the β investment climate in nigeria β showed that capital rather than productivity narrows the range of activities in which women engage. the report also showed that majority of women ( 76 per cent ) rely mostly on | 0 |
identified to deal with the potential risks and vulnerabilities to the islamic system in this now more challenging international financial environment. these include steps that need to be taken for the implementation of the prudential standards ; the development of a liquidity management infrastructure ; the introduction of strong financial safety nets ; the development of an effective crisis management and resolution framework ; the development and implementation of accounting, auditing and disclosure standards ; the formulation of an effective macro prudential framework ; the development of credible credit rating institutions and processes ; and finally, to strengthen efforts for capacity building and talent development for the islamic financial services industry. given the global dimension of these building blocks, international cooperation and collaboration is significantly vital to advance these important agendas. regulatory harmonization commanding the highest level of international cooperation is particularly vital in the implementation of common prudential standards to safeguard the stability of the islamic financial system. this will contribute towards the harmonization of the regulatory and supervisory framework in islamic financial systems across borders. of importance is advancing the international standards and best practices that takes into account the distinct characteristics of islamic finance. such prudential regulation that considers the unique mix of risks associated with shariah - compliant financial business would enhance the effectiveness of the regulatory outcomes intended for islamic finance. much progress has already been made by the ifsb in promulgating an extensive set of prudential standards for the islamic financial services industry since its establishment in 2002. the ifsb has already introduced standards for capital adequacy, risk management, bis central bankers β speeches corporate governance and shariah governance. this important work has been significant in promoting international uniformity of regulatory frameworks and international best practices for the islamic financial system in different jurisdictions. its significant progress has benefited from the strong international cooperation and collective support from its member countries and global institutions. indeed, as an evolving global industry with varying stages of development across borders and various business structures and operating models used in the different markets, this close engagement has also allowed for the attainment of balanced views. whilst islamic finance has demonstrated resilience during the recent crisis, the ifsb has moved quickly to review its existing capital standards for possible enhancements and to incorporate new liquidity measures in its ongoing work in developing liquidity standards for islamic banking. this work is currently being addressed through the working groups for capital adequacy standards and for liquidity risk management. the overarching objective is to ensure that the salient features of islamic finance are effectively and | governor title date event venue : mr. tariq bajwa : opening of boc pakistan operations : november 7, 2017 : official opening ceremony of bank of china limited pakistan operations : president house, islamabad h. e. president mamnoon hussain, honorable president of pakistan, mr. chen siqing, chairman bank of china, distinguished dignitaries and guests, ladies and gentlemen, assalam - o - alaikum and good morning, it is a great pleasure to be here at the inauguration ceremony of bank of china β s operations in pakistan. i welcome bank of china in pakistan. this is indeed a very auspicious occasion as the two brotherly countries, pakistan and china, further cement their ties in the fields of banking and finance. banks are to an economy what lubricants are for a machine. page 1 of 4 going forward, i hope that bank of china will play its due role not only in the economic development of pakistan but also be a catalyst in further strengthening our bilateral trade and banking relationships. ladies and gentlemen! in contrast to the protectionist sentiments that are gaining momentum in some parts of the world, pakistan and china present a distinct example of regional cooperation and harmony. the financial linkages between pakistan and china are growing manifold. we are already host to industrial and commercial bank of china limited ( icbc ). recently, consortium of chinese investors acquired forty percent shares in pakistan stock exchange. chinese investors have evinced interest in acquiring ke. i am also aware that other chinese institutions are exploring the possibility of making investments in the financial and other sectors of our economy. our banks have also been venturing into china and some of them have established branches and representative offices in china, such as habib bank limited, national bank of pakistan, united bank limited and bank al - habib. with start of bank of china operations, ties between pakistan and china will strengthen further. bank of china is not an ordinary bank. it is one of the big - four banks in china and is a global systematically important bank. it is ranked amongst the top global banks in terms of assets and has a significant footprint in over 50 countries. it brings with it a rich heritage of over 100 years of banking experience, practices, and knowledge. as bank of china is a key partner in china β s β one - belt one - road β initiative, we expect that it will be able to effectively cater to the financing needs of cpec projects by leveraging its specialized services | 0 |
are avoided. all of this is a major project and quality should not be compromised to the detriment of speed. i expect the ssm to start its operation in the second half of next year. i am certain that the ssm will be a reliable partner for us regulators and supervisors. therefore, in my view, the ssm deserves just as much trust as us supervisory authorities are granted by their transatlantic partners. bis central bankers β speeches planning for the second critical institution in a banking union, the common resolution framework, is less advanced. ideally, the single resolution mechanism would be in place at the same time as the ssm. however, it looks as if this is unlikely to happen. things are still in flux. for a start we will probably have a network of national arrangements with national resolution authorities and national resolution funds endowed by the banking industry. these national institutions will have the same design and will apply common rules. but as we all know : banking is global. when it comes to supervision β and particularly resolution β of large international banks, it will not be enough to have a european framework. global financial markets call for global regulations. coordination and cooperation with other jurisdictions β especially the us β, therefore, is of the utmost importance. the goal must be to head towards a more international, not towards a more national approach. by implementing a global level playing field, we have to avoid regulatory arbitrage likely to result from different regimes. we should keep in mind that the success of the g20 reform agenda for strengthening the resilience of the global financial system hinges upon the consistency of various initiatives. there are two different aspects. the first is cross - sectoral consistency. that is why it β s so important to keep shadow banking on the agenda. the second issue is consistency between the rules in different jurisdictions. that is exactly why international cooperation is of such high importance when reforming the financial sector. but let me get back to the european reform agenda. even a european banking union based on sound institutions will not be able to meet expectations if it is not underpinned by prudent macroeconomic policies. many european countries are currently making progress in cutting public expenditures, strengthening competitiveness, and improving their current account. they very much have to hold their course, since there is no alternative to those efforts. structural reforms are essential to bring back growth. central banks : the β only game in town β? some expect central banks to be the ones that can bring back growth. | and indeed, over the past few years, many central banks have taken on more and more tasks. monetary policy nowadays seems to be urged to promote short - term financial stability or to facilitate public borrowing. evidently, these developments have to be seen against the backdrop of the financial and sovereign debt crises of the past six years. for sure, there have been good reasons why central banks helped contain the crises through additional policy measures. central banks can do, and are doing, a lot to prevent tail events and are buying time for politicians to undertake the reforms needed to tackle the root of the crisis. but i am concerned to see central banks being pushed into the role of an all - purpose weapon of sorts. this will not do anybody any favours. in his andrew crockett memorial lecture held at the bank of international settlements a few days ago, professor raghuram rajan from the university of chicago β s booth school of business described the situation quite well : β when the central banker offers himself as the only game in town, in an environment where politicians only have choices between the bad and the worse, he becomes the only game in town. β but we should not let politicians lean back. we are not the only game in town. and if we find ourselves alone on the field, we need to bring the other relevant players back and remind them of their responsibilities. central banks cannot solve the crisis. and we should avoid overburdening monetary policy by trying. federal reserve and bundesbank turning to today β s event, it is my pleasure to have jerome powell from the federal reserve board of governors with us. he needs no introduction. jerome is going to deliver a speech on, among other things, international cooperation among central banks. how mutually bis central bankers β speeches beneficial and fruitful such a cooperation can be is shown, for instance, by the long - lasting collaboration between the fed and the bundesbank on so many different levels. the representative office of the deutsche bundesbank in new york is a good example of this close relationship. and i am sure that ms stirbock will contribute to a further deepening of this relationship, just as mr stephan did over the last four years. being a valued partner for discussion not only for our colleagues at the federal reserve bank, but for all our contacts in new york, mr stephan β and now ms stirbock β help to ensure this important dialog between the bundesbank and the financial centre new york. ms stir | 1 |
jacqueline loh : public - private partnership β the way forward for natural catastrophe risk management in asia opening address by ms jacqueline loh, deputy managing director of the monetary authority of singapore, at the 5th institute of catastrophe risk management symposium, singapore, 24 april 2014. * * * professor bertil andersson ( president, nanyang technological university, singapore ), professor haresh shah ( founding chairman, institute of catastrophe risk management ( β icrm β ) ), professor pan ( director, icrm ), distinguished guests, ladies and gentlemen, good morning. introduction 1. it is my pleasure to join you today at the 5th icrm symposium. the theme for this year β s symposium, β financing of natural catastrophes in asia β the role of private sectors, governments and regulators in natural catastrophe management β, highlights the importance of having both the private and public sectors collectively manage natural catastrophe risks. management of catastrophe risks spans a spectrum of activities across the entire risk management value chain, from raising risk awareness, to promoting effective risk assessment and pricing, and co - developing ex - ante risk financing solutions. this is a very relevant discussion topic, at a time when asia is facing increasing vulnerability to natural catastrophes. 2. in keeping with the conference theme, i will be sharing a few observations on how we can strive towards sustainable risk financing using a public - private partnership ( β ppp β ) approach. asia is more at risk from natural catastrophes 3. over the last 30 years, asia has borne the brunt of natural catastrophe losses, accounting for almost half of the world β s estimated economic losses from natural disasters1. however, less than 5 % of the losses were insured, compared to 40 % in developed countries2. over the last five years, the region experienced a series of high - profile and very painful disasters such as the tohoku earthquake and tsunami in japan, floods in thailand, and the super typhoon haiyan in the philippines. losses from these three disasters are estimated to be close to usd 360 billion3, about the average gdp of the philippines and thailand in 2012. as these economies were underinsured, the bulk of the financial burden was ultimately borne by the governments. 4. the development of catastrophe risk management in asia is still at a nascent stage, compared to more mature markets in the us and europe. yet asia is expected to continue to experience a rise in natural catastrophe losses, as a result of climate change, and rapid population growth, urban | them in understanding their roles and responsibilities, and to equip them with the necessary skills. even experienced directors need to continually upgrade their skills, to oversee and steer companies in today β s rapidly changing and globalised landscape. mas has been in discussion with the singapore institute of directors on how we can build on its very useful work to date, and develop a comprehensive and sustained approach to training and development of directors in singapore. mas will help to fund a study that will help to operationalise this comprehensive approach to training. the study will cover a few areas. first, it will look into benchmarking directors β training and development against best practices in other leading jurisdictions. a number of jurisdictions have in the last few years developed extensive structured training programs for directors. secondly, it will examine possible collaborative arrangements between a range of organisations and training providers. thirdly, it will also focus on how best such training initiatives should be financed. this is an important initiative to ensure our companies have skilled directors on their boards, who can help them to grow and expand in the region, and be recognized leaders in both performance and governance. developing practical guides for listed companies and directors a second issue arising from the study has to do with developing practical guides for listed companies and directors. this is in line with helping companies help themselves on the path to better corporate governance, mas will work with industry and professional bodies on practical guides on areas of interest to companies. the importance of an effective audit committee in particular was highlighted in the corporate governance study by professor mak. it noted that almost all corporate scandals involved some form of financial impropriety, with the audit committee often seen to be part of the governance failure. some guidance on the roles, functions and skills required by an audit committee would be useful. we need to encourage well - qualified directors to take on the critical responsibility of being a member of an audit committee. such practical guidance notes could be useful in helping directors on audit committees to understand their roles relative to that of senior management. it could also provide better focus on how they can add value by enabling the important interaction between strategy and financial and accounting controls. i note that the uk has issued similar guidance on audit committees β otherwise known as the smith guidance β to assist companies. conclusion let me conclude. the asian financial crisis has served to highlight the importance of corporate governance. it is a key component that contributes to the strength of our markets and to the performance of our companies. while corporate governance practices across asia have improved | 0.5 |
market. by re - engineering its monetary policy framework, the bank of mauritius is endeavouring to adapt its management of the macro economy to the changing economic environment. the bank of mauritius is striving towards enhancing the attainment of its ultimate statutory objective which is to maintain price stability and to promote orderly and balanced economic development. the financial services sector, including the banking sector, fulfils an important function as financial intermediary in an economy. mauritius has one of the oldest and most sophisticated financial systems in africa, with the banking system currently representing around 6 per cent of gdp. robust economic performance has strongly contributed to the expansion of the sector. strong regulatory and monetary policy frameworks have contributed towards maintaining macroeconomic and financial stability. at the same time, the soundness and degree of sophistication of the financial system is facilitating diversification of the economy, thus establishing a virtuous cycle in which the financial sector and the other productive sectors of the economy are strengthening in parallel. the bank of mauritius views that the stability of the financial system depends on every institution involved and thus it diverts sizeable resources in ensuring the soundness and stability of each and every financial institution under its purview. given the complexity and the dynamic nature of the industry, the supervision of an institution is becoming an increasingly challenging task. in this respect, the bank of mauritius has gradually adopted a risk - based approach towards regulation and supervision. a series of prudential guidelines β seventeen in total β have been issued to financial institutions so far. adherence to the guidelines is monitored through both on - site and off - site inspections. capital regulation is viewed as an important component of regulation of financial institutions. basel ii will soon supersede basel i, which was established in 1988. banking risks are far greater today and mindful of the potential benefits that basel ii may bring, the bank of mauritius embarked on and is committed towards implementing basel ii in mauritius by early 2008. given the intricacies of adopting a capital standard in mauritius, a consultative and participative approach has been adopted with banks. the committee for the implementation of basel ii was therefore established to act as a steering committee for implementing the new capital adequacy framework. this is rightly an occasion for me to reiterate some reflections i always share with fellow students. acquiring a diploma or a university degree is indeed a license to learn. learning starts after academic achievements and should be a continuous process. anyone who refuses to learn | fail. an international agreement on a cross - border resolution mechanism for internationally - active banks is not likely to be reached in the near future. we are waiting with bated breath for more rapid progress with the banking union at the level of the european union. we cannot wait for all the lessons to be learned and new institutions to be forged, before we, as regulator, reflect on how these lessons can be applied to our own banking system. our problem is somewhat smaller, and certainly less intractable β provided we have an open mind about it. someone has said : β more powerful than the will to win is the courage to begin. β in the case of barclays, we have amply demonstrated the courage to begin the process of restructuring. our banking sector is made up of 21 banks, of which five operate as branches of foreign banks. of these, we consider a few to be domestic systemically important banks ( dsibs ), in view of their size and complex structures. the global crisis highlighted two sources of vulnerability that the bank needs to address to ensure the stability of the domestic financial system. the first is the need to protect affiliates of cross - border banks operating in technically, it is a surrender of licence under section 11 ( 7 ) of the banking act 2004. bis central bankers β speeches our jurisdiction from any potential problem affecting their parents in their home country. the second vulnerability stems from the fact that the failure of a dsib could not only impair the provision of key financial services but also have knock - on effects on other parts of the domestic economy. these issues have been exercising my mind for quite some time. this is why i have been encouraging branches of foreign banks operating in mauritius to convert into locally - incorporated subsidiaries, and urging our dsibs to reduce the complexity of their structures by resorting to what is now labelled as β ring - fencing. β we have been setting the stage for some time. that is where barclays enters the scene, in pursuit of its β one africa strategy β. it is seeking to align the legal structure of its mauritius branch business with the rest of barclays africa entities. barclays sought our approval to become a wholly - owned subsidiary of barclays bank plc. barclays was the first of the targeted banks to do so. just as it had also been the first to set up a local advisory board for its branch operation in february 2012, well before we enshrined this in the revised guideline on corporate governance in | 0.5 |
compensatory measures by surplus countries would neither adequately address the problem nor would they bring notable relief to deficit economies. what can european policymakers contribute? in the long run, procedures to ensure fiscal policy commitment will have to be strengthened, for example by enhancing the stability and growth pact. more effective macroeconomic surveillance and the development of a crisis resolution mechanism would, at least in the medium term, also be helpful. thank you for your attention. | same time, the deficit countries have to increase labour market flexibility and consolidate government budgets. in the end, domestic absorption will have to return to a sustainable level. proponents of a symmetrical approach say that surplus countries must also act. they claim that these countries have to boost domestic demand and, consequently, imports by using fiscal policy stimulus. it is also argued that surplus countries should raise wages, which would further increase domestic demand and at the same time reduce their competitiveness. however, when taking a closer look at these proposals, it becomes apparent that they are based on invalid assumptions. to demand measures that would boost imports neglects the fact that trade flows are highly diversified. given the current trade structure, an increase in german imports by 10 % would improve the current account balance in spain, portugal and greece by a mere 0. 25 percentage point. the current account balance in ireland would improve by 1 percentage point. the proposal of raising wages to support domestic demand and reduce competitiveness does not only neglect that wages are not a political control variable. moreover, simulation studies show that the effects would be confined almost entirely to the home economy in the form of changes in employment. finally, the argument that fiscal policy should be used to stimulate internal demand and imports overlooks the fact that public finances in surplus countries are also strained and that ambitious consolidation efforts are required in these economies as well to restore the sustainability of public budgets. when looking at the international discussion, we must also bear in mind that the current account surpluses of china and, for instance, germany are of a different nature β germany does not manage its exchange rate nor does it impose capital controls. nevertheless, what i just said does not imply that there is no need for reforms in surplus countries. germany, for example, would benefit from more flexible labour markets and deregulated services and product markets. improvements to the education system would also raise the economic potential. but these measures will not ease the need for adjustment in deficit countries. 4. conclusion ladies and gentlemen, let me summarise my speech. the large current account imbalances in emu are mainly due to structural domestic imbalances in deficit countries. given spillover effects in integrated euro - area financial markets, the imbalances are a serious strain on the monetary union as a whole. they must therefore be corrected. the relevant reform agenda has to centre on deficit countries. they will have to align demand and potential output more closely and, at the same time, consolidate government budgets. | 1 |
financial models. good esg practices enable firms to benefit from competitive advantages stemming from innovation, to mitigate operating, legal and reputational risks, and lead to more efficient resource allocation, all of which tend to lower the cost of capital and to achieve better operational and market performance. for example, some analyses carried out by the bank of italy have provided clear evidence of a return premium on the shares of european electricity utilities with lower carbon emissions. experience has shown that reputational risks and the risk of serious losses for firms and their shareholders can instead arise from inappropriate business practices from an esg point of view. β¦ and its cooperation with other institutions the increasing concern about the possible consequences of climate change for the financial sector has strengthened international cooperation in the field of sustainable finance, with several initiatives being provided by industry and the institutions. the bank of italy has contributed to these projects and will continue to do so. in recent years, in our role as members of the financial stability board, we have discussed the studies of the task force on climate - related financial disclosure ; we participated directly in those of the g20 green finance study group ; we are giving technical assistance to the ministry of economy and finance for the negotiations on the legislative proposals resulting from the european commission β s action plan on sustainable finance. in this field we have contributed to drafting both the disclosure requirements as regards the sustainability of the financial products offered to customers by market operators β including banks, investment firms and fund managers β and the regulations on new low - carbon benchmarks. together with the supervisory authorities of the other eu countries, the bank of italy will cooperate with the european banking authority in carrying out the tasks of identifying the risks that sustainability factors pose to the stability of the financial system, drafting methodologies to correctly assess such risks, and selecting the most suitable prudential treatment. it will also take part in the analyses scheduled by the european single supervisory mechanism, which has included climate change in its risk map for 2019. the network for greening the financial system was founded in december 2017, on the initiative of a number of central banks and supervisory authorities. this forum, in which we participate, has a broad membership at international level, and analyses are conducted and best practices are shared within it regarding the management of financial risks linked to the environment and climate change. the network aims to develop scenarios, methodologies and studies to integrate environmental and climate risks into microprudential and macroprudential supervision, collect evidence of the existence of risk spreads between | β green β and β brown β assets, and draw up common guidelines for the adoption of esg criteria for managing central banks β financial portfolios. as part of the activities of the italian observatory on sustainable finance, set up by the ministry of the environment, we carried out a survey in 2018 of italy β s main financial operators to evaluate their level of preparedness on climate - based risks. the results are mostly in line with those of other surveys and indicate that awareness of the financial risks deriving from climate change remains limited. the issue of sustainability is mainly dealt with from a social responsibility point of view, yet it is generally neglected in the decision - making processes of administrative bodies and in financial risk management systems. greater effort is therefore required on everyone β s part in order to focus more on these topics. conclusions the transition towards an economy with low carbon emissions is essential if we want to reduce the risks that climate change poses for our well - being. the financial sector, central banks and supervisory authorities cannot stand in for those who make the policies necessary to decarbonize our energy systems, but they can play an important role in promoting this process. it is in the interests of financial intermediaries to be more aware of how sustainability factors can affect their activities : it would make it easier for them to take into account the corresponding risks in their strategies and governance, thereby helping to improve performance. central banks and supervisory authorities are working towards making the financial system ready to face this transition. the spreading of new financial instruments could be made easier by : the creation of an eu taxonomy of environmentally sustainable activities and the introduction of [ product ] labelling schemes ( including the standards for green bonds ) ; the wider uptake of the new low - carbon benchmarks ; and the application of the new rules on disclosure. italian investors have expressed considerable interest in sustainable finance, but the supply of products is still not sufficient to satisfy demand : there is room for new projects to be financed, we need the right investment instruments, and it is vital that companies be able to provide the necessary information on the sustainability of their activities. bibliography bernardini e, di giampaolo j, faiella i, poli r, β the impact of carbon risk on stock returns : evidence from the european electric utilities β, journal of sustainable finance & investment, 2019. ciscar jc, feyen l, ibarreta d, soria a ( coordinators ), β climate impacts in europe : final report of | 1 |
gratitude to the commercial banks that have sent their representatives to come and attend this event. the support we have received to date has been unflinching throughout the years. we shall continue to work together in order to ensure that the levels of service delivery to our customers is raised and maintained at high standards. distinguished guests, this really, is not an occasion for long - winded speeches. it is rather a time when we should be having some fun, watching both our ladies β football teams from the ndola and lusaka offices battling it out on the battle field. thereafter, it will be the turn of the gentlemen to break a sweat in friendly combat. we naturally expect that when the opportune moment is presented, commercial banks and other invited entities will also produce teams comprising ladies and gentlemen β after all the central bank of the republic of zambia will soon be showing you precisely how it is done. it is now my honour and privilege to officially launch the commencement of 50th anniversary celebrations of central banking in zambia. please enjoy yourselves. i thank you. bis central bankers β speeches | β who to lend, what maturity structure, interest rates, asset management β have to be decided by each bank. greater freedom implies greater responsibilities. and there are many more players β public sector banks, private banks, co - operatives and nbfcs, etc. markets are free and more complex. 2. you may ask β so what? it is upto each corporation or its shareholders β if it does well, they will gain ; if they don β t, they will lose and so be it. it is their business, why should we collectively worry? here, banks and financial institutions are in a completely different category. what happens in a particular bank is a concern of all. fear of contagion and systemic implications. think of some recent bad cases involving banks, including co - operative banks. relatively small, but affected a lot of institutions, including some several times larger. in india, because of the dominance of public sector institutions, investors expect more. ( example of ltcm fund in u. s ). 3. another factor is that we live in a more volatile and inter - linked world. effects are instantaneous. if one letter of credit fails, it may affect other countries and other institutions. so much greater international attention. examples of east asia and japan. so international institutions are getting involved β in codes and standards, and in assessment of corporate governance structure. so, for all these reasons, this subject has acquired a completely new dimension and wider interest. and we can no longer avoid it. as you discuss the subject, please keep this in mind. what is the core of corporate governance β for private entities, it may be profit. in the banking sector, it seems that it is risk containment, and early warning systems and prompt corrective action to avoid failure. it is not risk aversion, but risk assessment and providing adequately to cover risks. it is also clear that earlier the detection, the lesser the cost. obviously, without a viable and accountable corporate governance structure, all this is not possible, however able the ceo. the three essential ingredients of corporate governance in this context are : ( a ) checks and balances : auditing committees, external and internal accounting systems which are independent of decision making on credit and borrowings. ( b ) clear division of responsibility : both vertical and horizontal, so that responsibility is taken by those who make the decisions. ( c ) disclosure and transparency : so nothing stays hidden for long, once a decision has been made | 0 |
things remain to be explored. we can never regain the two decades that have elapsed. but we can make full use of the insights obtained during the period in fulfilling our mission of bringing the economy back on track toward sustained growth and in contributing to building up effective safety nets to underpin financial stability in japan as well as in other countries. only when these tasks are done can we probably say, perhaps with a little bit of relief, that the spell the lost decades cast on us is at last broken, and that not everything was lost after all. thank you very much for your attention. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | us to ] fail to do the job and get the interest rate turn fairly soon. but the way to get the interest rate turned is not by hastening it prematurely. 8 that is our position and, as the governing council underlined today, the momentum of the euro area β s economic recovery continues to be supported by our monetary policy. this fosters the return of inflation towards 2 %. altavilla c., g. carboni, r. motto ( 2015 ), β asset purchase programmes and financial markets : lessons from the euro area β, ecb working paper no. 1864. for information on the methodology behind this analysis see praet, p. ( 2016 ), β the ecb β s monetary policy response to disinflationary pressures β, speech at the ecb and its watchers xvii conference organised by the center for financial studies, frankfurt, 7 april 2016. see the transcript of the federal open market committee meeting of march 18, 1980. bis central bankers β speeches we are on the right track, but we take nothing for granted either. the governing council will closely monitor the evolution of the outlook for price stability and, if warranted to achieve our objective, we will act β as we have always done β by using all the instruments available within our mandate. bis central bankers β speeches | 0 |
t t mboweni : overview of the south african economy address by mr t t mboweni, governor of the south african reserve bank, at the 89th ordinary general meeting of shareholders, pretoria, 17 september 2009. * * * introduction the past year has witnessed the most severe global economic downturn since the 1930s. at the time of the previous annual general meeting, the impact of the financial market crisis was becoming evident in various economies. however, at that stage the extent and depth of the global recession were still to be realised. in response to the slowdown, central banks and governments around the world have taken unprecedented and unconventional steps to protect their banking systems and economies. in south africa the well - regulated banking system was relatively insulated from the fallout. however, the globalised nature of the downturn meant that the domestic economy was not spared, and the resulting domestic recession required appropriate fiscal and monetary policy responses. these developments posed a new challenge to monetary policy and resulted in a renewed focus on matters of financial stability. appropriate supervision and regulation of the domestic banking sector and payment system have ensured an orderly financial market environment. although inflation was outside the target range, the stance of monetary policy was loosened significantly in the face of an expected moderation in inflation and a weakening economy. nevertheless, some upside risks to the inflation outlook remained and this constrained the monetary policy response somewhat. apart from these concerns, the south african reserve bank ( the bank ) also focused on maintaining and improving its internal operations. a comprehensive economic report, which is included as part of the annual report 2008 / 09, provides an analysis of developments in the domestic and international economy during the year under review. particular emphasis is placed on those developments that have had implications for the operations of the bank. as is usually the case, the focus of this address is on the main operational areas of the bank. monetary policy during the past year, monetary policy has been faced with new challenges. for the first time since the introduction of the inflation - targeting framework in 2000, monetary policy had to be implemented in the context of a domestic recession and against the backdrop of the severe and synchronised downturn in the world economy. at the same time, inflation remained well above the upper end of the inflation target range and, despite the downside pressures, targeted inflation was only moderating at a very slow rate. at the time of the previous annual general meeting, inflation was significantly outside the target range. the consumer price index excluding mortgage interest | force the authorities to again allow the kind of depreciation in the yuan exchange rate that had prompted a tightening in global financial conditions in late 2015 and early 2016. concerns about the sustainability of economic stabilization in china also raised worries that the prices of many commodities ( in particular of metals and minerals ) could experience a renewed sell - off in view of china [UNK] s key role in shaping demand for these commodities. furthermore, the last few months of 2016 saw a jump in crude oil prices as key producers, both inside and outside of opec2, somewhat surprisingly agreed on freezing production levels. as the market adjusted to a new supplydemand equilibrium, the possibility of a further rise in oil prices at a time when other commodity prices could be on the back foot posed a risk to the economic recovery of both the advanced economies and the oil - importing emerging economies. organization of the petroleum exporting countries page 3 of 12 the global backdrop that proved benign in 2017 however, as we look back at the developments over this year, we can be thankful that most of the risks i have listed above did not materialise. in the us, policy normalization continued largely like the fed had anticipated at the start of the year. the fomc3 raised its federal funds target rate by 25 basis points each at its march and june meetings, and markets largely anticipate a third hike in december, which would bring the funds target rate to 1. 25 - 1. 50 %, in line with the median forecast of the fomc participants at the start of 2017. separately, the fed began the gradual unwinding of its balance sheet in october. yet these steps have not triggered the yield - curve steepening or the sell - off in riskier assets that many feared. in fact, on 17 november, the 10 - year us treasury yield stood at 2. 36, which was 8 basis points lower than at the beginning of the year. the yield curve has thus flattened. at the same time, us corporate credit spreads, both investment - grade and high - yield, are lower than at the start of 2017, and the s & p 500 equity index has rallied by 15 % over the period. several factors contributed to this solid market performance. on the macroeconomic front, while real economic activity in the us continued to expand at a solid pace, price and wage inflation kept undershooting most official and private forecasts. indications that prices may have become structurally less responsive to an erosion of | 0.5 |
envisaged in the projections for the recovery to materialise, for productivity growth to pick up, and for both to be sustained. but as economic conditions normalise, wage growth should gradually moderate over the medium term to be consistent with trend productivity growth and our inflation target. the improving inflation outlook, continued strong transmission and further moderation in inflation all create scope for more confidence that we can dial back restriction. we are coming closer to the point when we will have the confidence to act. thank you. annexes 27 march 2024 slides english 1. see lagarde, c. ( 2024 ), β building confidence in the path ahead β, speech at the ecb and its watchers xxiv conference, frankfurt am main, 20 march. 2. euro area employment increased by 3. 8 % from the fourth quarter of 2019 to the fourth quarter of 2023. 3. while the reopening of the economy led to a wave of pent - up demand facilitated by savings that had been accumulated during the pandemic, it was largely negative supply shocks β pandemic - induced supply bottlenecks, the energy crisis and russia β s war against ukraine β that drove the sharp spike in headline inflation. see arce, o. ciccarelli, m., kornprobst, a. and montes - galdon, c. ( 2024 ), β what caused the euro area post - pandemic inflation? β, occasional paper series, no 343, ecb, frankfurt am main. recent findings indicate that core inflation in the euro area was also largely driven by supply - side shocks during the post - pandemic recovery. see banbura, m., bobeica, e. and martinez hernandez, c. ( 2024 ), β shocked to the core : a new model to understand euro area inflation β, research bulletin, no 117, ecb, frankfurt am main. 4. the euro area imports around two - thirds of its energy, compared with just over one - fifth for the united states. 5. real compensation per employee declined by 3. 2 % in the first half of 2022 compared with the end of 2021. 6. nominal wage growth has also been bolstered by increases in minimum wages at the national level. 7. see eurostat data and march 2024 ecb staff macroeconomic projections. growth in nominal compensation per employee increased to 5. 1 % in 2023 ( up | property investors have increased. funding costs and risks have also grown, raising costs for leveraged property investors and, in turn, contributing to the observed negative price dynamics in some markets. iii. 3 the euro area financial system turning to the euro area financial system, conditions in the euro area and other major money markets deteriorated significantly in mid - september, as the default of lehman brothers fuelled concerns about counterparty credit risk and challenged the widely - held view that any large bank, which was considered too big or too interconnected to fail, would be supported by public authorities. this event triggered a sharp increase in the spreads between euribor and eonia swap rates across all maturities ( as shown in chart 12 ). banks hoarded liquidity ( or lent only for the shortest maturities ) in view of growing concerns about the creditworthiness of counterparties and heightened uncertainty about their own liquidity positions. conditions in money markets in other advanced economies exhibited similar developments. since mid - september, central banks have stepped up the already remarkable levels of cooperation and provided liquidity in coordinated actions. moreover, the ecb and also other central banks have made extensive efforts to provide refinancing at longer maturities and to expand the lists of assets that are eligible as collateral in credit operations. not least thanks to these actions, the recent weeks have seen a noticeable improvement in the euro money market. for example, in the past week, the spreads between term deposit and overnight index swap rates declined considerably, by 15 to 20 basis points along all maturities, reflecting the continued fall in the euribor rates. the spreads fell to 80 basis points for the one - month maturity and 160 basis points for the 12 - month maturity. an interesting analysis related to the current problems in the money markets is presented in box 7 of the review which highlights the link between market liquidity and funding liquidity risk, on the basis of evidence from recent data. the results show that a negative relationship between high funding liquidity risk and low market liquidity was established only after the financial turmoil had erupted, while in β normal β times, there is no obvious relationship between the two measures. this supports the theoretical proposition ( advanced by recent academic research ) that interactions between the two measures emerge only when banks face funding constraints, that is, when shocks to banks β funding liquidity can lead to forced asset sales and may depress asset prices, with dire consequences for market liquidity. the tensions in the money market, and | 0.5 |
rates hovering around 2 % over the past couple of months. these developments are broadly in line with previous expectations of inflation rates for the remainder of the year, but recent upward tendencies indicate that the short - term trend has been affected by oil price developments. however, subdued economic activity and the stronger euro should help to dampen inflationary pressures over time. at the same time, however, we need to assess other factors which may involve upward risks to price stability. among those, wage developments play a particular role. wage growth remained on an upward trend until early this year. although we have indications that this trend may have come to a halt in the second quarter of 2002, close monitoring is necessary. to sum up, inflationary pressures have declined. looking forward, recent trends in economic activity and the exchange rate of the euro imply downward pressure on inflation rates, but other factors, in particular monetary developments, wage trends and oil prices, need to be monitored for their possible upward impact on inflation. overall, therefore, we are of the opinion that the risks to price stability over the medium term are at present balanced. we thus consider the current level of the key ecb interest rates to be appropriate. at this juncture it is of utmost importance that all macroeconomic policies remain oriented to the medium term, with all players fulfilling their responsibilities. monetary policy will continue to provide a reliable anchor for the economy, especially in an environment characterised by high uncertainty and fragile confidence. this implies focusing on the maintenance of price stability over the medium term. let me make a remark in this context, linked to comments which arise with a certain regularity in public debate and which argue that monetary policy should follow a different orientation, an orientation in which price stability is not the overriding objective. i should like to recall in this connection the fundamental and yet simple principle that monetary policy should not be overburdened with objectives that it cannot fulfil. it is well established that monetary policy can only control price developments over the medium term and cannot have an impact on output beyond the short term. monetary policy can certainly not heal structural problems in the economy, such as those underlying the high level of unemployment. in line with these principles, the treaty establishing the european community has assigned the ecb the primary objective of maintaining price stability. in the end, strictly following this mandate, with the appropriate medium - term orientation, is the best contribution the ecb can make to supporting sustainable non - inflationary growth and a high level of | very important. they contribute to making europe really " one market " and to providing further economies of scale. fiscal developments are monitored very closely by the ecb. we have noted that a number of governments need to reinforce their efforts to proceed along the path of fiscal consolidation in order to achieve the objectives of the stability and growth pact. by increasing the level of ambition of their stability programmes, especially in respect of expenditure restraint, they would free resources for productive investment and reassure the public with regard to future tax developments, thereby fostering economic growth. i have already expressed the view that the ecb's best contribution to economic welfare in europe is to maintain price stability in the euro area. the ecb will continue to address governments and other policy - makers, convinced as we are that monetary policy does not act in a vacuum and that the task of maintaining price stability is much easier in a flexible and competitive economy. in this regard, we have taken note that, while some countries have implemented structural reforms, much remains to be done if the objectives set at the lisbon meeting are to be attained. one area where further progress is needed is the integration of the equity and securities markets. there is still a certain degree of fragmentation in europe's financial markets. the eurosystem is directly involved in the area of securities and settlement systems, because of the repercussions these may have on the conduct of the common monetary policy. the eurosystem is also active in ensuring that retail payments systems are harmonised across europe. at the moment, cross - border retail payments cost more and take longer than payments effected within countries ; this is incompatible with a well - functioning monetary union. all these aspects represent important challenges for the eurosystem and the financial sector at large. in conclusion, i hope that my presentation of the challenges the ecb and other european policymakers are facing has not distracted you from the assessment in the first part of my talk. it is perhaps useful to restate my main findings. the introduction of the euro has been a notable success, and i am sure that the euro will contribute to raising economic growth in europe in a lasting manner. | 0.5 |
not provide absolute protection against a loss of confidence. credit suisse was always fully compliant with all regulatory capital requirements, even at the peak of the crisis. clients, market participants and rating agencies, however, were increasingly casting doubt on the bank β s fundamental resilience. they also questioned its ability to successfully implement the announced strategic transformation plan. ultimately, credit suisse lost the confidence of the markets. second, its at1 capital instruments were written down when state support became unavoidable. at this late stage in the crisis, they thus played an important role in the package of measures. at1 capital instruments actually contain specific features that are intended to absorb losses in the early stages of a crisis so that a bank can stabilise its situation through its own efforts. however, these features were not applied. in particular, credit suisse refrained from cancelling interest payments on these instruments despite incurring losses over a prolonged period of time. such a measure would have provided immediate financial relief for the bank. at the same time, however, credit suisse would have exposed itself to the risk of negative market reactions β and thus also to the risk that refinancing would have become even more difficult and expensive. third, customers withdrew deposits at an extremely rapid rate, especially last october, and then in particular in march of this year. credit suisse β s liquidity buffers were still able to cover the considerable outflows in october. in mid - march, however, its liquidity was no longer sufficient to cover the exceptionally rapid outflows. a contributory factor in this regard was that a significant portion of the liquidity held was needed for operational purposes. in addition, the collateral prepared by credit suisse was insufficient to cover the outflows using the snb β s existing liquidity facilities. the liquidity assistance made available on the basis of emergency law, ela +, thus created the necessary time window until a comprehensive solution to the crisis of confidence could be worked out. in future, banks should be required to prepare sufficient assets in such a way that they can be delivered to their respective central banks as collateral for existing liquidity facilities. page 5 / 8 zurich, 22 june 2023 thomas jordan, martin schlegel and andrea m. maechler news conference taken together, these observations raise an important question concerning the β too big to fail β ( tbtf ) regulations : are these regulations adequately geared towards the timely adoption of correct | recommends that ubs continue with the capital strengthening process β including, in particular, pursuing a policy of dividend restraint. credit suisse, meanwhile, should accelerate its process and take all action necessary to expand its lossabsorbing capital base significantly during the current year. the snb also recommends that both big banks increase their transparency with regard to resilience. concretely, they should publish information on their capitalisation as defined under basel iii once fully implemented β as, indeed, ubs has done in the two most recent presentations of its quarterly results. they should also regularly calculate and disclose their risk - weighted assets according to the basel standardised approach. the results of such calculations would provide a basis for comparison with risk - weighted asset figures calculated using internal risk models. this comparison would enable the ongoing reduction of risks to be presented more transparently. implementing these two measures is necessary from a financial stability perspective. however, it is also in the big banks β own interest to hold sufficient loss - absorbing capital, as a high level of resilience strengthens their competitiveness in the core business of wealth management, and boosts market confidence. situation at domestically focused commercial banks i would now like to turn to our assessment of domestically focused commercial banks. there are clear and growing signs of a build - up of imbalances on the swiss mortgage and real estate markets. over the past 12 months, mortgage lending volumes and real estate prices have once again grown strongly. thus, the mortgage - to - gdp ratio, which was already high in a historical comparison, continued to increase. at the same time, residential real estate prices have reached levels that, in some cases, exceed those that can be justified by fundamental factors, such as demographics or per capita income. taking the national average, this is the case for prices of owner - occupied apartments. in some regions such as lake geneva, lake zurich and lake zug, this is the case, on average, for all segments of the residential property market. bis central bankers β speeches under the baseline scenario, the momentum in the mortgage and real estate markets continues. it is therefore to be expected that imbalances will continue to build up, and that, consequently, the risk of an abrupt correction of these imbalances will increase over the medium term. for domestically focused commercial banks, average capitalisation relative to regulatory requirements is at a historically high level. moreover, most of these banks β capital is of the highest quality, and thus loss - | 0.5 |
offset the constraints imposed by the small size of the local market. of course, this very expansion has opened the financial sector in trinidad and tobago to potential risks because of the greater income volatility of some of our caribbean neighbours. not unexpectedly, the expansion of the financial system and the emergence of new and liberal structures are proving to be a tremendous challenge for our supervisory authorities whose responsibility it is to ensure that institutions take adequate steps to manage exposure to systemic risk. accordingly, the central bank is currently working on amendments to the financial institutions act which, inter alia, will give the bank the authority to : ( i ) conduct consolidated supervision of conglomerates ; ( ii ) facilitate a better focus on cross - border risks ; ( iii ) allow the regulator to prescribe system - wide capital adequacy levels ; ( iv ) make mergers and acquisitions subject to the approval of the central bank ; and ( v ) authorise the exchange of information with other regulators both locally and regionally. ladies and gentlemen, over the past few years, in the context of a lower interest rate environment, mutual funds ( or as they are formally called, collective investment vehicles ) have assumed an evergrowing presence on the financial landscape of trinidad and tobago. as mr. benn has noted, the utc established the first mutual fund in trinidad and tobago in 1981, but since the opening of the mutual fund market in 1993, subsidiaries and affiliates of commercial banks have become major players in the mutual fund market. [ in 1981, the local mutual fund market started with $ 25 million under management, invested in equitybased and money market funds. today the mutual fund market has in excess of $ 24 billion under management with resources invested in equities, debt and real property or hybrids of these, as well as money market instruments. ] the growing importance of mutual funds as a savings vehicle is highlighted when compared with what is happening in the commercial banks. in 1997, commercial bank deposits amounted to $ 14 billion while mutual funds totalled $ 3. 3 billion. however, by 2003 mutual funds accounted for $ 20 billion, while commercial bank deposits accounted for $ 23 billion. the data clearly indicate that over the period, the rate of growth of mutual funds was significantly higher than that for commercial bank deposits. there are no indications that there will be an abatement of the growth of the mutual funds sector. in fact, it is becoming evident that mutual funds are quickly becoming the preferred form of investment in trinidad and tobago | in paper mode, is the industry geared up for such changes? is there a specific plan to go paperless by these service providers? interoperability also pre - supposes a central infrastructure for clearing and settlement. we have already permitted transfer of funds from a fully kyc compliant ppi issued by a non - bank authorised entity to a bank account through the sponsor bank route riding over the banks membership with nfs, npci. why is such a fund transfer not picking up? in our vision document we have discussed about the need for collaboration and co - operation between payment system operators. what is level of co - operation amongst the ppis issuers? have there been any efforts to collaborate at least on boarding of merchants? is there any effort to standardize the merchant code and enable all the ppi issuers once approved under the pss act, to have access to all the merchants? has the industry deliberated how collaboration and co - operation could be achieved in the three party model to increase the scale and volume of transactions? arriving at a consensus on these issues will increase the acceptability amongst the customers as they will have a wider choice of ppis and will help achieve the objective of increasing the cashless transactions. kyc related issues several requests for liberalisation of kyc requirements have been received from the industry. several schemes in other countries which are operating in a relaxed and liberalized kyc environment have been cited. we are also aware of the use of ppis for disbursement of government benefits in some countries. before sharing with you what we are reviewing, let me sound a word of caution. how many of you have read ravi subramaniam? more bis central bankers β speeches specifically, how many of you have read his book β the incredible banker β? can we draw comfort that, what ravi describes is mere fiction? the underlying message is clear. competition cannot degenerate into the race to the bottom! relaxation cannot be confused with abdication. if you are allowed to travel fast on a newly laid road, it does not mean that you have unbridled freedom to close your eyes and drive! now let me turn to what we are trying to review. in our vision document, we have committed that the ppi guidelines would be reviewed to provide further impetus to the industry. but it needs to be appreciated that closer the ppi gets to a bank account, the greater the need to apply the same set of kcy / aml regulations which | 0 |
flexible and forward - looking approach to financial supervision that seeks to motivate prudent management - and thereby complete the β virtuous circle β by encouraging further advances in risk management. the reforms underway are especially evident in the banking world under the basel committee β s β basel ii β framework. i should add that the international association of insurance supervisors ( iais ), a fellow association of supervisors in the insurance area, is now discussing a supervisory framework that would apply to all insurance regulatory systems globally. evolution in risk management and the reform of financial supervision should complement and reinforce each other, and the progress in each area will be influenced by the work underway globally to revise accounting guidelines. the geneva association has taken a great interest in this topic, so i will conclude my remarks with some brief thoughts from my perspective on the convergence of accounting standards, advances in risk management, and supervision. ii. trends across financial services sector allow me to begin with an overview of recent trends in risk management. last year, a body representing major financial supervisory agencies conducted a study of 31 banks, securities firms, and insurance companies in 12 jurisdictions. this body - called the β joint forum β - consists of expert supervisors from member agencies of the basel committee, the international organisation of securities commissioners ( iosco ), and the iais. the joint forum seeks to identify best practices and develop guidance for activities across the financial services sector. in its report, which was published in august 2003, the joint forum identified two important and recent trends among large, complex firms engaged in banking, securities, or insurance, or in some mix of these activities. a. integration of the risk management function. one of the most notable advances in risk management across all three financial services sectors is the growing emphasis on developing a firm - wide assessment of risk. this constitutes the first trend in the joint forum β s report. improvements in technology and telecommunications have made it easier for firms to gather, collect, and analyse large amounts of data on their exposures and business activities efficiently and increasingly in near β real time. β to make the best use of firm - wide data, some organisations have established a dedicated risk management function to foster more highly integrated and systematic approaches to risk measurement and management. the risk management function typically promotes the use of common risk measures across business lines. it can then report the firm - wide risk data to senior management. reports may range from daily updates on β value - at - risk β trading positions to regular, if | . similarly, economic policy measures have enabled progress to be made on correcting the problems faced by the financial sector during the worst of the recent crisis. nevertheless, the recovery has also benefited from a series of factors exogenous to domestic economic policy with varying degrees of persistence. these factors include the role played by ecb monetary policy and the significant drop in the oil price between mid2014 and early 2016, and, until the end of last year, the improvement in external markets, in a context of a global economic recovery. however, the effect of these factors can be expected to taper in the future. the foreseeable loss of momentum by the expansionary effects of demand - side policies is also relevant. in 10 / 14 this context, it is particularly desirable for prominence to be given to a renewed reform drive, geared towards correcting the spanish economy's persisting vulnerabilities. fiscal policy i will first mention the fiscal policy situation. over the past decade the spanish authorities have had to make the fiscal adjustment needed to guarantee the sustainability of the public finances. this process has brought the budget - deficit - to - gdp ratio down from a maximum of 11 % in 2009 to 3. 1 % last year. despite this deficit cut, spain β s public accounts continue to show significant weaknesses. first, the european commission estimates the ( cyclically adjusted ) structural budget deficit to still be around 3 % of gdp in 2018, the highest in the euro area. second, although government debt is on a slightly downward path from its historical peak of 100. 4 % of gdp in 2014, at around 98 %, it is still very high. the empirical evidence reveals that maintaining a very high level of public debt for a prolonged period tends to hamper economic growth as it becomes a source of vulnerability and reduces the scope for the public budget to act as a stabiliser in the event of a recession. the simulations made in a number of papers published by the banco de espana show that, on realistic assumptions, the process of reducing spain β s government debt will be very gradual. it may even take several decades to reach a debt - to - gdp ratio of 60 %, which is the reference value in europe β s current fiscal rules. in the light of these considerations, priority should be given to taking advantage of the current favourable economic context to reduce the vulnerabilities deriving from the public finances and create budgetary room for manoeuvre with which to address future crises | 0.5 |
in the baseline scenario in cumulative terms. [ 4 ] panetta, f. ( 2020 ), β the price of uncertainty and uncertainty about prices : monetary policy in the post - covid - 19 economy β, keynote speech at a capital markets webinar organised by the european investment bank and the european stability mechanism, 1 july. [ 5 ] european instrument for temporary support to mitigate unemployment risks in an emergency ( sure ). related topics coronavirus pandemic emergency purchase programme ( pepp ) monetary policy disclaimer please note that related topic tags are currently available for selected content only. uncertainties economic development euro area european central bank directorate general communications sonnemannstrasse 20, 60314 frankfurt am main, germany tel. : + 49 69 1344 7455, email : media @ ecb. europa. eu website : www. ecb. europa. eu reproduction is permitted provided that the source is acknowledged. media contacts copyright 2020, european central bank | european central bank : press conference - introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, and mr lucas papademos, vice - president of the european central bank, berlin, 4 may 2005. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to the press conference here in berlin. today is the 11th time that the governing council has met outside frankfurt, and i would like to thank president weber for his invitation and hospitality. let me also express our gratitude to the staff of the deutsche bundesbank for their excellent organisation of today β s meeting. let me now report on the outcome of today β s meeting, which was also attended by commissioner almunia. on the basis of our regular economic and monetary analyses, we continue to see no significant evidence of a build - up of underlying domestic inflationary pressures in the euro area. accordingly, we have left the key ecb interest rates unchanged. the exceptionally low level of interest rates across the entire maturity spectrum provides considerable support to economic activity in the euro area. at the same time, continued vigilance with regard to upside risks to price stability is warranted. allow me to elaborate on our decision, turning first to the economic analysis. regarding the current situation and the short - term outlook for economic activity, recent data and survey indicators are, on balance, on the downside. some of the downward risks to economic growth identified earlier, in particular those related to persistently high oil prices, appear to have partially materialised over the past few months. at the same time, when looking beyond the short term, conditions remain in place for stronger real gdp growth. on the external side, euro area exports should continue to be supported by foreign demand. on the domestic side, investment should benefit from the very favourable financing conditions, the robust corporate earnings currently being observed and ongoing improvements in corporate efficiency. consumption growth should evolve broadly in line with expected developments in disposable income. downside risks to economic growth continue to be related to oil price developments and global imbalances. turning to price developments, according to eurostat β s flash estimate, annual hicp inflation was 2. 1 % in april, unchanged from march. over the coming months, annual hicp inflation rates are likely to remain around these levels. wage increases have remained contained over recent quarters and, in the context of moderate economic growth and weak labour markets, this trend should continue for | 0.5 |
functioning markets add to welfare of producers as well as consumers. efficient agricultural markets can also be a potent tool for poverty reduction. agricultural markets in india, in particular the supply chain management and business models, are inefficient. in india, farmers β produce is generally disposed of in the village, rural / primary market or secondary agricultural market. the challenges facing supply - chain management and agribusiness in india can be broadly classified into three, namely, 1 ) lack of accessibility to regulated markets, 2 ) lack of competitition under the agricultural produce market committee ( apmc ) act, and 3 ) absence of a nationwide common agriculture market. these are challenges that run across the various channels through which the supply - chain and agribusiness models operate. these channels are ( i ) producer - consumer, ( ii ) producer - retailer - consumer, ( iii ) producer - wholesaler - retailer - consumer, ( iv ) producer - commission agent - wholesaler - retailer - consumer and ( v ) producer - village merchant - wholesaler - retailer - consumer. agriculture markets in india are regulated through the model apmc acts. the number of regulated ( secondary ) agricultural markets stood at 7, 157 as of march 2010 as compared to just 286 in 1950. there are also about 22, 221 rural periodical markets, about 15 per cent of which function under the ambit of apmc regulation. 5 the model apmc act allows states to collect market fees from the buyers / traders on the sale of notified agricultural produce which are generally high. the high incidence of commission charges on agricultural / horticultural produce renders marketing cost high. there are other charges like entry tax / octroi tax that vary across states as well as across commodities. these charges prevent the emergence of a nationwide common market for agricultural produce. moreover, restrictions on the movement of goods under the essential commodities act remain in place in various states. position paper no. 1 from the img on inflation http : / / finmin. nic. in / workingpaper / img % 20on % 20inflation. pdf average area served by a market is 115 sq. km while an average area served by a regulated market is 454 sq km. according to recommendations by national farmers commission, availability of markets should be within 5 km radius ( approx. 80 sq km ). bis central bankers β speeches these had inhibited free access of agriculture markets. most of the agricultural markets are also characterised by dominance of cash based | discussing the role of agribusiness in growth and inflation, it would be apposite to define and understand the concept of agribusiness. way back in 1957, davis and goldberg 1 had defined agribusiness very lucidly as the sum total of all operations involved in the manufacture and distribution of farm supplies ; production operations on the farm ; and the storage, processing and distribution of farm commodities and items made from them. thus, agribusiness essentially encompasses today, the functions which the term agriculture denoted 150 years ago and agriculture now is a subset of the larger superset called agribusiness. as far as growth and inflation is concerned, you may be aware that the weights attached to objective of growth vis - a - vis that of price stability in choice of policy measures vary according to the extant macroeconomic environment. for example, during the great moderation, the policies all over the world were focussed on growth enhancing measures. presently, in view of the continuance of low inflation and low or negative growth in the developed economies, the policy measures, mainly in the form of liquidity enhancement and low interest rates, continue to focus on augmentation of growth. quoted from king, robert p., michael boehlje, michael cook, and steven t. sonka ( 2010 ) β agribusiness economics and management β, american journal of agricultural economics, special issue commemorating the centennial of the aaea, vol. 92, no. 2, april bis central bankers β speeches in india, however, the conditions are very different. along with economic slowdown, inflation is ruling significantly above the threshold level, beyond which inflation turns inimical to growth. under the current macroeconomic environment, indian policy makers have to think of various measures that can simultaneously achieve the twin objectives of higher growth and lower inflation. opinions differ on the utility of different policy measures at the current juncture and you all may be familiar with the current debate on the timing, sequencing and complementarity of various measures. there is, however, near unanimity, amongst all that agriculture and agribusiness growth is a necessary prerequisite for moderation of inflation, particularly food inflation, as well as for acceleration and sustenance of inclusive growth. the impact of agribusiness on inflation is also both direct and indirect. the direct impact of agribusiness is visible in the form of food inflation. with demand arising from increasing population and | 1 |
##repancy between the economic concept that we would want to measure and the real phenomenon that the statistics attempts to measure. for example gross domestic product seeks to measure the total economic activity, the value added that takes place in the economy over time. it is almost impossible to measure this directly. instead much of the data is estimated from surveys. this gives rise to measurement issues relating to coverage, sampling and non - response, but not such as to undermine their integrity. it is therefore normal to have revisions as new information that improves the accuracy of the data is received. gdp growth and inflation ( as measured by changes in cpi ) are two of the most important indicators that are closely watched. they do have both economic and political significance, as they have become the standard tools for assessing performance. 1 / 2 in fact, ease of access to official statistics has become a hallmark of open and democratic societies, making it imperative for ensuring its accuracy and timeliness. the only way we can measure our short - to - medium term macroeconomic performance would be to effectively and accurately measure trends in monetary aggregates, balance of payments, debt sustainability and fiscal performance in addition to gdp and inflation. sound statistics are necessary to monitor these trends closely and accurately because of the economic costs that can accrue from imbalances and deviations of these indicators from sustainable levels. mr. chairman, a conscious effort on our part to improve upon data collection in terms of timelines and accuracy has an international dimension of interest. data are essential for investors, international organisations, financial institutions, banks and fund managers who rely on data of various countries to evaluate their investments. we all agree that data can be unreliable and prone to different interpretations or too dated to be useful. improving upon the reliability and timeliness of data enhances the chances of attracting foreign direct investment and allowing better assessment of various risks associated with investment decisions. absence of data closes the door to any access to financing from the international capital markets in a globally interdependent world. there is a need for proper funding and adequately resourcing our official institutions in charge of generating data, not only to ensure that disseminated data are accurate and reliable but also to ensure that they are current and not dated. mr. chairman, notwithstanding the significance of accuracy and timeliness of data in our national building efforts, our official institutions that have responsibility for collecting, collating and analyzing data have not received the prime support in terms of resources. it is caught up in a vicious | paul a acquah : workshop on the general data dissemination systems ( gdds ) opening address by dr paul a acquah, governor of the bank of ghana, at the workshop on the general data dissemination systems ( gdds ), accra, 17 august 2005. * * * mr. chairman, distinguished stakeholders, ladies and gentlemen, i deem it an honour and at the same time necessary to be part of this important workshop and i appreciate the opportunity to give the opening address. you would agree with me that the appetite for statistics and other information on the economy has increased considerably in this country and that users have become more resourceful in the analysis and use of data. this growing interest has been motivated by a desire to make assessments of how far we are from our national objectives, be they on growth, inflation, income distribution and incidence of extreme poverty or how distant or close we are to the millennium development goals. all this requires a robust and responsive statistical system to monitor developments and to allow policy changes to meet changing demands. mr. chairman, statistics do not only serve national purposes but they have global implications and it is a significant development that ghana has become part of the gdds platform. the gdds requires a good set of principles for routine data dissemination. adherence to its guidelines should enhance the usefulness of the data and provide users with valuable information to plan their work and programs. it also serves as a yardstick by which ghana can judge its performance in the field of statistics. one important outcome of the gdds platform is the collaboration with other statistical providers, and the fostering of a network among institutions. ghana β s adherence to the gdds should ultimately lead us to a strengthened statistical system. i am very sure we all agree on the usefulness of data and there would be no need to run you through that. however, we should acknowledge that good statistics as collected according to agreed international best practices, using appropriate methods for data collection, processing and dissemination are crucial as a tool for national development. accurate and timely data would allow us to formulate sound policies, effectively compare our progress over time and space and also set benchmarks for measuring progress in the future. ladies and gentlemen, it is however of paramount importance that the data generation process is thoroughly understood so that the appropriate interpretations could be made. economic statistics are often only an approximation of the underlying reality they are attempting to measure. even where the data can be perfectly measured there is often disc | 1 |
. in 2001, taken on its own, the figure was as much as 1Β½ percentage points. in my view, both temporary and long - term factors have contributed to germany's relatively poor performance in the euro area. as far as the temporary factors are concerned, it should be remembered that, already in the run - up to stage three of european monetary union, interest rates had fallen sharply in a number of eu countries with previously fairly high short and long - term rates of interest. for example, interest rates for long - term government bonds in italy and spain, even in 1995, were 5 to 6 percentage points higher than the rates for german federal bonds. as the home of the former anchor currency in the erm, germany did not benefit directly from this process of interest rate convergence. another cause of relatively weak growth in germany is the crisis in the construction industry, especially in eastern germany. in this sector, the capacity built up immediately after reunification exceeded the longer - term ability of the real estate market to absorb it. reduced construction activity depressed german economic growth. without the decline in investment in construction since the mid - 1990s, the shortfall in german growth compared with the euro area as a whole would therefore not have been as great. by contrast, construction activity in other european countries has remained an important mainstay of economic growth. consideration also has to be given to the fact that living standards in the monetary union are still very disparate. since the poorer countries are supposed to catch up with the emu average, they have to go on growing more strongly than those countries which have already achieved a high level of income. one very important β if not the most important and continuing β reason for the inadequate pace of economic growth in germany is the heavy burden of taxes and social security contributions. added to this are strict regulations in some parts of the economy. above all, there is too little labour market flexibility in germany. in periods of a cyclical downswing, the rise in unemployment in germany was far sharper than the fall during periods when there was an upturn. for instance, the number of people out of work in western germany rose from its cyclical low point between 1991 and 1997 by some 1. 3 million to around 2. 5 million. by 2001, the number of unemployed had been reduced by no more than just over half a million. in germany, the incentives to take up employment are restricted by the high - level marginal burden imposed by taxes and other public levi | oudheusden, β financial literacy around the world : insights from the standard and poor β s ratings services global financial literacy survey ". 6 / 6 bis central bankers'speeches | 0.5 |
conditions of great poverty, he is able to save, despite the small output produced by his methods of working, and he does save, for he is very thrifty. capital is hoarded in gold. as a result, albania possesses a large stock of precious metals valued at 100 million gold francs. but this capital, which, if put to use, would suffice to place economic life in albania on the road to progress, is hidden. credit and credit organizations do not exist in albania. rates of interest at 30 % are by no means rare. the reason for this is the lack of confidence. the albanian β s belief in the stability of the government is not firm enough for him to risk his money in financial enterprises. in order to bring capital forth out of the hiding places in which it lies unproductive, confidence must be created... β the best means to this end was the establishment of a national bank, an institution that albania needed greatly at that period. its establishment was urgently needed, for it alone could awaken albania to the conditions of modern economic life. its principal mission was to create confidence, and hence credit and the spirit of enterprise in albanians. the albanian national bank was established in 1925 as an albanian - italian joint - stock bank. it had the exclusive right of issuing the currency β in metallic coins ( gold, silver and bronze ) and banknotes β and determining its legal tender. the amount of banknotes the bank put in circulation had gold or silver coverage. the bank gave albania the first national currency β the gold franc β thus, going back to the gold - banknote monetary parity. the bank β s greatest achievement was the establishment of a sound monetary system that successfully weathered the difficulties of the global monetary system during the 1930s β global economic crisis. the albanian currency remained faithful to the gold - banknote parity until april 1939. being based on gold bars, the albanian banknotes were accepted at sight in all main bank counters globally. the albanian franc was one of the strongest european currencies in the period between the two world wars. the period between 1926 and 1939 corresponds to the establishment of a genuine banking system according to the market economy - based system and the banking traditions of that period. in the philosophy characterizing that system and time, which is basically similar to the current one, money played the main functions of the medium of exchange, store of value and unit of account. this is clearly evidenced in the press of | famous harry potter cannot exist without gringotts bank, which j. k. rowling describes as a multiple story white building with underground vaults that stretch to an unknown depth below the earth. economic and social development has constantly introduced innovations in the area of monetary systems, and also of banknotes and coins. the first banknotes were born as identical counter - values of the amounts of precious metals, mainly of gold, and they were explicitly guaranteed by the states and sovereigns for their gold parity. this characteristic is also found in the banknotes of the first period of the albanian state. the banknotes issued during this period are designated as β gold franc β implying their coverage with physical gold at a fixed and invariable rate. bis central bankers β speeches the further evolution of human societies and their economic and political systems introduced great innovations in the monetary area. the development of commercial banks, the credit system and central banks were crucial moments in the economic progress. central banks, as public institutions mandated to issue and circulate the currency, originate from earlier times. the first examples of central banks, closer to today β s perception of the central bank, date back to the 17th century in england or sweden. these institutions, originally with a clear commerce orientation, were responsible for the issue of currency and servicing the state needs with loans or lending for different purposes. the modern central bank originates from the 20th century, and the us fed served as a model for a number of other central banks. the attribution of the supervisory and regulatory functions of the banking system and the orientation of the central banks β mission in terms of economic objectives, like low inflation or stable economic growth, marks the starting point of central banks at their present form. the latter have played a primary role in the further progress of monetary systems. fixed - rate convertibility to physical metals was found problematic in the economic and monetary management. the great economic depression of 1929 β 1932 clearly showed that monetary policy, designed as an opportunity for public authorities to affect the amount of money in circulation and its price, or the interest rates, is a valuable instrument to mitigate economic fluctuations. beginning from the 20th century, the issued banknotes and coins lost their convertibility into gold at fixed and invariable rates. the issued currency, from this moment on also referred to as fiat money, derives its value from the state β s obligatory force. however, this is only half of the picture. the most important aspect determining the value of | 1 |
in a flexible inflation targeting framework β, in w. hunter, g. kaufman and m. pomerleano, eds., asset price bubbles : the implications for monetary, regulatory and international policies. cambridge, ma : mit press, pp. 427 - 444. chen, n. k. ( 2001 ), β bank net worth, asset prices and economic activity β, journal of monetary economics, vol. 48 ( 2 ), pp. 415 - 436. christiano, l. j., motto, r. and rostagno, m. ( 2008 ), β financial factors in business cycles β, mimeo, northwestern university. clarida, r., gali, j. and gertler, m. ( 2000 ), β monetary policy rules and macroeconomic stability : evidence and some theory β, quarterly journal of economics, vol. 115 ( 1 ), pages 147 - 180. cogley, t. and sargent, t. ( 2005 ), β drifts and volatilities : monetary policy and outcomes in the post - wwii us β, review of economic dynamics, vol. 8, pages 262 - 302. curdia, v., and woodford, m. ( 2009 ), β credit frictions and optimal monetary policy β, mimeo. dooley, m. p., folkerts - landau and garber, p. ( 2004 ), β the revived bretton woods system β, international journal of finance and economics, vol. 9, pp. 307 - 313. dowd, k., cotter, j., humphrey, c. and woods, m. ( 2008 ), β how unlucky is 25 - sigma? β, nottingham university business school cris working paper 2008. iii, march. freeman, r. b. ( 2008 ), β labor market imbalances : shortages, surpluses or what? β, in j. sneddon little, ed., global imbalances and the world economy, pp. 159 - 182. federal reserve bank of boston : boston. furceri, d., and mourougane, a. ( 2009 ), β the effects of financial crises on potential output : new empirical evidence from oecd countries β, oecd working paper 699, may. gerali, a., neri, s., sessa, l., and signoretti | rewards, but cap the downside losses, encourage traders to take on excessive risk. one unintended consequence of financial innovation was that it enabled clever traders to create positions with considerable embedded leverage β that is, portfolios requiring little payment up front, but whose returns amplified changes in the value of the underlying assets. traders then had a natural incentive to gravitate towards these types of highly risky instruments. a related problem is that it is extremely difficult for management to observe the risk being taken on by their traders, particularly when innovative financial instruments have unusual return distributions. take, for example, a deeply out of the money option. this pays a steady income premium and has little variation in value when the underlying instrument is a long way from the strike price, but generates rapidly escalating losses in bad states of the world. in good times this looks like a high return, low risk instrument. only in very bad states of the world do the true risks taken on become apparent. information problems information problems have also been central to the crisis. most of the asset - backed securities that have proved toxic are far from simple. a plain vanilla residential mortgage backed security ( rmbs ) typically contains tens or hundreds of thousands of underlying mortgages and even the documentation on them can run to a couple of hundred pages. these instruments provide diversification, but unless the mortgages are fairly homogenous in nature, it will be difficult for an individual investor to monitor the evolution of the underlying risk exposures at all precisely. the problem is compounded when the pool of mortgages is continually topped up to replace maturing mortgages, as is the case with master trusts, as the characteristics of newer cohorts may differ from those of older cohorts. in addition, us rmbs contain embedded options that further complicates the evaluation of their worth. ordinary us mortgage loans are usually non - recourse and offer the borrower the option of both early repayment and of default if the price of the house falls below the value of the loan, leaving the lender to recover what they can from re - sale of the house at what will be an uncertain price. us sub - prime mortgages also embed an option for the lender. essentially sub - prime mortgages are structured as a rolling sequence of short - term loans, with the lender sharing in some of the increase in housing equity when house prices rise and having discretion over whether to offer a new and affordable loan depending on | 1 |
high cost poses a barrier to inclusion. greater access to payment or transactional accounts can be an effective on - ramp to a broader range of financial services and boost our efforts toward financial inclusion. in addition, a shift to electronic payments will facilitate efficiency, which is convenience at the right cost. this will lead to lower business costs and higher consumer expenditure, a driver of economic growth in many economies. in fact, a cross country study found that a 10 % increase in the share of electronic payments was correlated with a. 5 % increase in consumer spending. 1 this efficiency will also drive business innovation and promote greater transparency in transactions. all these are also crucial in preparing for a more integrated asean economic community. le sar, porteous, introduction to national payments system, national payments system institute, 2013. bis central bankers β speeches nevertheless, while we celebrate this milestone today, we realize that this is just the beginning. there are still things to do and bear in mind as we take this journey forward. let me focus on three : first, it is important to establish well - defined rules, policies and processes to set the stage for areas of cooperation and areas of competition. this will facilitate the entry of new players, create a level playing field and provide the framework for inter - operability. second, there is a need to upgrade current arrangements to enable the participation of payment service providers, including non - banks. this will support the environment for innovation and efficiency in payment channels and the development new and inclusive business models. third and last is to always have the customer in mind. the retail payment system should provide each of its users with transparency, certainty and reliability. these are the critical steps in this journey ; which will surely lead us to a destination that will benefit all β a truly inclusive and efficient national retail payment system that promotes electronic payments in the country. these benefits reveal the very purpose of this journey. i have no doubt that the members of our banking community will all continue to work together toward this end of providing better payment services to our people. our next step is to collaborate on how to best implement not only the merger of atm and pos or point of sales operations, but the overall integration of our payments system. finally, i thank and congratulate everyone responsible for this milestone event. mabuhay ang banking system! mabuhay po tayong lahat. maraming, maraming salamat! bis central bankers β speeches | ], the economy would slow down. the slow economy is due to the high cost of imports and, unluckily, the high cost of some local agricultural products, [ which ] has reduced money for discretionary spending. this, together with the policy rate increases, give us an even more chance of seeing below 4 percent inflation next year. our policy rates are not in response to the current inflation per se ; they are forward - looking because we take very seriously our inflationtargeting mandate. if inflation is high next year, this would not be due to external supply shocks anymore but due to second - order effects. we notice, for instance, that wages are rising and transport fare petitions. there's very little we can do about this. but absent other shocks, we expect inflation to be below 4 percent next year and closer to 3 percent than to 4 thereafter. my point is we did not take away growth [ with our tightening ]. what we did was create bigger growth opportunities next year and the next. the other way to look at it is : we might have lost a little bit of output this year, but if we had postponed our actions, we would have lost more in the following years because the pressure to raise rates would have been even greater if we had not acted on inflation this year. in tagalog, mas mabuti ang maaga kaysa magaling. don't see our moves as being anti - growth. we're actually laying the groundwork for better growth in the coming years. another point : our banks are in a good position to absorb losses : there's enough provisioning, and capitalization is quite high β much higher than what's required. not all non - financial corporates are healthy, but that's the very nature of capitalism. in any distribution of firms in any capitalist economy, some will be doing much better or worse 2 / 3 bis - central bankers'speeches than average, but on average, [ the banks are ] quite strong. in my experience with the monetary board, never were we told by the government that our policy rate was too high. never were we told by the government to be gentle to a bank. the independence of the central bank is well understood by authorities, most of all by the current secretary of finance. thank you. 3 / 3 bis - central bankers'speeches | 0.5 |
has conducted a wide - ranging communication campaign, aiming to reach its audiences via multiple channels. this has given our stakeholders the necessary information about the banknote and its security features. but there is also another reason why banknotes are a fundamental part of what we do β one which is more significant for the euro area than for others. in a multi - country union such as ours, it is inevitably harder to create a shared identity than in a single nation state with its own culture and history. the euro is something we all have in common β it is a tangible symbol of european unity. holding a euro banknote and knowing that it can be used in 19 countries is a reminder of the deep integration europe has attained. indeed, when asked about the most important elements of european identity, the single currency is the one most frequently quoted by euro area citizens after democracy and freedom. and in spite of the difficulties in recent years, support for the single currency now stands at 70 %, equalling the highs recorded in the pre - crisis period. with the collaboration of the national central banks, credit institutions and banknote equipment manufacturers, hundreds of thousands of machines and devices have been updated during the last nine months, meaning that β starting today β the new β¬50 banknote is available. 1 / 1 bis central bankers'speeches | auditing organization for islamic financial institutions ( aaiofi ), it has facilitated greater cross - border engagement among practitioners and shariah scholars. in turn this has contributed to a greater understanding on issues and challenges faced by the industry and the progressive convergence of shariah views and rulings. more such international collaborative work and engagement would further facilitate this harmonization process. to navigate amidst turbulent seas to arrive at the new frontier of opportunities in islamic finance, there is a need for the industry to build on its strengths and achievements thus far, in the pursuit to realize the distinctive value that islamic finance brings to the global economy. indeed, islamic finance needs to leverage on its inherent strengths and demonstrate leadership in the real economic agenda and contribute towards global economic prosperity and stability. bis central bankers β speeches | 0 |
is now widely recognised that the performance of agriculture is critical not only for output and employment but also, particularly for price stability. while over 60 per cent of the workforce is dependent on agriculture, the sector accounts for barely 20 per cent of the gdp. second, alongside shortfalls in agricultural performance, large gaps have emerged in the physical infrastructure. rapid growth in demand for infrastructure with a less than proportionate supply response in the prevailing investment climate has resulted in stretching of the capacity utilisation in electricity generation, roads, ports and major airports. third, domestic developments in 2006 - 07 in terms of firming up of inflation through the year, led mainly by rising prices of primary articles, has been a matter of concern. monetary and financial conditions are reflecting these demand - supply gaps as well as the onset of a durable pick - up in aggregate spending. the acceleration of growth in the real sector has been reflected in the upward shift in the growth trajectory of non - food credit extended by commercial banks. the expansion in non - food credit at 29. 8 per cent in the period 2003 - 04 to 2006 - 07 is unprecedented in the history of the indian economy. there has been some sign of deceleration in the recent period as growth in year on year non - food credit was 27. 2 per cent as on may 11, 2007 as compared with 32. 3 per cent during the same period last year. in consonance with the rising capital flows, the reserve money growth has been higher in the recent period averaging 17. 8 per cent during 2003 - 07. the rate of growth of reserve money was 23. 3 per cent as on may 18, 2007 on year on year basis ( 20 per cent a year ago ). similarly, the high credit growth in the recent period has led the money supply growth to remain high averaging 16. 7 per cent during 2003 - 07. during 2006 - 07, the money supply grew by 20. 7 per cent. as on may 11, 2007, the growth in money supply on year on year basis was 20. 2 per cent ( 18. 2 per cent a year ago ). taking into account the high expansion of money supply worldwide, and given the monetary overhang of 2005 - 07, it is important to contain monetary expansion in 2007 - 08 at around 17. 0 - 17. 5 per cent, in consonance with the outlook on growth and inflation. the annual policy statement for the year 2007 - 08 also placed aggregate deposits growth in | y v reddy : indian economy β review, prospects and select issues address by dr y v reddy, governor of the reserve bank of india, at the central bank of chile, santiago de chile, 7 june 2007. * * * governor corbo and friends, i am honoured by the kind invitation of governor corbo to visit the esteemed central bank of chile. we, in the reserve bank of india, deeply appreciate the gesture. governor corbo is respected for his lucid expositions on complex issues in various international fora. while his analysis of monetary policy challenges in chile is a matter of interest to the central bankers, his understanding of global developments, especially of emerging market economies is also appreciated. the performance of the chilean economy over the last 15 years has attracted international interest and is often considered to be an interesting model of structural reforms, liberalization and stabilisation. the chilean experience with management of capital inflows and temporary recourse to unique chilean type of tax on cross border capital flow is often discussed in both academic and policy circles. the visit of governor corbo to india in january 2004 was the first by a governor from latin america to visit the reserve bank of india in the recent years. the scholarly speech that he delivered on the recent developments and prospects of the chilean economy was very well received in the reserve bank. today, in my presentation, there would be a brief review of the indian economy, followed by assessment of short term and medium term prospects. i will conclude by addressing select issues in the conduct of policy in the areas of money and finance in india, as they are likely to be of interest to the audience here. i. a brief review of the indian economy india β s constitution adopted in 1950 had established parliamentary form of democracy and india has been a republic with universal adult suffrage, which has contributed to significant stability of political system. it is a now a federation with 28 states and seven union territories. while the largest state ( uttar pradesh ) has a population of 166 million the smallest state ( sikkim ) has a population of only 0. 54 million. there is significant diversity in religious faiths with different states having majority of population belonging to different faiths such as hindu, islamic, christian and buddhist faiths. india is a host to the largest number of practicing zoroastrians ( of ancient persia ) in the world. there are 22 languages recognised by the constitution of india as major languages spoken by a large section of society | 1 |
the difficulties implementing those measures, and the short - term tension between fiscal consolidation programs and economic growth. consequently, uncertainty continues to prevail in the eurozone, a situation which over the last two years has contributed substantially to the volatility of international financial markets. obviously, instability has affected mexican asset prices and, in particular, the value of the mexican peso versus the u. s. dollar. the peso market is highly liquid and the floating exchange - rate regime in place since 1995 has functioned as a β shock absorber β for the economy. the complexity of the problems in the euro area likely means that it will be some time before sufficient solutions are finally implemented. hence, it is reasonable to expect that the eurozone may continue to fuel recurrent episodes of heightened risk aversion with global financial repercussions. also, the euro area will continue to be a drag on the global economic recovery. as the possibility of the occurrence of a tail - event in that area has not sufficiently diminished, additional deterioration of global economic prospects cannot be ruled out. this in turn could further constrain mexico β s economic recovery. two comments on external implications for mexico are in order. first, it is possible that some of the wider variability posted by the mexican peso relative to other emerging - market currencies during recent months reflected fears of contagion from europe through banking channels, given that the two largest spanish banks hold a significant share of assets in the mexican financial system. although caution is always a good strategy for economic policy, sound regulation and the positive performance of foreign bank affiliates give pause to these concerns. foreign banks can only operate in mexico as subsidiaries, and hence they have to comply with the same regulatory requirements as domestic banks, including limits for related - party lending and high capitalization standards. additionally, while many financial institutions in advanced economies are deleveraging, and given the under - banked nature of the mexican economy, both foreign and domestic banks in mexico have continued to expand their infrastructures as well as their lending to the private sector. second, the increasing monetary accommodation adopted by the u. s. federal reserve and other central banks in advanced nations since the global financial crisis may have contributed to the international search for yield that has caused substantial capital inflows to emerging - market economies. in particular, considerable flows have been directed to pesodenominated mexican government bonds during the last two years, allowing downward shifts of the domestic yield curve in tandem | a likely negative impact on inflation. also, upward pressures on key agricultural prices are probable in the following months due to weather and a chicken pandemic. an additional element has been a rise of short - term inflation expectations as reflected in analysts β surveys. moreover, inflation expectations for all time horizons remain above the 3 percent target. this is significant as inflation expectations have never been anchored on the objective, making the task of convergence challenging. therefore, monetary policy should be vigilant and actions should be timely in order to prevent supply - price and exchange - rate shocks as well as other factors from contaminating the behavior of other prices and pushing up inflation expectations away from the permanent target. convergence to price stability is a necessary condition for financial stability and longterm economic growth. concluding remarks to conclude, sustained higher long - term economic growth in mexico requires consolidated foundations for financial stability. in addition to convergence to price stability, the basic policy agenda includes the strengthening of public finances, especially given significant dependence on oil revenues and the fact that the price of oil in recent years has been unusually high but might not prevail in the future. the agenda also encompasses the deepening of macro - prudential regulation and improved supervision of the mexican financial system. finally, a wide set of possible structural reforms should be considered, including the dismantling of obstacles to private investment and further deregulation of the economy in order to enhance total factor productivity and, hence, promote higher living standards. bis central bankers β speeches | 1 |
on euro area bond yields. in my view, there is much to be said, then, for soon setting aside the practice of replacing all maturing bonds. this additional tightening signal would underscore our commitment to ensuring that inflation returns to the medium - term target of 2 % in a timely manner. if we act too hesitantly, we run the risk of having to tighten monetary policy even more severely further down the road. past experience, too, has taught us that if monetary policy gets behind the curve, medium - term inflation expectations adjust upwards. and that would make it far more difficult for monetary policy to achieve price stability. 2 / 5 bis - central bankers'speeches this is why it would be wrong to now hold back on further steps towards normalisation for fear of a downturn. on the contrary, unrestrained inflation is itself a burden on the economy. the longer inflation remains high, the more of a strain it places on consumption and investment. and the greater the risk of it becoming entrenched at a high level in the medium term. that has to be prevented from happening. for my part, it is important that we be honest : curbing inflation also comes with a price tag. it is likely to temporarily be an additional dampener on growth. but the main culprits behind the economic weakness are the supply bottlenecks caused by the pandemic and the war. honesty also means acknowledging that the lift - off in interest rates will make interest rate risk materialise on balance sheets. this also affects us as a central bank : we hold a high stock of low - interest securities with, in some cases, very long residual maturities. the counterpart to these on our balance sheet is mainly short - term deposits of commercial banks. the interest on these is now rising. as a result, this may weigh on our annual results. the provisions on our balance sheet are available as an initial buffer against potential losses arising from financial risks. 4 fiscal policy : targeted softening of hardships we have to recognise that the path to price stability is not a sprint but a marathon. unlike the runners in the berlin marathon, we do not know from the outset how much longer we still have to run until we reach our goal. this is especially true since monetary policy measures do not have their full effect on inflation immediately, but only after a delay. to make rapid progress on this route, fiscal policy can also play a part. it is an enduring principle that sound public finances | that every undertaking, however well - intentioned, is generally accompanied by unforeseen repercussions that can overshadow the principal intention. β let me illustrate, continuing with my road analogy. in road development, one option to deal with a traffic - congested road is to build a bypass or an alternate road. unfortunately, building a bypass may decongest the existing road, but as often happens, with new developments in the area of the bypass, we would now have, instead of just one congested road, two traffic congestions. many analysts have said that β the law of unintended consequences β was working spectacularly in the run up to this current crisis. one evidence of this is the benign macroeconomic environment created by the low interest rate regime prevalent during the first half of this decade. this should be a good thing. however, this environment led to the search for higher yields, that fueled unprecedented asset price increases and at rates faster than the growth in household incomes. this further led to a loss of rationality ( individuals believing house prices would never fall ) and extension of credit by financial institutions to sectors of the economy that normally would not qualify to borrow ( in other words, the so - called β subprime β borrowers ). sounds familiar? this was what transpired in the united states β low federal funds rate fueling a boom in mortgages with borrowers having doubtful credit histories, housing prices bubbled and burst, with the negative feedbacks affecting both the u. s. domestic economy and financial markets. another example is in line with risk spreading through financial innovations. the ability to spread risk should also be a desirable goal. however, the fast - paced evolution of financial products and services, along with the seemingly β loose β financial regulation β later on gave way to the unfortunate reality that risks were eventually β concealed β. through securitization and deleveraging, those hidden risks were effectively multiplied in the process. thus, while financial innovations have good intentions, they also have some side effects β¦ if not prudently monitored or given appropriate form of regulation. these developments, together with a host of other factors, fueled the current crisis, which from all angles, can be considered our first truly global crisis. from what was first believed to be a us - centric subprime mortgage problem, the crisis has since transformed into financial turmoil and further into an economic growth crisis. from the us and europe, it has spread to | 0 |
the most competitive firms, aggregate labour productivity can increase substantially. some studies indicate a gain of as much as 20 β 30 %. the current focus on competitiveness in france, leading towards an institutional and fiscal set - up that can support firms β investment and innovation, is therefore a welcome step in the right direction. it would be particularly welcome if this improved in particular the functioning of labour market for young people, so that they can find a job. for the euro area, too, increased labour mobility across borders is crucial. we should see that the current institutional arrangements of the welfare state do not stand in the way of such mobility. the portability of entitlements across borders is a crucial pre - condition for such mobility and should be fostered. bis central bankers β speeches competitiveness and market integration another important aspect is the growth and competitiveness - enhancing potential of further market integration in europe. one example is a very recent study, which finds that applying the eu patent would raise the gains for european firms from patenting inventions by 60 %. furthermore, if all countries also adopted best practices, those gains would more than double. i quote this example to show that improving competitiveness in europe does not imply a race between euro area countries, but rather the exploitation of their comparative advantages in the single market and a global economy that offer far greater growth possibilities than each economy on its own. improving competitiveness by setting the conditions for boosting productivity is not about ranking : it is about raising the bar for each country to enhance its potential and use it. the policy challenge let me now conclude. we at the ecb have responsibility to maintain price stability. as part of this mandate, we acted to remove unfounded doubts about the irreversibility of the euro. this is a necessary condition for price stability and will help restore the stability and prosperity of the euro area. but it is not a sufficient condition : it is the responsibility of individual governments to adopt policies that ensure the full responsiveness of wages and prices, facilitating the efficient use of our large potential resources, thus revitalising growth. euro area governments have made significant progress, but their work is not yet complete. what i see in france, and in many other parts of europe, is a consensus that the erosion of competitiveness has to be reversed. this is meaningful. what i also see in france, and in many other parts of europe, is a growing debate on the best possible functioning of product and labour markets. this | and when to use them. our strategy review also sets out how we can contribute to tackling longer - term challenges that pose threats to price stability, in particular climate change. with this strategy, we are well placed to continue ensuring price stability in this fast - changing world. and that is especially important today in light of the phase of higher inflation we are seeing. we understand that rising prices are a concern for many people, and we take that concern very 1 / 2 bis central bankers'speeches seriously. but people can trust that our commitment to price stability is unwavering, which is critical for the firm anchoring of inflation expectations and for confidence in the currency. the whole governing council is united in pursuit of this goal. at the same time, one of the key strengths of the eurosystem is the way that it brings together different perspectives to form a consensus. our rich quality of debate and diversity of views ensures that our decisions are robust. in this respect, i shall certainly miss my times with jens. he has always been a very articulate voice on the governing council, presenting his views with precision and clarity. and he has embodied the best of the bundesbank tradition of faithfulness to the mandate. alongside the challenges of ensuring price stability, our institutions have cooperated intensively during his term. the bundesbank plays a crucial role in many eurosystem projects, for example acting as one of the three providing central banks of target2, and as a centre of digital financial innovation together with the banque de france. we have enjoyed an exceptionally fruitful working relationship over these past two years. jens, your steadfastness, your intellect, and your loyalty have been crucial to our successful management of the pandemic emergency. i wish you the very best in your next adventure. i now look forward to working closely with joachim in his new adventure as bundesbank president. joachim brings with him a rich expertise crafted by a career that spans the bis, kfw and, of course, 17 years with the bundesbank. so, while this ceremony marks a change of office, it also represents a homecoming for joachim. i am sure i can speak for all of us when i say : β willkommen daheim, lieber joachim! β it is great to have you back in frankfurt and again working to deliver on our mandate for europe. 1 i have recently shared my memories of the introduction of euro banknotes and coins back in january | 0 |
eintracht frankfurt, there is every reason for the father to cancel the test, since he has already made his son study. his optimal choices are time - inconsistent. and his son is not outsmarted so easily. he will call his father β s bluff, as he knows the europa league schedule just as well as his father does. similarly, a one - off promise of β lower for longer β holds the allure of a monetary stimulus now, at the cost of higher inflation in the future. but when the time comes to make good on the promise, the benefits have already been reaped, and only the cost of higher inflation remains. at this point, policymakers have an incentive to renege on their promise as well. but such an approach still raises further problems. in the case of the euro area, it should be kept in mind that, according to our existing strategy, the governing council defines price stability as a year - on - year increase in the hicp for the euro area of below 2 % and aims to maintain inflation rates below, but close to 2 % over the medium term. thus, intentionally higher inflation rates would not be consistent with this strategy and may pose a communication challenge and a credibility risk. moreover, for β lower for longer β to work as intended, inflation expectations of firms and households need to respond accordingly : short - term expectations have to adapt to the central bank β s guidance without de - anchoring long - term expectations from the inflation target. this is certainly no mean feat. a study on various advanced economies suggests that expectations of households and firms do not respond much to announcements on monetary policy in an environment of low inflation. the researchers refer to this as a β veil of inattention β. [ 12 ] central banks would need to pierce it by adjusting and intensifying their communication in order to use inflation expectations as a more active policy tool. furthermore, after a long period of low interest rates, holding interest rates lower for even longer would aggravate the risks and side effects of a very expansionary monetary policy. for example, the longer the period of negative rates persists, the more likely it is to place a burden on banks that primarily generate their income from traditional deposit - taking and lending operations. this is what we observe in the euro area. in this context, the relief which the new tiering system will provide to banks is likely to be perceptible, but modest. it is the indirect effects of | with the current situation using our four - point checklist, beginning with borrowing by businesses and households. business debt has grown faster than gross domestic product ( gdp ) for several years and today is high. but the growth in the ratio of business debt to gdp in the past decade is much less than the growth in household debt to gdp that we saw in the run - up to the global financial crisis. back then, household debt grew from 60 percent of gdp to 90 percent, or by half ( figure 5 ). at its recent low, business debt was 65 percent of gdp. now, even after rapid growth, it is still below 75 percent of gdp. overall, the increase in business debt relative to the the board β s financial stability report discusses the analytical framework. for a longer and more academic discussion, see adrian, covitz, and liang ( 2015 ). for research on the role of credit, house prices, and other factors as indicators for potential financial instability, see borio and lowe ( 2002 ) ; schularick and taylor ( 2012 ) ; jorda, schularick, and taylor ( 2016 ) ; and kiley ( 2018 ). for research on the role of bank capital, see basel committee on banking supervision ( 2010 ) ; macroeconomic assessment group ( 2010 ) ; and firestone, lorenc, and ranish ( 2017 ). - 7size of the economy is one - third the increase in household debt seen in the previous decade. business debt rises in expansions. it is a steady upward plod in borrowing over the long expansion β not a rapid expansion β that has now brought business debt to gdp back to historic highs. seen this way, the current situation looks typical of business cycles. the mortgage credit boom was, because of its magnitude and speed, far outside historical norms. 3 as for household debt, we see that household debt - to - income ratios have steadily declined post - crisis. moreover, a high and rising fraction of this debt is rated prime. all told, household debt burdens appear much more manageable. our second factor β valuation pressures β also points to moderate risks to financial stability. valuations are high across several financial markets. equity prices have recently reached new highs, and corporate bond and loan spreads are narrow. both commercial and residential property prices have moved above their long - run relationship with rents, although price gains slowed substantially last year. all of these developments point to strong risk appetite β as might be expected | 0 |
and businessmen, calling themselves the nation rescue club, has attacked the government for selling off the country on the cheap. its spokesman, a university professor, called on the thai government to publicise details of the sale of radanasin bank to uob, and nakornthon bank to standard chartered bank. the group accused the government of striking acquisition deals which allowed foreign banks to take on virtually no risk since any future losses would be borne by thai taxpayers β money. but over time, if the globalisation wave persists in the financial industry, countries will eventually decide that the cost of closing themselves off is too great. they may then change their position, just as over the last two decades they have done in manufacturing, opening up to reduce import barriers, and promote mnc investments and exports. malaysia β s governor of bank negara has said that malaysia may open up its banking sector to greater foreign participation, though only after 10 years [ bt 30 mar ]. so liberalisation will happen, although to varying degrees in different countries. the internet the internet is having a major impact on financial services. it is not just a more efficient distribution and marketing channel. it is opening up new financial applications and business models, and breaking down national barriers separating financial markets. bill mcdonough, the president of the new york federal reserve bank, has described the internet as the most important strategic issue facing financial institutions today. the best way to package and deliver financial services over the internet is not yet clear. in share trading, the success of discount brokers like etrade, and ecns like island, is obvious. there is also promising potential for trading fixed income instruments and derivatives online. but for other financial services, institutions are still experimenting with different business models and approaches. they all know that a new generation of customers will want to do business over the internet, and banks will have to meet this demand or lose business to new players. the internet has also created new roles in the financial services value chain, e. g. infomediaries, or intermediaries which gather and present information on financial products offered by different financial institutions, so that consumers can compare prices and quality at the click of a mouse before committing to a specific product like mortgages, insurance packages and loans. financial institutions will need to gear up to participate in electronic commerce. for them, the internet means not only new business opportunities, but also fiercer competition, including across borders. it will create new risks, which they must | . we have to understand the industry β s point of view, and yet not be captured by the industry we are regulating. this mindset must permeate the whole of mas, to every staff member. 5. industry specific issues banks the first priority for banks is to upgrade their capabilities and strengthen their management teams. this is the only way for them to hold their own in the new environment, either by themselves or linked up with others in a strategic alliance or merger. banks also need to prepare themselves for new business opportunities, especially e - banking. mas will track the progress of the banking liberalisation programme. we will review the status next year, and decide on further steps to open up the sector. local banks will come under increasing pressure, not from mas, but from the rapid changes in technology and the market. the banks will have to continually reassess their competitive positions and strategies, and adapt themselves as conditions change. mas will continue discussing with the local banks ways to increase bank transparency further, for example by disclosing more information on remuneration and incentive structures, related party transactions, the banks β risk profiles and their risk management processes. greater disclosure will reinforce corporate governance. singapore banks are ahead of most of their asian counterparts in these two areas, but they are still some way from the best international practices. we are reviewing the current minimum liquid assets and minimum cash balance requirements imposed on banks, and the capital requirements for financial holding companies and banking groups. this is part of the shift from regulation to supervision, replacing β one - size - fits - all β requirements with a more β tailored β approach. we should not unnecessarily disadvantage singapore banks vis - a - vis foreign competitors. we are reviewing bank involvement in non - financial activities, and the cross - holding structures typical of singapore banking groups. an appropriate separation between financial and non - financial activities is important to minimise the risk of contagion and ensure that management is focussed on the core business of banking. this is a complex issue, which mas will study carefully, and discuss with the banks. changes to existing rules can have major implications for the players, so mas will take care to give them enough time in the implementation, to make the adjustments without disrupting the markets. insurance insurance companies need to raise their standards of professionalism and proficiency. they must become more efficient and upgrade customer service. they must also become as competent as professional fund managers in managing their funds. i hope that the | 1 |
completely understandable in light of the number of new and urgent issues to be tackled. similarly, the involvement of political officials through the g - 20 was imperative to galvanize the legislative and regulatory processes of participating countries to undertake the breadth of needed reforms. but as we move toward administering these new standards and arrangements, we must rationalize the often confusing and duplicative process whereby the basel committee, the fsb, and some other bis committees are all involved in the same subjects. fortunately, the agenda breaks down rather naturally into the new substantive topics, such as resolution and otc derivatives, and the further refinement and implementation of established regulatory areas such as capital standards. the new topics play to the coordinating and gap - filling strengths of the fsb, which includes both regulators and finance ministry representatives, and which can parcel out appropriate components of larger projects to standard - setting committees. work in established regulatory areas obviously falls more appropriately within the province of the basel committee ( or with respect to some securities regulatory issues, iosco ), which consists of the regulators with responsibility for administering these standards domestically. in this regard, it is important that the independence of regulators established domestically also be respected internationally. bis central bankers β speeches conclusion the international dimension of financial regulation has grown even more important since the financial crisis. yet there are, as i have suggested, more subjects to be tackled. at the same time, the pursuit of efficient and effective regulation requires priority - setting by, and rationalization of, the web of international arrangements dealing with these issues. bis central bankers β speeches | to improve the ability of community banks to manage their third - party relationships effectively. by doing so, i believe we will be able to better support the ability of community banks to access innovative new technology and offer modern services to customers. - 13 looking ahead the kinds of advances in technology we are discussing here today present challenges and opportunities for banks of all sizes, including community banks. investments in new technology are likely to create implementation costs, and payment system innovations are no exception. testing new technology, upgrading software and processing systems, and integrating new systems with existing systems will require banks to incur costs and dedicate resources to implementation. community banks in particular may incur additional costs, for example to extend operating hours in order to facilitate payments during nonstandard business hours. however, technological advances also present opportunities for community banks to continue serving their neighbors, and payment services are a key component of this. since i joined the federal reserve, i have been on the road a lot, visiting federal reserve districts and talking to bankers, consumers, and community groups. i have been struck in particular by stories i have heard about younger generations of americans moving back to rural areas. these individuals may be returning to their hometown or moving out of urban centers, but they still have the same expectations for services like those that may be offered by larger banks with nationwide footprints. technological developments, like the payment system modernization efforts we have discussed today, allow banks across the country to meet these customer expectations and provide payment services on a competitive basis. i believe the federal reserve is uniquely positioned as a provider of payment services and as a supervisor of banks to ensure that our nation β s evolving financial system works for community banks. as a provider of payment services, our efforts to modernize - 14 the nation β s payment system through services like fednow and same - day ach will ensure community banks and their customers have access to today β s financial technology nationwide. as a supervisor of banks, we can support responsible innovation by reducing regulatory burden where we can, clarifying expectations, and improving the ability of community banks to manage their relationships effectively. collectively, i believe these efforts will help support a community banking sector that is well positioned to thrive and offer modern, innovative services to their customers. by providing such services, community banks can help ensure all americans can make payments safely and efficiently regardless of their location and that families across the country have access to financial services that are so important to their success and the success of our communities in today β s | 0.5 |
with the resolution of imbalances. so there are impediments in europe, the united states, and asia that are all getting in the way of a timely and orderly resolution. because of this, global imbalances are growing, and this is increasing the risk of a disorderly correction at some point down the road. in addition, the longer the adjustment is delayed, the greater the risk that industrialized nations will take protectionist measures against emerging - market economies that are perceived as not playing by the rules. the rules of the game so, what are the policy prescriptions that hold the greatest probability of bringing about an orderly resolution of the imbalances? put simply, what should be the " rules of the game? " i've already spoken about the consensus that exists on the need for action domestically. what i want to do now is talk about what would be helpful on the international front. to begin with, we certainly need to preserve and increase the potential for goods and services to move freely across national borders. this means further enhancement of the rules of free trade through the doha round and a strengthening of the world trade organization ( wto ) to ensure proper compliance with the rules. this effort, as you know, is going on rather more slowly than we would have hoped three years ago, and my sense is that the prospects for substantial improvement are not as good as we thought they might be. however, keep in mind that the last round took 10 years to complete. so, it is important to keep moving forward and to support the wto in its enforcement of proper compliance with the rules. of course, free trade needs the support of well - functioning capital markets, as well as exchange rate regimes that allow market - equilibrating forces to play a greater role in the adjustment process. just as the wto provides critical support for trade, there is also a need for an effective organization to support the international monetary system. under bretton woods, this role was given to the international monetary fund ( imf ). but world financial conditions have evolved dramatically, while in many respects, the imf remains the same institution that was created in 1944 for an era of fixed exchange rates. to be clear, the basic mandate of the fund - the promotion of an international order that fosters economic growth and investment - remains relevant and important. and the fund's main responsibilities - surveillance, lending, and helping member nations to develop their financial infrastructure and efficient product and labour | to build a liberal economic order and framework for freer trade. but it's difficult to discuss problems and find solutions if key players don't feel that they are adequately represented. there is a crucial need to build an international financial institution that is seen as meeting the needs of all members. a good start would be to re - examine the representation of asian and other emerging - market economies, and the implications for their quotas and voting power on the imf's board. a larger stake by asian members in the imf also implies greater responsibility on their part for the success of the fund as guardian of the international monetary and financial systems. indeed, by taking greater responsibility, asian nations would affirm their commitment to the fund's important objectives. moreover, by being able to draw more on the strengths of the asian economies, the imf would be in a better position to do its job properly. conclusion i truly hope that such an institution - one that makes progress in these four areas - will emerge from the strategic review of the imf that is currently underway. the creation of a global institution for the twenty - first century is tremendously important, not just for canada, but for all nations. if we can get it right, a more effective imf would be helpful in the worldwide effort to resolve global imbalances in an orderly way. but a global institution can't do it all by itself. policy - makers around the world need to make sure that they are part of the solution and not part of the problem. all countries must recognize that it is doubly important to pursue the sound domestic policies that i mentioned - the promotion of flexible markets, the creation and maintenance of a sound financial system, and the pursuit of sound fiscal and monetary policies. clearly, following these policies is in each country's own domestic interest. but the benefits would flow beyond national borders. if we all follow appropriate policies, then market mechanisms can defuse the danger posed by global imbalances. and that is an outcome that is in everyone's interest. | 1 |
##cyclicality in the financial system, and that provides momentum for reform to strengthen financial infrastructure and governance. thailand, like most emerging markets, has also been struggling with this issue. and i want share with you some of the policies that we have pursued in response to the challenge. it is a long journey, and it is the journey that we are making. on the issue of reducing risk from procyclicality of the financial sector, prevent excessive lending, and ensure adequate capital. in our view, the key issue here is to reduce a possible large swing in the availability and the price of credit stemming from the tendency of banks to underestimate risks in good times, and then to overestimate them in bad times. on this, our approach has been to ensure that banks β capital and riskmanagement policy is forward - looking by using a combination of three instruments. the first is stress testing to ensure that bank β s own internal process for assessing the adequacy of capital and overall risk management is alert to possible key risks. thai banks have begun conducting stress tests as part of the supervisory process since early last year when we first underwent the fsap assessment. from our experience, we find stress testing to be a useful and effective instrument for helping banks in formulating strategy for capital and risk management in a forward - looking manner. also importantly, it provides a formal process for a two - way dialogue between banks and supervisors on risk management and on other financial stability issues. the second instrument is the fair value accounting rules or ias 39, which we have adopted for non - performing loans and for structured products. in our view, these rules can help strengthen market discipline over bank lending and investment. and because fair valuation involves marking to market, its adoption also helps make provisioning for asset impairment more forward - looking. the third instrument is prudential policy to limit excessive procyclicality. in the past five years, when capital inflows were strong, we have put in place prudential measures to stem the build - up of excessive credit growth on consumer spending and on speculative housing demand. these include measures on credit card approval and maximum loan - to - value ratio for luxury housing. as i noted earlier, in the context of monetary policy framework, combining inflation targeting with macroprudential measure offers a pragmatic approach to deal with concerns on financial stability and asset prices without compromising the discipline of monetary policy with respect to its primary inflation | prasarn trairatvorakul : trust as a pillar of the industry keynote speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the asian banker summit 2012 β trust as a pillar of the industry β, bangkok, 26 april 2012. * * * ladies and gentlemen, it is an honor to join all of you today, and to welcome leaders of asian banking community to bangkok. the theme of this year conference, β trust as a pillar of the industry β, highlights the fact that the global financial market stands at an important cross - road. the topic of trust inevitably arises after a crisis. the cross - road is about how to reform regulation, that is, how to re - regulate. this is the juncture which we have reached today, with reforms proposals such as those by the basel committee, the financial stability board, or dodd - frank act in the us. all these are attempts to rebuild trust and confidence. it is well known that trust is the cornerstone of the financial industry. but it should also be added that, trust alone is not enough. we also need to have a good dose of healthy skepticism. the reason for this is that we must avoid, on the one hand, overly trusting market mechanism, or on the other hand, overly trusting in regulation. this is because of the rapid changes in the financial system and how risk is transmitted. the last crisis showed how financial innovation and complexity of bank business model overtook risk management and regulation in the west. in asia, economic and financial liberalization is a powerful driving force that is reshaping our financial landscape today. this could potentially open up the gap between risk and our ability to manage it. so what should be our strategy to build trust, but avoid being blinded by our sense of security? the strategy to deal with this is to have trust that is counter balanced by well informed debate on risk management, supervision, and good governance. so, we need a good dose of well - informed skepticism, as well as financially literate public. let me turn to the progress on the global efforts to reform regulation. where are we today? in all of these reforms β be they basel or fsb β the questions we ask are these. have we done enough to rebuild β trust β and secure financial soundness? is the international standard right for the local context? are there unintended consequences, i. e. the bad side - effects? getting it right | 0.5 |
andreas dombret : the yin and yang of resolving the european sovereign debt crisis speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the peterson institute, washington dc, 17 october 2013. * 1. * * introduction ladies and gentlemen thank you for having me here today. it is a great honour to speak at an institution as distinguished as the peterson institute. for more than 30 years now, the institute has provided essential analytical input for the work of policymakers around the world. and when i say policymakers, i explicitly include central banks, as the institute β s president, adam posen, has intimate knowledge of our trials and tribulations. he served on the bank of england β s monetary policy committee and has worked with many other central banks including the bundesbank. he is therefore in a unique position to provide analysis and advice to central bankers such as myself. such advice is especially valuable in turbulent times such as these. looking back, we see a crisis that has spanned more than six years. it began with turbulence on the us housing market, followed by a global financial crisis, a global recession and a sovereign debt crisis in the euro area. it is this last episode i would like to focus on in my speech. mark twain once said : β a man who carries a cat by the tail learns something he can learn in no other way β. applied to the euro area, it seems that we have had the cat by its tail more often than not over the past three years. and as mark twain predicted, we have learnt a lot. we have learnt a lot about the inner workings of the european monetary union β both economically and politically. true, everybody looks at the crisis from a slightly different angle but it seems that most of us have learnt the same lessons. at least in terms of the causes of the crisis, most of us seem to have made the same diagnosis. according to this diagnosis, the main causes of the crisis can be found at the national and at the european level. at the national level, there was high public debt and a lack of competitiveness in those countries that are now at the centre of the crisis. at the european level, there were weaknesses in the institutional framework of monetary union. but if most observers agree on the diagnosis of the crisis, why can β t they agree on the appropriate therapy? why is such a vast array of cures proposed? in my speech, i would like to | beyond the borders of europe. after all, europe is not an island but part of a globalised world. and at the global level, we are competing with economies such as the united states and china. now, what would happen if the euro - area countries followed the approach of meeting in the middle in terms of competitiveness? well, ultimately the euro area as a whole would become less competitive vis - a - vis the rest of the world. in my view, this is not the right path to follow. to succeed, europe as a whole has to become more dynamic, more inventive and more productive. any attempt to shield one european country from competition by lowering the competitiveness of another would be doomed to fail. 3. 3 adjustment is under way now, what is my conclusion with regard to burden sharing and efficiency? have i just been arguing for efficiency while rejecting the notion of sharing the burden? well, again it is not a matter of β either / or β but a matter of degree. true, in my view, the initial adjustment has to take place in the deficit countries. at the end, they operated an unsustainable model based on structural deficiencies. reforming this model is the most promising approach to facilitate rebalancing. not every deficit country needs the same structural reforms, of course, but all require some sort of adjustment. and a number of reforms have already been undertaken. the process of rebalancing through structural reforms is therefore well under way. the current accounts of deficit countries have improved dramatically since 2008. the improvements range from nearly 9 percentage points of gdp in ireland to more than 15 percentage points in greece. according to recent estimates by the european commission, most crisis countries will achieve a current account surplus this year. even more importantly, this adjustment is being accomplished not only by shrinking imports, but also by growing exports. all the crisis countries are projected to see some export growth this year, ranging from just under 1 % in portugal to about 4 % in spain. and when the current accounts of deficit countries improve, the current accounts of surplus countries will automatically adjust. in the end, not every country can have a current account surplus. in a sense, we will consequently meet in the middle eventually. moreover, the burden of the initial adjustment, though not being shared in the narrow sense of the word, is at least being alleviated. what are the rescue packages other than publicly guaranteed interim loans to facilitate the adjustment? thus, at the | 1 |
ben s bernanke : long - term fiscal challenges facing the united states testimony of mr ben s bernanke, chairman of the board of governors of the us federal reserve system, before the committee on the budget, us senate, washington dc, 18 january 2007. * * * chairman conrad, senator gregg, and other members of the committee, i am pleased to be here to offer my views on the federal budget and related issues. at the outset, i should underscore that i speak only for myself and not necessarily for my colleagues at the federal reserve. as you know, the deficit in the unified federal budget declined for a second year in fiscal year 2006, falling to $ 248 billion from $ 319 billion in fiscal 2005. as was the case in the preceding year, the improvement in 2006 was primarily the result of solid growth in tax receipts, especially in collections of personal and corporate income taxes. federal government outlays in fiscal 2006 were 20. 3 percent of nominal gross domestic product ( gdp ), receipts were 18. 4 percent of gdp, and the deficit ( equal to the difference of the two ) was 1. 9 percent of gdp. these percentages are close to their averages since 1960. the on - budget deficit, which differs from the unified budget deficit primarily in excluding receipts and payments of the social security system, was $ 434 billion, or 3. 3 percent of gdp, in fiscal 2006. 1 as of the end of fiscal 2006, federal government debt held by the public, which includes holdings by the federal reserve but excludes those by the social security and other trust funds, amounted to about 37 percent of one year's gdp. official projections suggest that the unified budget deficit may stabilize or moderate further over the next few years. unfortunately, we are experiencing what seems likely to be the calm before the storm. in particular, spending on entitlement programs will begin to climb quickly during the next decade. in fiscal 2006, federal spending for social security, medicare, and medicaid together totaled about 40 percent of federal expenditures, or roughly 8 - 1 / 2 percent of gdp. 2 in the most recent long - term projections prepared by the congressional budget office ( cbo ), these outlays are projected to increase to 10 - 1 / 2 percent of gdp by 2015, an increase of about 2 percentage points of gdp in less than a decade. by 2030, according to the cbo, they will reach about 15 percent of gdp. | in the country has risen sharply by two and a half times since 2010. the flow of resources to the commercial sector in india almost doubled from βΉ12 lakh crore in fy 2012 to βΉ22 lakh crore in fy 2022. 7 while banks continue to be a dominant source of financing, market borrowings8 of the commercial sector increased from βΉ74, 000 crore in fy 2012 to βΉ3, 16, 000 crore in fy 2022. as our economy and financial markets grew, the integration with the world economy and global financial markets has also risen. the growing economy and our aspirations to be and remain among the fastest growing economies has expanded our funding needs. all these necessitate larger and deeper financial markets. the policy response to headwinds 9. it is relevant to look at some of our policy responses in recent times, especially to major global headwinds. each successive episode of turmoil over the last decade and half has posed a specific set of challenges for the economy. each has warranted a specific response. 10. in 2008, policy actions were aimed at ensuring comfortable system liquidity ; augmenting forex reserves and maintaining a crisis management framework to support the economy through the global financial crisis. conventional tools such as policy interest rates and source : ministry of statistics and programme implementation source : ministry of statistics and programme implementation, rbi balance of payment statistics source : world bank source : reserve bank of india source : rbi handbook of statistics market borrowing includes public & rights issues by non - financial entities, gross private placements by non - financial entities and net issuance of commercial papers subscribed to by non - banks. cash reserve ratio ( crr ) were used. measures to manage forex liquidity included, inter alia, relaxing the interest rate ceiling on foreign currency deposits by non - resident indians and external commercial borrowings ( ecb ) for corporates. unconventional measures included a rupee - dollar swap facility for indian banks, a refinance window for mutual funds and a special purpose vehicle for supporting nonbanking financial companies. 11. post the announcement of early taper of quantitative easing by the federal reserve in 2013, the need for restoring confidence of market participants and containing the pressure on the rupee guided the reserve bank β s policy responses. monetary conditions were tightened through unconventional tools. forex market measures included both direct intervention and administrative measures to manage capital flows. these included import restrictions of nonessential items, opening of a special | 0 |
here measured as the time - varying sensitivity of expected rates to expected inflation at the same horizon β has always been strong ( higher than one ) at long horizons. it suggests that markets anticipate an active reaction function in the medium - to long - run, and this sensitivity increased during the liftoff period from mid - 2022 to mid - 2023 at all horizons, suggesting that actions reinforced our credibility to fight inflation. 1. 2. from the vicious circle of inflation to the virtuous circle of credibility what we learned from the volcker period is that disinflation is costly and long to achieve for an imperfectly credible central bank. firms anticipating increasing costs are likely to increase their prices and workers anticipating increasing prices fight for higher wages leading to a vicious inflation circle and creating a strong correlation between current and expected inflation. imperfectly credible central banks must hence react more forcefully and swiftly. the induced much higher real rates may however quickly cause unemployment but without any immediate gains from price stability, such as lower long - term inflation risk premia. by contrast, a ( more ) credible central bank faces a virtuous circle of credibility. past credibility anchors inflation expectations at the target, reducing the risk of an inflation spiral. this reduces the size of the interest rate hikes necessary to bring inflation down, and the associated costs on economic activity. quantifying the impact of credibility is by no means easy, and surrounded with much page 6 sur 13 uncertainty. but banque de france research suggests that, had inflation expectations been as poorly anchored as they were in the 1970s in the us, our policy rates would have had to peak around 8 % instead of 4 % x. credibility also buys time. when a central bank is imperfectly credible, it must act immediately to calm any latent inflationary pressure and continually demonstrate that it aims at stabilizing inflation. but a credible central bank can react with a delay and still achieve nominal anchoring. indeed, davig and leeper argue that what really matters is the average reaction to inflation in the medium run and not the immediate response, a sort of β long - run taylor principle β xi. still, the delay should not be too long as it may be wrongly interpreted as a signal for future inaction. central bank credibility like inflation is also global xii. most central banks in advanced economies have credible and convergent inflation numerical targets ( 2 % ), a distinctive difference to the 1980s. this global credibility translates into less, and | u. s. dollar. with regard to corporate finance, private banks continue to be more active in extending loans, mainly to blue - chip companies, while carefully evaluating the credit risks involved. however, the lending attitudes of financial institutions perceived by small firms are becoming slightly more cautious. meanwhile, the fund - raising conditions of firms in the markets for such instruments as corporate bonds and cp continue to be favorable owing to a decline in market interest rates and the more active stance of investors to take credit risks. on the other hand, credit demand in the private sector is declining faster mainly due to a decrease in business fixed investment while firms continue to reduce their debts. in view of this, the year - on - year rate of decline in private banks β lending is expanding slightly. the growth rate of amount outstanding of corporate bonds issued is about 2 percent on a year - on - year basis. meanwhile, the amount outstanding of cp issued continues to be at a high level, significantly exceeding that of the previous year due to the favorable environment for issuing cp. the growth rate of money stock ( m2 + cds ) in august was slightly higher than that of the previous month due mainly to the inflow from postal savings. funding costs for firms continue to be at extremely low levels. with respect to the recent financial environment, the effects of monetary easing are permeating through the economy. this can be observed such as in the additional easing in the money market conditions, further decline in short - term interest rates, higher growth in monetary indicators, and the improvement in the fund - raising conditions of firms through the markets. however, against the background of deteriorating corporate earnings and the more cautious lending attitudes of financial institutions, fund - raising conditions of small firms seem to be becoming more severe. hence, the developments in the behavior of financial institutions and corporate financing need careful monitoring. in addition, it is necessary to carefully monitor the effects of the terrorist attacks in the u. s. on global financial markets and economic activity. | 0 |
monetary policy in the prevailing recession. as monetary policy is forward - looking, it is important not to overlook the potential inflationary impulses now being built in for the future. price impulses from a weak krona and from high unit labour costs are two such factors. if the global economy recovers more quickly than we are predicting, this will also contribute to making monetary policy less expansionary. before further measures are taken, there are thus many reasons to evaluate the effects of all of the measures taken so far, and to evaluate the new information on economic activity and the financial market situation that is received. continued financial crisis difference between 3 - month interbank rate and expected policy rate ( basis spread ), basis points sweden euro area usa united kingdom jan / 07 apr / 07 jul / 07 oct / 07 jan / 08 apr / 08 jul / 08 oct / 08 jan / 09 apr / 09 economic downturn worsens in sweden gdp, quarterly changes in per cent calculated as annual rate, seasonally - adjusted data - 2 - 2 - 4 - 4 - 6 - 6 - 8 - 8 february april - 10 - 10 sources : statistics sweden and the riksbank repo rate cut to 0. 5 per cent economic downturn worsening low repo rate for long period of time positive growth in 2010 low repo rate for long period of time per cent, quarterly averages 90 % 75 % 50 % repo rate note. the uncertainty interval does not take into account the zero bound. source : the riksbank | ##ksbank has raised the interest rate in a number of stages since january 2006 and that these increases have not yet had a full impact on the economy. what has happened since the monetary policy meeting? so far my assessment is that outcome data and indicators in the euro area are largely in line with the assessment in the main scenario of the monetary policy report. my opinion is also that the indications of weak us growth at the beginning of this year and the continued problems on the housing and property markets are in line with the assessment in the main scenario. in the short - term perspective the assessment does not differ from my own. i am however more concerned that it will take longer before the recovery gathers pace. swedish gdp growth during the fourth quarter last year was somewhat stronger than expected in the monetary policy report. employment, measured as the number of hours worked, increased at an unexpectedly high rate and productivity growth last year was weaker than expected in the report. the national institute of economic research β s business tendency survey for february shows a clear slowdown in economic activity in the business sector as a whole. the business tendency survey suggests that employment has continued to increase, but at a slower rate. companies have adjusted their recruitment plans downwards ahead of the coming months. in contrast, the purchasing managers index displays a more positive view in february. the total index rose somewhat and during several months fluctuated around the level of 55, which is close to the average since 2001. however, at the same time, the survey shows that growth in employment has slackened and that companies have become less optimistic about output growth in the future. in january inflation in sweden was somewhat lower compared with the forecast in the monetary policy report. however, this was largely connected with the fact that the weights in the cpi basket, as at the end of each year, had changed. the effects of this change were unusually large this time. this could be interpreted as though consumers, to a greater extent than normal, have replaced goods and services that increased rapidly in price in their consumption. the so - called substitution effect was then greater than the riksbank and most other analysts had assumed. all in all, activity in the swedish economy during the final quarter last year appears to have been slightly higher than we expected in february. productivity on the other hand showed weaker development than in the assessment in the report. survey data clearly suggests however that a slowdown is occurring in most parts of the business sector and that the increase in the demand for labour is on the | 0.5 |
the unemployment rate has been approaching the structural unemployment rate, which is considered to be around 3. 5 percent, and the active job openings - to - applicants ratio has risen to 1. 08, which is the same level as the peak reached before the global financial crisis ( chart 6 ). this tightening of labor market conditions has started to influence wages, and, in the regular annual wage negotiation this spring, the number of firms that raised not only bonuses but also base pay has increased substantially. in addition to this increase in the utilization of labor, a growing number of firms, particularly in the nonmanufacturing sector, are experiencing capacity shortages, and the output gap has been narrowing moderately. while the level of the output gap is subject to a considerable margin of error, the gap seems to have narrowed to close to 0 percent, that is, the long - term average ( chart 7 ). as for the outlook, inflationary pressure from the output gap is likely to strengthen further, given that the economy is expected to continue growing at a pace above its potential. upward pressure on prices from inflation expectations let me next outline developments in medium - to long - term inflation expectations. according to various surveys and market indicators, inflation expectations appear to be rising on the whole ( chart 8 ). looking at the mechanism behind this rise, it appears that, in the first instance, the bank β s strong and clear commitment to overcome deflation through qqe, together with bold monetary easing to underpin this commitment, has affected expectations of economic entities, and inflation expectations started to rise. subsequently, the actual increase in the inflation rate due to the narrowing of the output gap has then led to a further rise in inflation expectations. as mentioned earlier, the year - on - year rate of change in the cpi ( excluding fresh food ) has been above plus 1 percent. except for the period of the surge in global commodity prices around 2008, this is the first time in the two decades since 1993 that the cpi has risen by more than 1 percent year - on - year for several months in a row. with firms and households experiencing these price increases, their inflation expectations have changed and have started to influence wage and price setting. as seen in the wage negotiations this spring, the increase in inflation has been taken into account in the wage negotiations between management and labor. in addition, a shift in firms β price - setting strategies from strategies focusing on low prices to strategies seeking to raise sales prices while increasing value added | off - with higher growth and more jobs - if and when the reforms of the lisbon agenda are delivered. we are now at your disposal for questions. | 0 |
our thinking, there are four cornerstones. let me next reflect on these. the first one is that the infrastructure for payments must be open and cost efficient. in our own particular context, the european reach of solutions and the use of standardization are important drivers for this. the interoperability of different infrastructures builds efficiency at the systemic level. it is important to allow equal access to all relevant infrastructures for every party fulfilling the necessary regulatory requirements. in economic terms, we are referring to a contestable payments market. 1 the keynote by professor christine parlour will expand on this point. the second cornerstone is that electronic payment services must be developed to take the 1 / 4 bis central bankers'speeches needs of all user groups into consideration. electronic payments do normally deliver efficiency. yet, we must ensure that development does not lead to digital exclusion. the key is to make the services easily usable and widely accessible. and in the brave new digital world, we must pay particular attention to financial literacy. one practical example is instant payments. in finland, we are seeing an encouraging trend where instant payments are being taken up by the banks largely as a β new normal β, and as the β default procedure β for processing of account transfers. this is likely to benefit society as a whole. in a report by the finnish payments council in 2019, it was noted that the improved cash management brings benefits for businesses, not least the smes, as the money arrives sooner and is directly available for use. in his recent book, β the internet β, mikko hypponen, a renowned finnish it security expert, wrote that we should not blindly digitalize everything. he uses the example of elections in finland. if digital methods of voting were to be introduced, he says, the benefits would be marginal while potential problems could be huge. i very much agree with mikko. the other example he gives is cash. the resiliency it provides should not be overlooked. this aligns with our thinking at the bank of finland : besides our strong support for advancing and improving electronic payments, we β and the eurosystem at large β are committed to keeping cash as an alternative, also for the sake of resilience, not least in the case of cyber emergency. the third cornerstone in our thinking is that improvements in safety, reliability and prevention of misuse must be fundamental to the development of electronic payments. payment service providers and infrastructures must have sound risk management and must focus on resilience | was always essential in my mind for the central bank to respect its narrowly defined mandate. after all, central bankers are not elected political agents and should therefore not make any decisions that are reserved for parliaments and governments. otherwise, they could put their independence and therefore the basis for a stability - oriented monetary policy at risk. i β m certain that the line i draw between monetary policy and fiscal policy is more clear - cut than the one drawn by others. i have also repeatedly pointed out the risks and side effects of non - standard measures. i have done so because they could undermine the pursuit of price stability by causing monetary and fiscal policy to become more closely intertwined. furthermore, i continue to believe that fiscal dominance could pose a major risk to monetary policy. discussions in the ecb governing council were not always easy, and they were at times controversial as well. one of the reasons for this is that there was no blueprint for responding to various the crises. another is that the monetary union, with its single monetary policy and 19 independent national fiscal policies, is sui generis in terms of its structure and differs vastly from other currency areas. however, i believe that our intense discussions ultimately resulted in better decisions. it was a challenging time when occasionally difficult decisions had to be made under time pressure and with far - reaching consequences. not only did we debate with each other, we also 2 / 5 bis central bankers'speeches agonised over the right path forward. mario draghi did not have an easy time in office, and he didn β t make it easy for himself with the positions he took. many conservations i have had testify to this. christine, i would like to thank both your predecessor but especially you for creating a solutionoriented, open and constructive atmosphere in which to hold these discussions, which, by the way, have led to mutual decisions on multiple occasions β a fact often overlooked by the public. i have great respect for the work that both of you have achieved at the helm of the ecb. but i would also like to extend my gratitude to my other colleagues on the ecb governing council for their close and constructive collaboration. i think it is a remarkable accomplishment that we managed to work out a new monetary policy strategy even under the difficult conditions of the pandemic. the results speak for themselves. that said, the new strategy has yet to be put to the test, as inflation rates have climbed in the wake of the pandemic to their highest level | 0 |
now to the domestic economy. this year a theme that has kept recurring in my presentation of the thai economy is that of risks and adjustment. this is to say that, for thailand, this year has been a year of greater risks and the key theme has been adjusting to risks as the global economic and financial environment has become less helpful. the key external pressure an the thai economy throughout this year has been the higher oil prices, the higher global interest rates, and the potential impact an our exports of a slowing chinese economy. this year, we also have our own domestic challenges. these include the two episodes of bird flu that have affected production and exports of poultry, and the uncertainty linked to the situations in the south which has importantly affected consumer confidence and business sentiment. so, for the most part, the performance of the thai economy this year is essentially a story of how the domestic economy has been adjusting to the risks that emerged. this includes adjustments in the domestic financial markets and the real economy, as well as the implications for economic and financial stability. let me go through each of these points in turn. as for the domestic financial markets, the adjustment has been led by the repricing of financial assets that has been underway since the second quarter. yields on long bonds have been rising. equity prices have declined. there have been some outflows of short - term capital, and the baht has weakened from last year. in all, the adjustment has been smooth and orderly, and has benefited from the flexible market mechanism that underpins the movements of the economy β s key prices. and for the real economy, the adjustment has been accompanied by a moderation in growth in the first quarter to 6. 5 percent, led by the slowdown in agriculture because of drought and the bird flu. output of manufacturing and services, however, has continued to expand robustly. on the demand side, the dampened consumer confidence has moderated the momentum of private consumption in the first half of the year, but private investment and exports have expanded well and have been the key drivers of growth so far this year. on this point, it is comforting to note that domestic demand expansion has benefited increasingly more from the pick - up in credit extension, driven by ample liquidity in the system. private credit growth was a high 9 percent at end - june. turning to economic stability, with continued growth, pressure on resources has become more visible this year with output gap continuing to close, inflation rising, the trade surplus | pursued. central banks in advanced economies are widely anticipated to have already halted rate hikes and could be easing later in the year. these developments are expected to alleviate pressure on the ringgit. furthermore, the past two years of depreciation, which we have emphasised time and again as not reflecting domestic economic fundamentals and performance, have likely resulted in an undervalued ringgit. the undervaluation and the easing of global financial conditions in 2024 thus set up for a recovery in the ringgit. the current undervaluation should be attractive for investors. bloomberg consensus forecasts point towards a stronger ringgit in 2024. favourable economic fundamentals, including plans for structural reforms to materialise, will lend further support to the ringgit in the longer - term. we can also do our part. the reality is, our individual actions collectively also contribute to the ringgit's performance. let's then play an active role supporting the ringgit. allow me to share just three suggestions. first, for exporters and importers. indeed, there can always be additional gains from holding foreign currencies, taking advantage of the trend and the higher foreign interest rates on offer. but these actions will not help the ringgit. and relying on foreign exchange gains cannot be a sustainable business strategy. perhaps it's then time to look through these gains and focus on the actual business at hand, which could be more fruitful. manage your foreign currency and ringgit conversions, with a view to best protect and support the ringgit. second, corporates, investment houses and institutional investors on the other hand should focus more on domestic investment. indeed, now there is a compelling case to direct investments domestically. we have highly liquid government and corporate bond markets with attractive yields and a historically undervalued equity market presenting attractive investment opportunities. there will also be many growing opportunities for investment in the new and emerging sectors. third and finally, all of us as everyday consumers can also do our part. this includes a malaysia - first attitude, from purchasing goods, services, travelling for holidays and even investing in domestic unit trusts or ringgit - hedged investments. as we each do our part to boost our domestic economy, a strong ringgit recovery is within our grasp. 2 / 5 bis - central bankers'speeches ladies and gentlemen, the malaysian financial system is ready to play its role in intermediating investment and economic activities. i am glad to see that on many fronts, | 0 |
in underlying culture. we endeavour to foster a strong culture of compliance, with firms and individuals within firms acting in the best interests of their customers backed up by comprehensive and enforceable legislation, rigorous supervision, a credible threat of enforcement and powers of redress when consumers have suffered detriment. as i have stated, although the tracker examination will still take some time, the central bank is determined to ensure that every impacted customer is identified and appropriately redressed and compensated. on the issue of insurance, the central bank will continue to work with this committee, the working group and other stakeholders in ways that are appropriate to our mandate. looking ahead, brexit poses a number of risks and challenges for the economy, for institutions and for businesses. in line with our mandate, we will continue to highlight these risks, engage with institutions so they are adequately prepared, and provide a transparent and efficient authorisation process for any potential entities that choose to establish here. i look forward to discussing these issues further with you as well as the other issues you raised in my invitation. 7 / 7 bis central bankers'speeches | patrick honohan : international credit and financial market integration β after the storm? opening remarks by mr patrick honohan, governor of the central bank & financial services authority of ireland, at the 8th infiniti conference on international finance, trinity college, dublin, 14 june 2010. * * * it is a pleasure to open the 2010 infiniti conference, an acronym i understand to mean β international financial integration studies at trinity β. research on international financial policy issues has never been more important in ireland and abroad than it is now. the great financial crisis has thrown up many key questions for research. our own experience in ireland has many international financial ramifications. for, even if i have been emphasising recently how much of ireland β s banking difficulties were home grown, they have certainly occurred in an international context. ireland is one of the most globalised economies in the world β one indication : the ratio of exports to gdp approaching one ( which, by the way, you will realise is not a theoretical upper bound ). and its property price and construction bubble was financed to an important extent from abroad. over a four year period 2003 β 2008 net indebtedness of the banks to the rest of the world jumped from 10 per cent of gdp to over 60 per cent. interestingly, this foreign borrowing was not only used to finance the domestic property bubble but also to finance property development abroad β mirroring a common phenomenon of high income countries incurring foreign debt to acquire foreign equity β in this case equity in the property market some of which did not perform too well. and there was another international development that was important in igniting the property boom. in line with shiller β s theory of how bubbles get going, a myth that a new economic era was unfolding drove expectations. thus there was not only an unrealistic expectation that the irish economy would grow beyond the sustainable level of output β close to the production frontier and at full employment β which it had achieved in the celtic tiger period based on sustainable improvements in competitiveness and efficiency. in addition, the sharp fall in nominal and real interest rates on euro entry led many investors to exaggerate the degree to which a higher capitalization rate would apply to long - lived assets such as property. what new areas come to the fore now as topics for study? i would like to emphasise a number of issues which relate to the interaction of fiscal and banking policy. the direction of the interaction is two - way. banks | 0.5 |
financial crisis. prioritizing risk management is even more important for insurance companies. this is due to the fact the core activity of insurance involves risk - taking and risk - transfer, and that insurance risks are usually long - tailed. under the risk based supervisory framework, corporate governance and risk management has always been an integral part of bank negara β s supervisory assessment of insurance institutions. to form a supervisory view of an institution, bank negara evaluates how an institution manages the inherent risks within its significant areas of activity. the bank also assesses the quality of the oversight and control functions and tests the resilience of the institutions to different risks under stress conditions. therefore, it is critical for an insurance company β s internal policies and control mechanisms to be effective in shaping the desired risk profile. this risk profile should commensurate with the level of capital and capabilities of the company. the bank also initiated, in 2008, the financial institutions directors β education ( fide ) program to promote good corporate governance and risk management practices. feedback from the directors who attended the program revealed a deeper appreciation of the importance of sound corporate governance and active engagement of the board in risk management and strategic issues. we have also observed that the practices of financial institutions in malaysia showed evidence of strengthened risk governance culture. in particular, we observed higher commitment by board members, strengthened authority of the chief risk officer ( cro ), and more comprehensive oversight of risks. it is important to recognize that risk management should not be a β black - box β discussion that is confined to high level management. risk management should be an enterprise - wide process involving all levels of business functions. the top level management is responsible for putting in place a well - defined risk governance framework and formulating the appropriate risk strategies. at the operational level, the roles of the business units are to ensure that key risks are appropriately identified, assessed and mitigated. we are all aware, therefore, that risk management is a dynamic and iterative process. risk management is not a one - off exercise. instead, it is a continuous cycle. hence, there should be genuine awareness, ownership and accountability of risks throughout the company. every employee should see himself or herself as a risk manager! it is exciting to see the breath of the topics for this conference. and it is even more encouraging to see risk experts from different countries like the united kingdom, hong kong, singapore, philippines and malaysia coming together to exchange information and experience. i am also pleased to | of a single entity in one part of the world on all other connected parties illustrate the tremendous importance of sound and effective risk management in today β s financial world. due to the inter - connected economies around the world, asia has not been isolated from the spill - over effects of the global financial crisis. the western economies continued to be bogged down by slow and hesitant recovery with weak economic growth and high unemployment rates. emerging economies, particularly in asia, however, have been resilient through these financial challenges. this is attributable to various policies and practices adopted in the region following the lessons learned from the asian financial crisis in 1997 β 98. on the local front, malaysia has been largely successful in dealing with the challenges brought about by the global crisis. the economy has recovered beginning from the fourth quarter of 2009. prompt government responses and initiatives, as well as the existence of strong macroeconomic fundamentals and a sound financial system are the principal factors. in the first quarter of 2010, most asian economies registered robust growth, with malaysia recording a 10. 1 % real gdp growth. another recent measure of malaysia β s resilience is its rating in the imd world competitiveness yearbook 2010. malaysia β s global competitiveness ranking improved significantly from 18th place in 2009 to 10th place in 2010, out of 58 economies. malaysia has successfully issued a us $ 1. 25 billion sovereign sukuk ( islamic bonds ) last friday with large international demand even during a period of volatile financial markets. this further attests to malaysia β s success as well as international acceptance of malaysia β s standing as a major international islamic financial centre. although malaysia fared relatively well during this crisis, we should not be complacent. we should leverage on the lessons learnt from this and the late 1990s crises to improve our resilience to any future shocks. there is at present obvious optimism among financial institutions following the improved economic outlook and market sentiment. it is crucial to ensure, however, that this does not result in unchecked increases in risk appetite or compromises the quality of risk management practices. what was once a β black swan β event has increasingly become more common due to the high inter - linkages between international economies. as such, we need to be vigilant and ensure all potential risks are addressed and comprehensive risk management measures are adopted, both at the macro and micro levels of the economy. regulatory reforms in line with risk management let me turn now to the regulatory reforms in line | 1 |
work that entail high contact and pose greater risks of exposure to infection. see steven brown ( 2020 ), β how covid - 19 is affecting black and latino families β employment and financial well - being, β urban institute, urban wire : race and ethnicity ( blog ), may 6, https : / / www. urban. org / urban - wire / how - covid - 19 - affecting - black - and - latinofamilies - employment - and - financial - well - being. despite this, cortes and forsythe find that the larger increases in job losses suffered by individuals from disadvantaged groups, such as hispanics, younger workers, those with lower levels of education, and women, can be explained only in part by occupation and industry affiliation ; see guido matias cortes and eliza c. forsythe ( 2020 ), β the heterogeneous labor market impacts of the covid - 19 pandemic, β upjohn institute working paper series 20 - 327 ( kalamazoo, mich. : w. e. upjohn institute for employment research, may ), https : / / research. upjohn. org / cgi / viewcontent. cgi? article = 1346 & context = up _ workingpapers. - 6decline in participation and boosting the productive capacity of the economy. 8 persistent spells out of employment risk harming not only the prospects of these individuals, but also the economy β s potential growth rate. regarding the other side of our dual mandate, the 12 - month change in total personal consumption expenditures ( pce ) prices picked up from 0. 5 percent in april to 1. 4 percent in august. over the same period, core pce price inflation picked up from 0. 9 percent to 1. 6 percent, supported lately by increases in prices of durable goods, including those for used cars and household appliances. 9 while inflation may temporarily rise to or above 2 percent on a 12 - month basis next year when the march and april price readings fall out of the 12 - month calculation, my baseline forecast for inflation over the medium term is for it to remain short of 2 percent over the next few years. support for a broad - based and inclusive recovery recent research indicates that the coronavirus aid, relief, and economic security ( cares ) act played a significant role in supporting aggregate demand in the spring and summer. enhanced unemployment benefits offset the lost income of many lower - wage and services workers | holding back employment and spending, increasing scarring from extended unemployment spells, leading more businesses to shutter, and ultimately harming productive capacity. the recovery will be broader based, stronger, and faster if monetary policy and fiscal policy both provide continued support to the economy. while monetary policy has helped keep credit available and borrowing costs low, fiscal policy has replaced lost incomes among households experiencing layoffs and businesses and states and localities suffering temporary drops in revenue. monetary policy finally, let me turn to how the new statement on longer - run goals and monetary policy strategy will help monetary policy achieve its goals. the new statement on goals and strategy seeks to align monetary policy with key longer - run changes in the economy. 12 the combination of a low neutral interest rate, underlying trend inflation the new statement is available on the board β s website at https : / / www. federalreserve. gov / monetarypolicy / files / fomc _ longerrungoals. pdf. information about the review of monetary policy strategy, tools, and communications can also be found on the board β s website, at https : / / www. federalreserve. gov / monetarypolicy / review - of - monetary - policystrategy - tools - and - communications. htm. in addition, see lael brainard ( 2020 ), β bringing the statement on longer - run goals and monetary policy strategy into alignment with longer - run changes in the economy, β speech delivered at β how the fed will respond to the covid - 19 recession in an era of low - 9below 2 percent, and the low responsiveness of inflation to resource slack embodied in a flat phillips curve reduces the amount we can cut rates to buffer the economy, weakens inflation expectations, and could lead to worse employment and inflation outcomes over time. consequently, it is important to strengthen our ability to achieve our employment and inflation goals by committing to a path of policy and lowering borrowing costs along the yield curve. the new statement on goals and strategy makes several key changes that should significantly improve the way the committee conducts monetary policy. it eliminates the previous reference to a numerical estimate of the longer - run normal unemployment rate and instead defines the statutory maximum level of employment as a broad - based and inclusive goal. it commits that the committee will aim to eliminate shortfalls of employment from its maximum level, rather than the previous reference to deviations, which could be in either direction. by eliminating the rationale for removing | 1 |
later. participation in erm2 one important question that would become relevant during the preparatory phase is how best to ensure exchange rate stability against the euro within the scope of the exchange rate mechanism erm2, the successor to the erm system. in this regard, there may be reason to say something about history. the riksbank has previously, mainly over the years 1995 - 1997, considered the issue of erm participation and the possibilities for combining this with the inflation target policy that has been conducted for a number of years. during that time, the riksbank was legally responsible for the exchange rate regime, and the reasons therefore for considering erm participation were quite simply to prevent the regime of floating exchange rates from constituting a formal obstacle to swedish participation in monetary union, in the event this was to become a possibility. when the government then decided that there was insufficient popular support for swedish participation in monetary union, the question of changing the exchange rate regime was dropped. in connection with the riksbank being made formally independent in 1999, new legislation on exchange rate policy was also introduced. nowadays, it is the government that decides upon the issue of our exchange rate regime, although the riksbank determines how it is to be implemented. in other words, it is the government that would decide whether and when the krona should join the exchange rate mechanism erm2. following that, the ministry of finance and the riksbank would decide what rate between the krona and euro we assess to be consistent with a stable development of the economy. there are very good reasons to agree upon a common line of action. this is why we are holding discussions already among toplevel officials about an appropriate line of reasoning, the results produced by different estimation methods, etc. if we do not reach agreement, it is likely to be difficult to hold effective discussions with our european partners. a decision on participation in erm2 and on the central rate and fluctuation bands at which the krona should join would be taken through common accord of the finance ministers in the euro area member states, the ecb, the central bank governors and finance ministers of the applicant country and the other erm2 countries, i. e. denmark at present. in practice, a decision would be preceded by contacts between representatives of the ministry of finance and the riksbank as well as with our colleagues in a number of euro area member states and denmark. the first official step in the negotiations would be taken within | : the two main lines of action are elimination of non - explicit price mechanisms and achievement of greater certainty on the terms applied in the supply of payment services. national legislation has to transpose the obligations laid down under these provisions with regard to β two - leg β transactions only, those in which both payment service providers ( if there are more than one ) are located within the eea. but italy has opted for broader scope, extending the transparency rules also to one - leg transactions in which only one of the service providers is located in the eea. the information requirements concern both the conditions of the service ( ex ante transparency ) and the effective execution of the transaction ( ex post transparency ). they vary with the nature of the payment service contract and the needs of the customer. a new category of payment service provider is also envisaged by the directive : the β payment institution β. this represents an opportunity for businesses with a network structure and extensive distribution channels, such as mobile phone operators and large retailers, who will be subjected to rules laid down by the oversight authorities to ensure adequate quality of payment services. it goes without saying that the new regime will benefit remittances. the bank of italy also monitors technological innovation in the remittances market. a study the bank is currently conducting on mobile payments has found that most operators are interested in developing new remittance payment services using mobile phones. in fact, in the emerging countries mobile phones are already being used successfully to transfer money internationally. in the opinion of the mobile phone operators interviewed, in the medium - tolong term it will be possible to deploy mobile payments applications for remittances on a large scale in italy as well. to conclude, a number of initiatives in both the regulatory environment and the market may have a significant impact on the remittances industry, increasing transparency and efficiency. the bank will continue to support these initiatives while monitoring the remittances market as part of its institutional mandate for oversight on the payment system, economic research and supervision of financial institutions. in view of the social and economic impact that remittances have on the everyday life of migrants and the increasing attention of the g8 authorities, we hope that along the lines of this italian initiative, and of those in other countries, remittance price databases will be introduced in many countries around the globe. | 0 |
the central organisation establishes trust among the participants that funds can be exchanged safely. but more than ten years ago, a new idea came onto the scene challenging the established model with a decentralised approach : distributed ledger technology. this allows crypto - assets or crypto - tokens to be transferred without a central organisation. instead, trust between the asset holder and the beneficiary is established via a cryptographic consensus mechanism. bitcoin was the first of these crypto - tokens and is the most prominent example. since it first emerged, a whole zoo of crypto - assets based on different consensus mechanisms and transfer protocols has been invented. there is a lot of creativity, it brilliance and entrepreneurial spirit. but there is also a kind of β wild 1 / 5 bis central bankers'speeches west mentality β, which is still a far cry from the initial idea of replacing traditional payment instruments. instead, crypto - token values fluctuate like blades of grass in a hurricane, inhibiting a wider uptake for payment purposes. consequently, stablecoins were introduced to address this. essentially, these are crypto - tokens that claim to be backed by fiat currency. prominent examples that already exist are usd coin and pax dollar. while payers and payees trust fiat money because central banks take responsibility for its stability, stablecoins merely borrow trust from the currency they are pegged to. yet, the substance of this pledge has so far neither been regulated nor put to the test. 2 different regulatory approaches nevertheless, tremendous progress has been made in payments overall. the market has been moving away from a fairly simple structure. there used to be a limited number of regulated participants domiciled within a certain area. now we are seeing a plethora of arrangements with a wide variety of different parties from all over the world, and developments are sometimes hard to keep track of. that is why i see β payment services at a crossroads β. and now, it β s time for regulators β not only in europe, but worldwide, too β to review the existing regulatory approaches in order to ensure the safety and efficiency of payments. this responsibility is also enshrined in the mandate of the bundesbank and of the other central banks around the world in their capacity as overseers. and it has led not only to a review and amendment of existing regulations and frameworks, but also to the development of new ones. in the following, i will set out | john c williams : the longer - run framework - a look ahead remarks ( via videoconference ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the hoover institution monetary policy virtual series : the road ahead for central banks, 7 october 2020. * * * it β s great to be back in california participating once again in a hoover institution monetary policy event, even if only virtually. these conferences have provided an excellent opportunity for academic experts, policymakers, and practitioners to share research and perspectives on critically important issues. john taylor is both a friend and a mentor, so it β s a particular pleasure to be sharing this online platform with him today. this summer, the federal open market committee ( fomc ) completed its review of the fed β s monetary policy framework. this culminated in august with the issuance of a new statement on longer - run goals and monetary policy strategy. 1 the fomc put this strategy into practice in its september policy statement, explicitly tying its policy actions and intentions to the new framework. 2 the new policy framework represents a substantial evolution of the fomc β s thinking and approach since the committee published its first framework statement in 2012. today, i β m going to talk about what these changes mean for policy as the economy recovers from the effects of the pandemic. but what i β m really looking forward to is our conversation around these important issues, so i β ll keep my opening remarks brief. before i go any further, i need to give the standard fed disclaimer that the views i express today are mine alone and do not necessarily reflect those of the fomc or others in the federal reserve system. our dual mandate goals while our monetary policy approach has shifted, our fundamental goals have not. the fed has two goals set by congress : maximum employment and price stability. these β dual mandate β goals remain on an equal footing, and our commitment to delivering on both has not changed. in addition, our assessment that a 2 percent long - run inflation rate is most consistent with achieving both of our dual mandate goals is unaltered. what has evolved is how we think about best achieving them. like all institutions, the federal reserve must be responsive to changing circumstances and adapt to new realities. since 2012, we have learned a great deal about the behavior of the economy, employment, and inflation β both in the short and longer run β and these lessons have informed our approach to | 0 |
carlos da silva costa : opening remarks β " conference on financial stability " opening remarks by mr carlos da silva costa, governor of the bank of portugal, at the bank of portugal conference on financial stability, lisbon, 17 october 2017. * * * opening remarks by governor carlos da silva costa good morning ladies and gentlemen, it is a great pleasure to be here today to open banco de portugal β s 2017 conference on financial stability. on behalf of banco de portugal and the organising team, a very warm welcome to you all! 10 years past its beginning, academics and policymakers are still struggling to build a consensus on the policy implications of the financial crisis. it is undisputable that the financial system in most advanced countries is now sounder than at the onset of the financial crisis in 2007 : funding of the core of the financial system ( banks ) is more stable, an adjustment process leading to more sustainable levels of leverage took place, and banks are significantly more capitalized. nevertheless, the financial system is not immune to risks, and the existing policy instruments are unable to fully address the persisting legacy of the crisis. moreover, in the aftermath of the crisis, to reduce the risk of moral hazard and protect the taxpayer from shouldering private sector losses, there was a strong impetus against involving public money in providing a safety net to the financial system. bail - in principles in resolving banks prevailed, as well as a general aversion to bail out provisions. while this should be the norm, flexibility should be preserved to address emergency situations. by limiting policy options on the usage of public funds, regulators may have ended up exacerbating risks in the event of a systemic crisis. jeopardizing financial stability will result in output losses and damaging consequences to the overall economy. as investors rationally act to protect themselves against the possibility of haircuts to their claims on weaker institutions, the existing framework may actually accelerate runs and create a heightened vulnerability to a future systemic financial crisis. the incomplete set up of the banking union in europe with the full implementation of the resolution regime is a dangerous combination. last week β s proposal by the european commission risks prolonging this problem. when seen in the context of the much smaller room for manoeuvre of monetary and fiscal policy tools, this threatens to leave us less prepared to deal with future crises. therefore, despite the reforms in financial regulation, and the upgrade in analytical and monitoring instruments, we should not convince ourselves that our ability to detect and | also argued that β [ t ] his requires that the national supervisors and parliaments should receive the necessary information to understand the risks national depositors are exposed to from these branches and the possible impacts on the financing of their economies. this may require developing specific reporting instruments and processes for the local authorities to continue to be able to appropriately supervise local activities and thus contribute to supervisory decisions taken at the ssm level that may impact their jurisdiction. β, eurofi ( 2019 ), programme of the eurofi high level seminar in bucharest, 3 - 5 april. viii as evidenced by the high - level working group chair report on the strengthening of the banking union, including edis ( op. cit. ) : β broad agreement exists on the need for a harmonisation of necessary parts of bank insolvency law, including with regard to cross - border groups and the ranking of creditors, while the toolbox for resolution might need to be expanded. β ix this report is expected to feed into the review of the single resolution mechanism, european commission ( 2019 ), β report from the commission to the european parliament and the council on the application and review of directive 2014 / 59 / eu ( bank recovery and resolution directive ) and regulation 806 / 2014 ( single resolution mechanism regulation ) β, available at http : / / ec. europa. eu / transparency / regdoc / rep / 1 / 2019 / en / com - 2019 - 213 - f1 - en - main - part - 1. pdf, and european parliament ( 2019 ), briefing for the purposes of the public hearing with elke konig, chair of the single resolution board on 2 april 2019. the european parliament econ committee has also commissioned an external study on β lessons from the united states for banking resolution in the banking union β to be published in spring 2019. x state aid sa. 50640 ( 2018 / n ) β italy β liquidation scheme for small banks, available at http : / / ec. europa. eu / competition / state _ aid / cases / 274069 / 274069 _ 1989761 _ 107 _ 2. pdf. xi judgment in joined cases t - 98 / 16, italy v commission, t - 196 / 16, banca popolare di bari scpa v commission, and t - 198 / 16 fondo interbancario di tutela dei depositi v commission. xii the dgs directive also recognises that dgs funds may be used | 0.5 |
able to draw on the pool of talent in the bank as we launched different initiatives in several directions simultaneously. the very first task - force that i set up completes its mandate today with the launch of the mpc. there are several others still at work on a range of issues such as the strategic review i just mentioned, the celebration of the 40th anniversary of the bank, the move to the new headquarters, the review of our approach to retail forex trading, and one on such a mundane but serious issue as the flooding of the bank β s vault. looking down the line, we have on the drawing board our move into islamic banking services which constitute a global business opportunity. we can rapidly roll out a new financial product and service, with some re - engineering of our approach to banking regulation and supervision to make it possible. in the next few weeks, we have a training programme, organised jointly with deutsche bank, for our own staff and also for staff from commercial banks, to pave the way for our move to full conformity with basel ii principles. both regulators and regulatees will be given the same training to ensure they are on the same wavelength. and later this week, a joint bank of mauritius / mauritius bankers β association delegation leaves for east asia as we make final preparations to introduce the cheque truncation system. this will reduce paper processing, speed transactions and reduce their cost, and make us all cheque - users a little bit more efficient and productive. as you can see, we have many balls up in the air. our vision is clear. our goal is set. we continue the exciting journey of modernisation with renewed determination. we do not have the luxury of time. this time round, we do not want to wait another 13 years to do what must be done. the future does not belong to the hesitant. we must get on with the job, come what may. to achieve all this, we need resources. we require new blood. and this is the reason why the bank has recently advertised for a range of positions for such openings as bank examiners, research officers and communications manager. the response has been very good, indicating that the bank has a good reputation and enjoys credibility as an employer. allow me to conclude by making two specific observations. first and foremost, let me point out that this first mpc meeting is not an interest - rate - setting meeting. today the mpc will discuss the operational aspects for the conduct of its future meetings, take | policy review committee to ensure a continuous monitoring of the economic situation. we are also proposing that the mpc meet at quarterly intervals. the dates on which the meetings will be held will be communicated to the public well in advance. however, there is provision for the mpc to meet in between should the need arise. the mpc will decide on the key repo rate by voting. all these are tentative at this stage and are subject to revision or confirmation by the mpc when it meets later today. inflationary pressures have built up lately in our economy and the inflation rate is expected to cross the single digit level by june this year. we are experiencing the highest rate of inflation in a decade. it is a cause for concern, but certainly not for alarm as the rate is expected to decline as the pass - through effects of recent price hikes taper off. this of course assumes that we do not compound the problem by inappropriate fiscal and wage policies. eternal vigilance on these fronts is the price we have to pay to combat inflation. in any case, we must remind ourselves that the primary objective of the bank is to maintain price stability and to promote orderly and balanced economic development. thus, in our mandate as given by the act setting us up, price stability is not an end in itself. rather it is a means to an end, which is sustainable macroeconomic growth. we therefore need to weigh real sector issues adequately in our monetary policy decisions. in this respect, the bank intends to institute regular contact with stakeholders of the real sector in addition to those of the financial sector we normally deal with. and i very much welcome the presence among us this morning of employers, trade unions, economic operators, exporters, and their respective associations and chambers. i am convinced that there is a lot more that must be done β and done fast - within the bank. we are expecting shortly the arrival of a consultant from another central bank to help us with a strategic review of our existing structure. as a pro - active institution, we want to make sure that our staff is equipped with the right tools, given state - of - the - art training and imbued with the level of professionalism that the situation calls for. i hope i shall be able to count on the support of the staff and the union as we press on with the re - engineering that we have already embarked upon. we shall proceed in a measured manner, with full consultation every step of the way. i have been | 1 |
due to the tightening of mortgage lending regulations including dti ratios, however, house prices show a slower pace of increase this year ; with the greater seoul area turning to a mild decrease. in contrast to their very steep falls from pre - crisis levels in countries such as the usa and the uk, house prices in korea have remained relatively unaffected. from january 2008 up until the present, house prices fell by 20. 8 % in the usa and 7. 0 % in the uk whereas they edged up 5. 5 % in korea. 3. policy responses thanks to the active implementation of monetary and fiscal policies, the korean economy could overcome the financial crisis faster than other major countries. monetary policy in the immediate aftermath of the collapse of lehman brothers, the bank of korea moved boldly from that october to bring stability to the foreign exchange market and ease the credit squeeze. it supplied a total of 26. 8 billion us dollars in foreign currency liquidity by making active use of the foreign exchange reserves and a currency swap facility with the us fed. through open market operations and support for a bank recapitalization fund and so on, it also pumped in korean won liquidity of 28 trillion won, amounting to the equivalent of around 2. 6 % of nominal gdp. in a further move, between october 2008 and february 2009, it cut its policy rate dramatically from 5. 25 % to its lowest - ever level of 2 %. from the second quarter of 2009, in line with the stirrings of improvement in finance and the economy, it progressively withdrew the liquidity supplied in the course of tackling the financial crisis. during 2009, it collected in full the foreign currency liquidity provided through swaps and loans. similarly last year, it recouped the entire amount of the liquidity pumped in by way of rps. in june this year the aggregate credit ceiling for the financial support of smes was reduced by 1. 5 trillion won, part of the 3. 5 trillion won increase undertaken in response to the crisis. β right now the total scale of the korean won liquidity supplied and still outstanding amounts to only 6. 9 trillion won ( 0. 6 % of nominal gdp ), being made up of part of the increases in the aggregate credit ceiling ( 2. 0 trillion won ), the bank recapitalization fund ( 3. 1 trillion won ) and the bond market stabilization fund ( 1. 8 trillion won ). the bank of korea adjusted its policy rate upward from 2 | major country central banks and international consultative bodies, while participating actively as well in the discussions on financial stability at the g - 20, the financial stability board ( fsb ), the basel committee on banking supervision ( bcbs ) and other international forums. we must in particular exert our utmost energies to successfully host the g - 20 meeting of ministers of finance and central bank governors and the bis meeting of central bank governors, both scheduled for november this year. continuous efforts on our part are also needed to enhance the safety and efficiency of the nation β s payment and settlement system. the bank should strengthen risk management in the net settlement systems, in line with the expanded use of the retail settlement system and diversification of its participant institutions. the β plan to develop the payment and settlement systems in the securities markets β, prepared jointly with other related institutions including the korea exchange and the korea securities depository, must also be seamlessly put into operation. in our management of the foreign reserves, meanwhile, even greater attention should be paid to their safety and liquidity, in consideration of the still high degree of uncertainty in the global financial markets. efforts are at the same time needed to secure their improved profitability, in line with the rise in our holdings of foreign currency assets. every endeavor should be made to ensure the trouble - free supply of banknotes and coins, and to prevent circulation of counterfeits. special attention needs to be given as well to augmenting the quality of public economic education. my dear colleagues, given today β s rapid global economic integration and the fast - paced changes in economic structures and in economic agents β behavior, it is very difficult for a central bank to implement monetary policy looking ahead at medium - to long - term economic conditions. in order to overcome such changes and challenges, it is thus more important than ever that we develop our abilities to analyze and forecast the economic situation accurately and to make timely and effective policy decisions under conditions of great uncertainty. the bank β s organizational and personnel management should therefore be rearranged, to meet such needs of the times by reinforcing our research and policy operation capacities. nor should our increasingly more important operations in the areas of financial stability and international cooperation ever be neglected. while economic conditions are still difficult, growing social attention is being paid these days to improving public sector management. we must continue our efforts to boost the efficiency of our organizational management. my dear colleagues, this year we will celebrate the 60th anniversary of the founding of the bank | 0.5 |
##rated to strike a balance between, on the one hand, offsetting the direct cost of negative interest rates on bank profitability, thereby helping to sustain the pass - through of low policy rates to bank lending rates, and on the other, preserving the positive contribution of negative rates to the accommodative stance of monetary policy and the continued sustained convergence of inflation to our aim. reconciling these two goals is possible, since the value of funds in the money market is determined by their cost at the margin. that marginal cost will continue to be set by the rate on our deposit facility, and it will not be influenced by the higher remuneration that banks will receive on the portion of their reserves that will be exempt under the new scheme. the excess liquidity that will be created in exchange for the additional bond purchases that start in november will also further increase the non - exempt amount, which has already been calibrated in such a way as to preserve a high level of trading activity in the money market. in any case, we will actively monitor conditions in the money market and adjust parameters as necessary to maintain an active trading environment and to ensure that the easing effects of a reduction in the overnight interest rate are transmitted effectively through the entire yield curve. to sum up, the measures we announced last week complement each other and together constitute a powerful package. as i previously noted, the evidence shows that our monetary policy measures have been an effective response to the environment that the ecb has faced in recent years. the cut in the deposit facility rate lowers the anchor for the entire term structure of interest rates, while the forward guidance on interest rates steers expectations of the short - term interest rate path. the forward guidance protects the short to medium - term segment of the yield curve from unnecessary volatility by eliminating residual uncertainty about the expected rate path over the forward guidance horizon. in addition, it helps to steer the long end of the yield curve by affecting the expectations component of longterm interest rates. renewed net asset purchases reinforce the downward pressure on long - term rates by reducing risk premia, and also complement the impact of forward guidance on the expected short - term rate path by signalling the governing council β s commitment to maintain a highly accommodative monetary policy stance for a prolonged period of time. new net asset purchases will also mitigate the mechanical upward pressure on long - term rates that ensues from the gradual ageing of our portfolio and the associated loss of | european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr lucas papademos, vice - president of the european central bank, at the press conference held in lisbon, 2 october 2003. * * * ladies and gentlemen, the governing council of the european central bank today met for the eighth time outside frankfurt. i would like to thank both governor constancio for his invitation and generous hospitality, as well as the staff of the banco de portugal for an excellently organised meeting. turning to business, we have decided to leave the key ecb interest rates unchanged. the basic components of our economic and monetary analysis remain in place. in particular, the medium - term outlook for price stability continues to be favourable, allowing us to conclude that the historically low level of ecb interest rates remains appropriate. this also lends ongoing support to economic activity. we will continue to carefully monitor all developments which might affect our assessment. the more detailed considerations underlying our decision are as follows : starting with the economic analysis, real gdp growth in the euro area was virtually stagnant in the first half of this year. however, the latest data and information are consistent with a moderate pick - up in activity in the second half. in particular, there are signs that economic activity might have firmed somewhat in the third quarter, and confidence indicators available up to september generally point to some improvement in economic expectations. in line with available forecasts and projections, this upturn should gradually strengthen in the course of 2004. externally, the recovery in world economic activity appears to be proceeding. this should support demand for euro area exports, counteracting the effects of the deterioration in price competitiveness. domestically, companies seem to be continuing their adjustment efforts to enhance productivity and profitability. this, together with the low level of interest rates, should contribute to a recovery in investment. furthermore, terms - of - trade effects stemming from the past appreciation of the euro should positively affect real disposable income in the euro area, and thereby private consumption. developments in financial markets are generally consistent with this overall picture. the short - term risks to our main scenario of a gradual recovery appear to be broadly balanced. however, some risks to the sustainability of economic growth at the global level remain. these are related to the medium - term sustainability of public finances in major industrialised countries and, in this connection, the adjustment of external imbalances in some regions of | 0.5 |
the main purpose of the banknote project is to have banknotes that are even more secure than previous banknote series. leif veggum, director of norges bank β s cashier β s department, is soon going to tell us about the security features that make the banknotes almost impossible to counterfeit. however, if these features are to work as intended, it is important that, as users, we should familiarise ourselves with them. if you feel that you need to brush up your knowledge, i would encourage you to visit norge bank β s webpage newnotes. no, norge bank β s facebook page or order the banknote brochure from norges bank. you will still be able to use the old 50 - krone and 500 - krone banknotes for one year after the launch of the new banknotes, ie until 18 october 2019. so use your old banknotes when you are out shopping or take them to your bank well before the deadline to help make the withdrawal of the old banknotes as smooth and efficient as possible. good luck with the new banknotes! 2 / 2 bis central bankers'speeches | ##ecd area. many are seeking new opportunities and work in the urban areas. low labour costs and more efficient transport and communication attract labour - intensive production. production of goods and services is being transferred from norway and other high - cost countries to amongst others the baltic countries, poland, china, india or other emerging economies. there are many examples showing that competition in selling highly skilled services is also intensifying. norwegians are offered myopia surgery in turkey. dental care and other medical services are also offered, at prices that are substantially lower than here. the norwegian oil and gas company norsk hydro reports that almost 300 000 hours of engineering services for the natural gas field ormen lange were supplied by indian engineers, located in india. the shift in the division of labour is now influencing real wage growth in industrialised countries. the risk that a business will have to wind up operations or move abroad is dampening costs as bargaining power is being transferred from workers to employers. in a number of european countries, wage growth is also being influenced by labour inflows from the new eu member states. increased trade has engendered higher demand for shipping services and favourable freight rates for a period. this has in turn led to a boom in the shipbuilding industry. at the same time, high energy prices are boosting investment in the petroleum and electricity sectors, with considerable impetus to the engineering industry. growth in asia is also having a favourable impact on many metal prices. norway β s terms of trade are improving. prices for our imported goods are falling in relation to prices for goods we export. the impact of the rise in oil and gas prices is particularly strong, but the terms - oftrade gains for the mainland economy have also been high. the situation in norway differs from that of its nordic neighbouring countries. sales of swedish and finnish high - tech products are growing strongly in volume terms, but prices are falling. denmark has a diversified business sector, which is overall moving on a steady path. strong development in the petroleum sector high oil prices have provided a strong impetus for the petroleum industry and have led to a strong increase in activity on the norwegian continental shelf. many projects have been launched to increase recovery from fields in operation, and investment in the petroleum sector has increased sharply. the large development projects relating to the natural gas fields snΓΈhvit outside of hammerfest and ormen lange at aukra have made a large contribution to the high level of investment. both these projects also involve considerable | 0.5 |
jean - claude trichet : central bank cooperation after the global financial crisis video address by mr jean - claude trichet, president of the european central bank, at the bank of korea international conference 2010 β the changing role of central banks β, seoul, 31 may 2010. * * * ladies and gentlemen, first, let me congratulate the bank of korea on its 60th anniversary. the bank has made essential contributions in korea β s economic development, the reform of the country β s financial system and its integration into the global financial system. the clear focus on controlling inflation and the strengthened independence further buttressed the role of bank of korea in the economy. and recently, the bank β s timely and decisive measures helped korea weather the global financial crisis. hence, there are many reasons to congratulate and wish bank of korea a very happy birthday! * * * let me now say a few words about central bank cooperation during and after the crisis, which the bank of korea is so closely involved in. the cooperation among central banks has recently taken numerous forms, such as information sharing and the setting of general standards and rules. such cooperation has been mainly channelled through the various fora at the bank for international settlements ( bis ) in basel. these include the governors β global economy meeting and the other committees that meet under the aegis of the bis as well as the financial stability board. the global economy meeting comprises the esteemed governor kim and some 30 other governors from all systemically important economies. it is held every two months in basel and provides a unique opportunity to discuss the global economic outlook, policy challenges as well as any other topics of mutual interest. until january this year, the global economy meeting was primarily concerned with assessing global economic and financial conditions. since then, it was entrusted with an additional assignment : it now provides guidance to, and formally decides on, issues discussed by the various basel - based central bank committees. this responsibility had been in the hands of g10 governors for decades. i have the privilege to chair the global economy meeting and find the frank and in - depth discussions of invaluable importance for my own work and for the central bank community at large. central bank cooperation is part of a more general trend that is reshaping global governance, and which has been spurred by the global financial crisis. one distinctive aspect of this crisis has been its originating in industrial economies. emerging countries have also been severely affected, but as a group remained a source of strength for the | the build - up of household debt all at the same time. in this situation, it is not evident how monetary policy should manage the balance between inflation, economic activity and the risk of an overly rapid increase in housing prices and household credit. let me elaborate on my thoughts a little further here. monetary policy must take financial risks into account the concern over lending to households increasing too rapidly has led to a majority of the members of the riksbank β s executive board voting to hold the repo rate at a higher level than would otherwise have been justified. i have entered reservations against these decisions and advocated a lower repo rate, for reasons i will return to later. despite my reservations, i share the majority β s concern over the rapid increase in household debt. and i consider that monetary policy should, in principle, take into account financial imbalances and risks that may arise as a result of the monetary policy conducted. in what way is this compatible with the riksbank β s mandate? according to the sveriges riksbank act, the objective of the riksbank β s activities is to maintain price stability. moreover, the riksbank shall promote a safe and efficient payment system. in addition, the preliminary works to the act state that the riksbank, without prejudice to the price stability target, should support the goals of general economic policy with a view to maintaining a sustainable level of growth and high rate of employment. at the riksbank we consider the task of promoting a safe and efficient payment system to have a broad meaning and that it is, in practice, a matter of taking responsibility for promoting the stability of the financial system. 2 but it is not actually this task that justifies monetary policy taking into account a rapid expansion in household borrowing. it is namely the case that the preliminary works to the sveriges riksbank act emphasise that the monetary policy instruments shall only be used to maintain price stability, and thus not to promote a safe and efficient payment system. 3 we sometimes say that monetary policy shall take financial risks into account, as it can be difficult to stabilise inflation around the target if households are forced to rapidly reduce their debts. 4 such difficulties could arise, of course, but for me it is not consideration of the inflation target that mainly justifies letting monetary policy take financial risks into account. instead i perceive taking financial risks into account to follow on from the task of β supporting the objectives of general economic policy with the aim of | 0 |
raise the standards on education in financial services. less than a month ago the faa β finance accreditation agency, an entity responsible for reviewing the quality of the learning programs that serve the industry was launched. this agency complements the initiatives by the international centre for leadership in finance ( iclif ) to produce capable and competence leaders. taken together, these efforts reflect our motivation in ensuring comprehensive talent development solutions for financial sector professionals throughout their career progression from entry - level up to leadership positions. equal emphasis is also given in the area of islamic finance. talent development has been identified as a key thrust to support industry growth and development, both domestically and globally. the role of several talent development institutions dedicated to serving the industry has been instrumental in contributing towards achieving this goal β the international centre for education in islamic finance ( inceif ) which is as a global university offering academic and professional qualifications in islamic finance, the international shari β ah research academy for islamic finance ( isra ) which is a centre for applied research in shariah and islamic finance, as well as ibfim or the islamic finance and banking institute malaysia β an industry - owned training entity for islamic finance professionals. despite being relatively new in existence, these institutions have now become increasingly recognised as leading providers of expertise in islamic finance, providing the islamic finance global community a reference centre for knowledge and talent development. bis central bankers β speeches i am most inspired by the optimism set by theme of this year β s conference β β waves of change, oceans of opportunities β. the theme very aptly sums up the business conditions we face today. rapid change is the new normal in today β s dynamic world. the rise and interconnectivity of asia as well as its demographic changes, the impact of regulatory changes and new technologies are all combining to transform the financial landscape of the region. survival and success in today β s challenging environment will depend on being able to exploit new growth opportunities that come with change. but this journey will not happen without determined action to lay the foundation for future success of the industry. in closing, i wish you an insightful and productive deliberation and trust that your discussion will be useful and will leave you with additional insights to tackle the challenges that you face. to our overseas guests, i hope you will leave kl with pleasant memories of your brief stay here. bis central bankers β speeches | rut presently, crypto - asset market structures continue to develop at a rapid pace. and at the same time, we see a growing involvement of traditional finance with the crypto - ecosystem β which means that the financial interlinkages between these two worlds are growing as well. so we cannot exclude that, sooner rather than later, vulnerabilities in crypto - asset markets become big enough to form an actual, transmissible risk to global financial stability. and this risk looms larger if we don't implement comprehensive regulation. 1 / 4 bis - central bankers'speeches all over the world, national regulators have not been waiting on me to say this. a lot of decisive action has been taken already. the fsb welcomes these initiatives because they show much - needed willingness to act. but at the same time, we see a challenge due to crypto's inherent global reach. and that is : how do we ensure consistency between all these regulations? and how do we deal with crypto parties that choose to operate exactly from those jurisdictions that don't really prioritise the effective regulation and supervision of crypto - asset activities? to overcome these challenges, the fsb developed a global regulatory framework. this framework, published last july, aims to promote the consistency of regulatory and supervisory practices to address the financial stability risks of crypto - asset activities ( more information ). developing this framework on the basis of consensus among the fsb member authorities has required a careful threading of the needle. and so, i think it is fitting that we find ourselves on threadneedle street, today. the perfect place to discuss the fsb's finalized policy work on broader crypto - asset markets and global stablecoin arrangements. the latter is a specific type of crypto - asset β one that aims to maintain a stable value relative to a pool of assets, usually fiat money. one that carries heightened risks to global financial stability because of its potential systemic relevance in multiple jurisdictions. and so, one that requires special attention. because the fsb recommendations are high - level, national authorities can apply these recommendations flexibly, whilst also ensuring a baseline β a baseline that provides for a consistent application of comprehensive regulation across the globe. a baseline that embraces both already existing rules in some countries, and to be drafted regulations in others. a baseline with a clear thread of gold β and that is the principle of " same activity, same risk, same regulation ". many crypto | 0 |
##concilable. the minimum exchange rate does not restrict our monetary policy independence, as some observers wrongly claim. rather, it is a genuine expression of our monetary policy independence. the minimum exchange rate is not a move towards the euro and most certainly not any tie to the european currency. what it in fact does is to ensure appropriate monetary conditions for our country in an economic environment which remains extremely difficult. meanwhile, the value of the swiss franc is still high. in the long run, a central bank can only pursue an autonomous monetary policy in line with the needs of its country if it is independent. independence is therefore a further condition for ensuring that a central bank retains its freedom of action at all times. independence is more than an abstract construct. it gives the central bank the freedom to act swiftly, resolutely and credibly, if needed. what independence also means, however, is the responsibility to use this freedom strictly within the meaning of the statutory mandate, no matter what the prevailing political climate may be. independence cannot be taken for granted, it is a privilege. it was granted to us under the constitution in order that we could achieve the goal of price stability in the long term. as a counterweight to its independence, the snb has a duty of accountability and information with respect to parliament and the public. the snb is thus bis central bankers β speeches firmly anchored in our constitutional democracy. in a free society, an authority with a complete free hand would be a foreign body. favourable environment created by confederation and cantons yet independence must also be lived. the snb may not accept instructions from political authorities ; neither can it allow itself to be put under pressure by public opinion. it must conduct a monetary policy that serves the interests of the country as a whole, to the best of its ability, and in accordance with its mandate. it is only natural that our monetary policy cannot please everyone at all times. however, an independent central bank must not be put off by this. the relevant legislation contains a number of mechanisms designed to ensure the snb β s independence. one of these is our distribution practice, which has been developed on the basis of the provisions of the national bank act ( nba ). we are happy to make distributions to the confederation and the cantons ; we can only do so, however, where the balance sheet and annual results allow for this. as we announced some days ago, this will unfortunately not be the case for the 2013 business | priorities. at a later stage, the massive appreciation of the swiss franc threatened the economy at its core, creating a risk of deflation. the snb came to the rescue by injecting liquidity into the market, setting up the stabfund, intervening in the foreign exchange market and introducing the minimum exchange rate. our balance sheet is a reliable indicator of just how intense these interventions were. prior to the outbreak of the crisis at the end of 2006, the balance sheet total was just over chf 100 billion. today, it amounts to nearly chf 500 billion. in the area of financial stability, the snb, too, was entrusted with some new tasks, especially with regard to macroprudential measures. the countercyclical capital buffer as well as the designation of systemically important banks and their functions are probably the most well - known of these measures. on the whole, central banks around the world have thus far been successful in their role as firefighters. they managed to prevent the global economy from falling into a depression and to ensure price stability. in addition, in many countries, they worked side by side with their governments to shore up the banking system. this has bought some time β time that in numerous places should be used to solve the underlying problems. in many countries, bis central bankers β speeches measures that should be undertaken to achieve this include well - designed structural reforms of the economy and comprehensive restructuring of government finances. the downside of the central banks β success is that it could give the impression that treating the root of the structural problems is not necessary at all. to put it somewhat bluntly, this fallacy can be described as follows : now that the central banks have done so much to save the economy and the financial system from collapsing, they should be permanently in charge of ensuring sound economic growth, high employment, low interest rates and a healthy real estate market. such extremely high expectations are exceedingly dangerous. central banks would be forced into a role in which they had to fulfil tasks for which they neither have the requisite responsibilities nor the appropriate instruments. as a result, other agents could be induced to neglect their responsibilities. while the crisis might be delayed, it most certainly would not be overcome. it may appear politically opportune to put problems on the back burner, rather than working out solutions. in the long term, however, the cost to the economy and to society would be horrendous. what can central banks do | 1 |
of the oil price fall in 2014. nor are market 2 / 7 bis central bankers'speeches expectations of future interest rates necessarily aligned with norges bank β s interest rate path. on the contrary, the two curves have often diverged to some extent, particularly at somewhat longer horizons. norges bank β s analyses nonetheless indicate that we are successful in steering market expectations in the desired direction ( brubakk et al ( 2017 ) ), for example by publishing the interest rate path. the analyses also find that central bank and market revisions of interest rate paths in the periods between monetary policy meetings are strongly correlated. this suggests that market participants have a good understanding of the central bank β s response pattern and of how monetary policy will react to new information about economic developments. need for alternative reference rates chart : from key rate to money market rate β¦ market expectations of future interest rates are reflected in the norwegian monetary market rate β three - month nibor. this rate can be decomposed into the average expected key policy rate over the next three months and a risk premium, usually referred to as the money market premium. over time, three - month nibor has tracked the key policy rate. three - month nibor is a so - called reference rate, used as a basis for the pricing of many financial contracts in norway, such as loan contracts and interest rate swaps. in its capacity as a reference rate, nibor is a key element linking the key policy rate with the interest rates facing households and enterprises. chart : β¦ and on to mortgage rates the interest rates paid by households and enterprises on their bank loans are set to cover banks β costs as well as to provide a return on equity for the banks β shareholders. a large share of banks β costs consists of the cost of wholesale loans to fund retail lending. prices for these loans will typically be formulated as a premium on top of three - month nibor. changes in nibor will thereby affect banks β funding costs and lending rates for households and enterprises. reference rates are used to hedge against future changes in the general interest rate level. the pricing of bank bonds can serve as an example. when the interest rate on a bond is set at the reference rate plus a fixed risk premium, both the bank β s interest expenses and the bond purchaser β s interest income will depend on the level of the reference rate β and thereby on the general interest rate level. when the two parties agree to the contract, they can then focus on the contract β | ΓΈystein olsen : economic perspectives annual address by mr ΓΈystein olsen, governor of the norges bank ( central bank of norway ), to the supervisory council of norges bank and invited guests, oslo, 14 february 2013. the underlying data series can be found on the norges bank β s website. * * * introduction life was blessed for these people, living in a small capital in a small country, geographically outside the world ; geographically, but not economically. the bright springs bubbled up as never before (... ). they were sent sparkling to the sky by popping corks over tables set for a feast (... ) but all those who lived by the banks of the bright springs knew that they could not spring eternal. 1 johan borgen β s portrayal of norway as it was almost a hundred years ago could also serve as an apt description of today β s norway, even though the environment was entirely different at that time. five years after the financial crisis started in earnest, growth is weak and unemployment high in many countries. the economic situation in norway stands in stark contrast to developments abroad. norway β s economy is still growing and unemployment remains low. there is a tendency to see ourselves as a country apart. norway β s oil and gas resources provide an economic base that few other countries enjoy. income levels are among the highest in the world and the people of norway are generally highly educated. our access to natural resources makes a significant contribution to our prosperity. at the same time, our increasing dependence on oil and gas increases the vulnerability of the norwegian economy. we know that neither of these sources will spring eternal. the theme of my speech this evening is how to enhance the resilience of the norwegian economy. continued weak growth prospects, but less fear when the financial crisis washed over the norwegian banking sector in autumn 2008, we were reminded of how dependent we are on the world around us. nonetheless, the norwegian economy weathered the crisis well. after about a year, the downturn in norway was over. chart 1 : emerging economies are driving oil demand one of the main reasons is that there is strong demand for norwegian goods in countries where economic growth remains robust. the centre of gravity in the world economy is shifting. in the course of the next few decades, china will most likely be the largest economy in the world. emerging economies β with china at the forefront β are the main driving force behind the increase in demand for crude oil and other commodities. as a | 0.5 |
over national payment systems, central banks guard against systemic risks that could be transmitted via these systems. there are therefore clear synergies between financial stability and other tasks. central to these synergies is the wealth of knowledge on the financial system through the central bankΒ΄s active presence in financial markets. again, the structural differences in financial systems across the euro area mean that the financial stability task is more appropriately located at the national level, although communication and co - ordination across borders are increasingly important. whereas all national central banks have a financial stability task, not all have direct competence in the field of prudential supervision. the choice to delegate the supervisory task to the central bank is, of course, based on national circumstances and preferences. however, the important synergies between the financial stability and supervisory tasks should not be ignored. i will come back to this issue when i discuss the supervisory arrangements in the netherlands. in general, it is important to stress that on both a national and european level the national central banks remain involved in discussions on prudential supervision. this is essential for the proper execution of their financial stability task and, as such, enables the system to contribute to the smooth conduct of supervisory policies. recent developments in europe regarding supervision recently, the perception of increased cross sector and cross border financial integration has resulted in demands for enhancing the supervisory structure in europe. i fully subscribe to the ambitions to speed up the regulatory process of supervision in europe. moreover, the convergence of supervisory practices would serve a level playing field in european financial markets. last year, a european committee under chairmanship of mr brouwer β director at the dutch central bank β made several recommendations on this point. as i explained, the involvement of national central banks will continue to offer welcome expertise in assessing the supervisory needs and challenges of financial integration. concerning topics directly related to financial stability and systemic risks, the national central banks will be at the frontline of european discussions, together with their counterparts from the ministries of finance. however, i would warn against the suggestion of introducing a single european supervisor. it is a misconception to expect that a top down approach to the design of supervision in europe would promote financial integration. clearly, that would simply ignore the structural differences on the national level. indeed, the practice of emu has shown that a critical mass in integration is needed before institutional convergence ( i. e. the introduction of the euro ) can work as a catalyst. likewise, i would warn against the suggestion that | nout wellink : the role of national central banks within the european system of central banks - the example of de nederlandsche bank introduction by dr nout wellink, president of de nederlandsche bank and president of the bank for international settlements, to the paper β the role of national central banks within the european system of central banks : the example of de nederlandsche bank β, oesterreichische nationalbank conference β competition of regions and integration in emu β, vienna, 13 - 14 june 2002 * * * introduction i would first like to thank the oesterreichische nationalbank for inviting me to this conference and take up the challenge of discussing the role of national central banks in europe. clearly, this role underwent a fascinating metamorphosis with the introduction of the single currency. suddenly, a strong, european dimension was added to these institutions that were traditionally largely confined to national boundaries. consequently, the national central bank in europe is of a peculiar sort and has a double identity. on the one hand, it is deeply rooted in national tradition and sovereignty, which reflects specific national tasks and responsibilities. on the other hand, it is part of a system of central banks responsible for a fully supranationalised monetary policy and related, common tasks. let me now briefly outline my paper on the role of national central banks in europe. first, i will shortly discuss the general framework of the european system of central banks. subsequently, i will touch on the system tasks and related national responsibilities. here, i will specifically spend some time on financial stability and supervision. clearly, this policy area has seen some major developments recently, both on the national and european level. the european system of central banks what exactly is the european system of central banks? what explains its unique institutional and operational set - up? these are crucial questions in analysing the role of national central banks or, for that matter, understanding monetary union in general. nevertheless, the questions are seldom asked, let alone answered. since the second world war, european integration has been a co - operative effort in which common objectives in principle override the size and power of the individual participants. the european system of central banks is a both a product and a reflection of this european community of member states. hence, the fundamental notion underlying the system is a joint and equal responsibility to carry out the tasks assigned by the treaty. in this set - up, the ecb operates as the legal entity that links | 1 |
##states the underlying momentum in aggregate demand, in part because of a sizable inventory correction that began early last year ; even so, gdp growth has been mediocre at best. the combination of strong job gains and mediocre gdp growth has resulted in exceptionally slow labor productivity growth. most recently, business - sector productivity is reported to have declined for the past three quarters, its worst performance since 1979. granted, productivity growth is often quite volatile from quarter to quarter, both because of difficulties in measuring output and hours and because other transitory factors may affect productivity. but looking at the past decade, productivity growth has been lackluster by post - world war ii standards. output per hour increased only 1 β 1 / 4 percent per year on average from 2006 to 2015, compared with its long - run average of 2 β 1 / 2 percent from 1949 to 2005. a 1 β 1 / 4 percentage point slowdown in productivity growth is a massive change, one that, if it were to persist, would have wide - ranging consequences for employment, wage growth, and economic policy more broadly. for example, the frustratingly slow pace of real wage gains seen during the recent expansion likely partly reflects the slow growth in productivity. 2 let me highlight a few topics from the growing volume of research on this topic. the first is that the productivity slowdown reflects mismeasurement, because the official statistics have failed to capture new and better products or properly account for changes in prices over time. 3 given how often we meet new technologies in our daily activities, even in classes of products that have been in operation for many years β from driving an automobile, to flying, to medicines and medical equipment, to our communications, and far more β it is easy to persuade ourselves that technological advances play a major part in improving our lives. however, some of these gains are conceptually outside the scope of gdp, and most recent research suggests that mismeasurement of output cannot account for much of the productivity slowdown. 4 an alternative explanation is that productivity growth has been slow because wage growth has been slow ; that is, faced with only tepid rises in labor costs, firms have had less incentive to invest in labor - saving technologies. see, for example, david byrne and carol corrado ( 2016 ), β ict prices and ict services : what do they tell us about productivity and technology? ( pdf ) β economics program working paper series 16 β 05 ( new york : conference board, may | export enterprises. expensive and reduced access to credit, high interest expenses and uncertainty about developments ahead amplified the downturn towards the end of 2008. private consumption fell markedly, the decline in housing investment accelerated and mainland business investment started to fall. the downturn in the world economy and the abnormal conditions in financial markets are expected to continue to mark the norwegian economy ahead. mainland gdp is projected to contract by 1 per cent between 2008 and 2009. norwegian government finances are sound, with substantial net wealth, although the surplus will be reduced by the fall in oil prices. the automatic stabilisers in the national budget together with discretionary fiscal policy will stimulate the mainland economy by the equivalent of 5 per cent of gdp from 2008 to 2009. fiscal policy is assumed to become less expansionary between 2010 and 2012. government oil revenue spending is expected to be brought back into line with the fiscal rule when cyclical conditions eventually normalise. we assume that prospects for higher unemployment, a fall in house prices and a high level of debt will induce households to build up financial buffers and reduce debt. the saving ratio is expected to increase considerably. net lending is projected to be positive this year after being negative since 2004. as household borrowing has been considerable in recent years, deleveraging in the household sector is important to long - term stability in the economy. the outlook ahead and monetary policy assessments inflation will be curbed by lower capacity utilisation. the marked increase in unemployment now envisaged will result in lower pay increases this year and next. prospects for weaker growth and lower inflation imply a lower interest rate than presented in the interest rate projection from our previous forecast in december. there is also a risk that the global downturn will be deeper and more prolonged than expected. if this proves to be the case, growth in the norwegian economy will not pick up as quickly and inflation will fall more sharply than we currently assume. the objective of avoiding a pronounced downturn indicates in isolation that the interest rate should be rapidly reduced to a low level. on the other hand, we have already made substantial reductions in the key policy rate. with a low interest rate, households may save less and the turnaround may occur more rapidly than we assume. this indicates in isolation that changes in the interest rate should be gradual or that further interest rate cuts should be put on hold. overall, the outlook and balance of risks suggest that the key policy rate should be gradually reduced further to a level of around 1 per cent in the second half | 0 |
of economic downturn, then they may all react similarly to a given shock. this could itself amplify market movements and trigger liquidity difficulties, despite the best intentions. there is also the question of legal certainty. if counterparties doubt an institution β s strength or solvency, their behaviour may be influenced if they feel that complex and untested types of contract may not β close out β, particularly in adversity. such concerns lay behind the ltcm crisis in 1998. counterparties feared ltcm might be insolvent. they could sense a drain of liquidity from ltcm which might precipitate collapse. if collapse occurred, the vast array of complex contracts within ltcm might not close out. the dimensions of the exposures were considerable, and a disorderly run on ltcm, triggered in part by a lack of legal certainty, could well have provoked a serious liquidity situation. no surprise that there was a co - ordinated purchase by the main creditors to enforce an orderly wind down. a key lesson for financial stability oversight is the need to encourage ways of improving legal certainty. 7. implications of the new environment : risk and culture so much for the drivers of change - liberalisation ; technological advance and new products. but what about the implications for the financial markets and their oversight? the first implication is to highlight the need for examination and possible change in supervisory and regulatory frameworks. what made sense before, in terms of separate regulation for each silo of banking, insurance and securities might look different today. we have also certainly seen a move towards consolidated supervision. i will return to this area later. but second, oversight needs an understanding of a number of different soft issues : of culture and attitudes to risk which can affect behaviour. these can and do vary across the different areas of activity. the existence of new concentrations of risk might not matter if their new holders are fully aware of the risk implications, or if their likely behaviour could be anticipated by other financial participants or the public authorities. but new holders of such risk may not have the same understandings of what the risks consist of, as those who generate them. and accordingly they may behave in unexpected ways when shocks arise. for example in banking, confidence in the liquidity of the system and expected behaviour is underpinned by the presumption that, in the absence of a credit event, obligations will be honoured at a known time and date. this would typically beon the expiry | fund issue, the nickel metals case β namely that for firms to understand and respond to the 4 / 6 bis - central bankers'speeches full risk implications they would have had to observe and respond to a much larger picture of risks than they did observe, and from that came potentially larger risks. there is a challenge of breadth and depth in the nbfi world. it is a very large and disparate landscape with many activities and entities. as a result, we have to survey a lot of ground to look out for risks. but in order to understand these risks, we need to get into the detail, hence the depth issue. ldi was a good case study of this. the ldi fund world comprised 85 % of the larger so - called segregated funds, and 15 % of the smaller pooled funds. our stress testing work focussed on the 85 %, but the problem arose in the 15 %. in some ways the issues around nbfi bear a striking resemblance to ages old challenges in finance, such as leverage, and inter connectivity with other parts of the financial system, creating the scope for spill - overs and systemic consequences. but the heterogeneity of the landscape means that there is no single magic number for leverage as we have with banks, and the inter connectivity can be hard to map, reflecting the recent incidents. this helps to explain why at the bank of england we are conducting a system wide stress exercise involving non banks as well as banks to help us to map out the risks. this is inherently a cross - border issue. so, we must make progress internationally. this is what the financial stability board work programme is focussed on, and why it is so important. it is also crucial that individual countries take forward and implement these reforms. while the solutions are global, delivering them will necessarily be local. finally, there is an important point to pull out of a number of these issues. a common outcome of a shift in the balance from inside to outside money ( either through cbdc or banks holding larger reserves at the central bank ) or increasing the broader liquidity buffers of banks and non - banks could be to create a constraint on lending and investment in the real economy. for the uk economy this would go against the need to finance investment to support stronger potential growth, from its current weak level. this constraint would not appear if the counterfactual was an unstable financial system because solving that instability would have to be the priority. but in | 0.5 |
the economic outlook : time to let the data do the talking remarks by christopher j. waller member board of governors of the federal reserve system at the 17th annual vienna macroeconomics workshop vienna, austria september 9, 2022 thank you, klaus, and thank you for the invitation to speak at this workshop, which i have been attending since its very beginning in 2004. something that i love about this conference that has kept me coming back almost every year is its tradition of open inquiry and even some fun, on the one hand, combined with rigorous, critical analysis, on the other. i am a supporter, and i guess a practitioner, of rigorous criticism, because, as you may have heard, the conference award given each year for β outstanding critic β was named for me. based on the standard i set, the person who wins the award is also known as the β most annoying participant. β i suppose it was only karma that a guy like me who likes to dish out the criticism would end up in a job that receives plenty of it. kidding aside, i do consider being the namesake for this award a great honor, and just to make sure i don β t get too much of a swelled head, by tradition the conference organizers purposefully misspell my name. my subject today is the outlook for the u. s. economy and the federal reserve β s ongoing campaign to bring down inflation and achieve our 2 percent objective. 1 there are three takeaways from my speech today. first, inflation is far too high, and it is too soon to say whether inflation is moving meaningfully and persistently downward. the federal open market committee ( fomc ) is committed to undertake actions to bring inflation back down to our 2 percent target. this is a fight we cannot, and will not, walk away from. the second takeaway is that the fears of a recession starting in the first half of this year have faded away and the robust u. s. labor market is giving us the flexibility to be aggressive in our fight against inflation. for that reason, i support continued increases in the fomc β s policy rate and, based on what i know today, i support a these views are my own and do not represent any position of the board of governors or other federal reserve policymakers. - 2significant increase at our next meeting on september 20 and 21 to get the policy rate to a setting that is clearly restricting demand. the final takeaway is that | total industrial production increased 0. 6 percent in july, standing 3. 9 percent above its level a year ago. forward - looking indicators of manufacturing activity, such as new orders indexes in various manufacturing surveys, are softer than earlier in the year, but most ( and in particular the positive august reading from the ism ) are not suggestive of a material pullback in manufacturing activity. meanwhile, the non - manufacturing ism report suggests continuing growth, with its new orders index rising to a solid level last month. but there are signs of moderation in economic activity, which is what the fomc is trying to achieve by tightening monetary policy. not surprisingly, higher interest rates this year are slowing activity in the housing market. there have been declines in construction of single - family homes for a number of months, with permits and home starts both decreasing in july. sales of existing and new single - family homes have also slowed. existing home sales fell by 5. 9 percent to a seasonally adjusted annual rate of 4. 8 million homes in july. while the imbalance between housing supply and demand - 4remains significant, it has meaningfully improved. the inventory of unsold new and existing homes has more than doubled since january. while the three months supply of existing home is still below levels before the pandemic, the eleven months of new home inventory is the highest since the spring of 2009. this latter statistic has raised concerns by some about a significant downturn looming in the housing market, but an important caveat is that much of the current elevated inventory reflects the recent low rate of housing completion due to continued supply constraints. many of these new homes for sale are still under construction, and as supply constraints ease, builders will be able deliver more completed homes to a market where the supply of existing homes remains tight. all that said, the housing market is a significant channel for monetary policy, and i will be watching this sector carefully. the fomc β s goal is that the tightening in monetary policy slows aggregate demand so that it is in better alignment with supply across all sectors of the economy. my expectation is that strong household savings, the tight labor market, and additional availability of manufactured goods as supply chains constraints continue to resolve will allow households to make long - awaited purchases, which will provide a partial offset to tighter policy. that will support a slowing, rather than a contraction, in demand. turning to the very strong labor market, private payroll employment has been | 1 |
and see board of governors of the federal reserve system, federal deposit insurance corporation, and office of the comptroller of the currency ( 2013 ), β agencies issue updated leveraged lending guidance, β joint press release, march 21. the fsoc staff with the regulatory agencies also have been assessing whether other financial institutions, such as insurance companies and pension funds, may be susceptible to a large spike in interest rates. bis central bankers β speeches applied to all market actors engaged in the covered activities, not just prudentially regulated firms. a frequently cited example is increased loan - to - value requirements for certain types of lending such as residential or commercial mortgages. having just recently addressed at some length the promise and limitations of such timevarying macroprudential tools, i will not repeat those views at length today. 8 i can summarize by saying that, in practice, such policies face a number of challenges, including questions about the reliability of measures to guide policy actions, which officials should make macroprudential decisions, the speed with which policies might realistically be implemented and take effect, and the appropriate calibration of policies that will be effective in damping excesses while not unnecessarily reducing well - underwritten credit flows. 9 and, as with supervisory policies, there is reason to doubt how effective they would be in circumstances where credit growth had been excessive across wide parts of the economy. as i have said previously, however, given that procyclicality is an important contributor to systemic risk, there is good reason to continue work on developing time - varying policies. i would devote particular attention to policies that can act as the rough equivalent of an increase in interest rates for particular sources of funding. such policies would be more responsive to problems that were building quickly because of certain kinds of credit, without regard to whether they were being deployed in one or many sectors of the economy. in that respect, such policies should be more effective ( and perhaps less controversial ) in slowing the buildup of excess credit than a measure directed squarely at one sector, which might be quickly met by the redirection of a reach for yield to other asset classes. one example is the countercyclical capital buffer in basel iii, which provides for an increase in the risk - weighted capital requirements of prudentially regulated banking organizations of up to 2 - 1 / 2 percentage points when β credit growth is excessive and is leading to the buildup of system | under the auspices of the financial stability board. 15 but these kinds of changes might also make the trade - off between systemic risk and near - term growth aims a bit easier, since a financial system with more ballast will be less prone to listing in response to accommodative monetary policies directed at the dual mandate goals of price stability and maximum employment. were such a regime of minimum margins in place, one could also see the potential for enhancing the effectiveness of monetary policy by adding a time - varying, countercyclical component. finally, it may also be worth considering some refinements to our monetary policy tools. central banks must always be cognizant of important changes that may result in different responses of households, firms, and financial markets to monetary policy actions. there is little doubt that the conduct of monetary policy has become a good deal more complicated in recent years. some of these complications may diminish as economic and financial conditions normalize, but others may be more persistent. central banks, in turn, may want to build on some recent experience, adapted for more normal times, in addressing the desire to contain systemic risk without removing monetary policy accommodation to advance one or both dual mandate goals. one example would be altering the composition of a central bank β s balance sheet so as to add a second policy instrument to changes in the targeted interest rate. the central bank might under some conditions want to use a combination of the two instruments to respond to concurrent concerns about macroeconomic sluggishness and excessive maturity transformation by lowering the target ( short - term ) interest rate and simultaneously flattening the yield curve through swapping shorter duration assets for longer - term ones. conclusion in reviewing the relationship between financial stability considerations and monetary policy, i have suggested that monetary policy action cannot be taken off the table as a response to the build - up of broad and sustained systemic risk. but i have also tried to suggest that the development of existing supervisory tools, the judicious use of macroprudential measures, the adoption of some structural measures affecting certain forms of financing, and perhaps some refinements of monetary policy tools can together reduce the number of occasions on see moritz schularick and alan m. taylor ( 2012 ), β credit booms gone bust : monetary policy, leverage cycles, and financial crises, 1870 β 2008, β american economic review, vol. 102 ( 2 ), pp 1029 β 61. see financial stability board ( 2012 ), consultative document : | 1 |
diversification and the need to provide productive and sustainable employment have led to increased attention to the development of the small - and mediumsized enterprise sector. our strategy recognizes the importance of an enabling business environment of macro - economic and financial stability and provides for a critical role for the state. the government β s involvement centres on two state - owned institutions viz : the national entrepreneurial development company ( nedco ) and the business development company ( bdc ). ( i ) nedco β s primary mandate is the management of a credit programme for small businesses. nedco also offers a suite of business support services including entrepreneurial education and development, business advisory and coaching services, training and business mentorship. in an effort to strengthen the entrepreneurial culture, nedco recently expanded its training programmes to secondary schools and tertiary institutions. the government β s vision is to integrate entrepreneurship into the school curriculum at all levels, starting at the primary school level. ( ii ) the mandate of the bdc is to facilitate the growth and expansion of small - and medium - sized enterprises. bdc pursues its mandate by providing loan guarantees for commercial bank lending to these enterprises. bdc also provides direct support for capital investment by way of lease financing. ( iii ) the government has sought to provide venture capital financing by offering tax credits for contributions to a venture capital fund. the supply of venture capital to prospective entrepreneurs has however been very limited. while comprehensive data are not available to allow a precise estimate of the impact of the new sme expansion thrust, the evidence is that there has clearly been strong growth in the sme sector over the last few years. the nedco programme has built a client base of 5, 600 businesses and has advanced close to tt $ 100 million in loans to various sectors including light manufacturing, services, and food and agro - processing. since 2002, close to 5, 000, persons have also benefited from the training and mentorship programmes. let me end by raising what i think is a very important challenge for sme development in the caribbean today. globalization and trade liberalization are presenting new opportunities and challenges for small business development. in the case of the caribbean, smes have, to date, largely confined their activities to catering for the domestic market place. if smes are to contribute more meaningfully to caribbean development, they need to adopt a more outward oriented strategy, seeking export opportunities or finding ways to participate in production chains with large producers abroad. there is no reason why the caribbean | suhaimi ali : empowering change through diversity, equity and inclusion keynote address by mr suhaimi ali, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the fide forum 2nd distinguished board leadership series, organised by asia school of business, kuala lumpur, 2 november 2023. * * * assalamualaikum warahmatullahi wabarakatuh and a very good afternoon, distinguished members of fide forum, ladies, and gentlemen first of all, allow me to thank fide forum for the invitation. diversity, equity, and inclusion ( dei ) is a topic that has gained increasing prominence and attention in recent years in the context of workplace culture. it is no longer a buzzword. rather, these are important concepts that reflect ongoing efforts to address systemic discrimination and promote fair opportunities for all. dei has become a household strategy for talent retention, as organisations seek to create a conducive working experience for all employees. companies that are diverse, equitable and inclusive tend to respond better to challenges, win top talent, and are better equipped to meet the different needs of society. as malaysia is a country rich in cultural and ethnic diversity, dei is especially important to ensure that people from all backgrounds have fair access to opportunities in all aspects of life. let me attempt to unpack the term " dei ". first, diversity of demography and thought. building a diverse demography at the workplace means growing a workforce that is characterised by a wide range of demographic factors, including age, race, ethnicity, gender as well as disability and socioeconomic status. acknowledging and embracing this diversity is not only a social imperative but it enables us to develop solutions and policies that cater to the unique and evolving requirements of various demographic groups. the diversity of thought, on the other hand, refers to efforts to incorporate a variety of perspectives, experiences, and skills in problem - solving, innovation and decision - making, whilst encouraging employees to " speak - out " and bring their unique lens to the discussion table. second, equity in pay and opportunities. providing equal pay for equal work, irrespective of gender, race, or other demographic factors ensures that all employees receive fair compensation for their contributions. providing equal opportunities for advancement and career development to all employees, irrespective of their backgrounds is also a strategic necessity. this inclusivity allows organisations to reap the rewards of a talented workforce, enhance productivity and drive organisational success. thirdly, | 0 |
muhammad bin ibrahim : scaling up excellence β creating opportunities while mitigating risks keynote address by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the regional conference on money services business β scaling up excellence β creating opportunities while mitigating risks β, kuala lumpur, 19 may 2014. * * * i β m glad to be here with you today to join mr mathew a. verghis in welcoming you to this regional conference on money services business. on behalf of bank negara malaysia, i would like to thank the world bank, the malaysian association of money services business, and the international association of money transfer networks who partnered with us in organising this event. this conference aims to bring together regulators and industry players to review developments in the money services business industry at a time when there are significant changes occurring in the financial industry. in many countries, money services business plays an important role in complementing banking institutions to provide financial services to the community, in particular, the unbanked and small business communities. given the forces of change that are reshaping the financial industry, it is timely to consider how these forces impacted the expectations, opportunities and challenges for money services businesses. the money services business industry contribute to an important purpose in our communities. they provide financial services to segments of society in both the developing and developed world that do not have access to basic banking facilities and services. increasingly, money services business provides and support tourism, business travel and cross - border trade activities in a more globalised world economy. according to a world bank report, it is estimated that nearly 1 out of 7 persons is a migrant, reflecting the large and diverse diaspora community in the world today. worker remittances to developing countries were in excess of usd400 billion last year and represent a key source of external resource flows. these flows support economic growth in developing countries, far exceeding official development assistance. more than usd 1 trillion was spent on global business travel expenditure in 2013 and more than 1 billion in international tourist arrivals are recorded each year. in 2013, business activities supported world trade volume of over usd 23 trillion. all of these developments have created new and greater demand for remittance, currency exchange and other financial services that can be offered by money services businesses. the industry itself has also become more diverse. advancements in technology have enabled new business models, offering new product and service, innovations and forming of new alliances. these enhancements have the potential to further lower cost and increase convenience | ##ra ) was established this year to conduct applied shariah research on the contemporary islamic finance issues. isra also provides a platform that promotes active engagement and dialogue among global shariah scholars that promote mutual respect in shariah and the convergence of views from different jurisdictions in the global islamic financial system. the third strategy is to promote greater financial integration with the global islamic financial system. the malaysian islamic financial system has also been progressively liberalised to allow for increased foreign entry and participation in our financial system, thus facilitating greater cross border flows and thus strengthening the international financial inter - linkages. this has taken the form of issuance of new licences and increasing foreign participation in both islamic banks and takaful companies to 49 %. new licences were also issued to foreign fund managers and foreign stockbrokers. in this new phase of development for islamic finance, malaysia as an international islamic financial hub, has increasingly become a meeting place for businesses from different parts of the world that need to raise funds and for investors that have surplus funds for investment. islamic finance going forward there is now a strong and growing demand for islamic financial products in the global market, far exceeding the current availability of financial products and services being provided by the islamic financial institutions. going forward, there is therefore tremendous upside potential for islamic finance. as the pace of development of the islamic financial services industry accelerates, the increasingly more complex and challenging environment will continue to shape the advancement of the industry. central to this will be the expansion of the business parameters and innovative product offerings. for this, there is increased investment in research and development to yield new instruments and structures to meet the changing requirements of the international community. an area of focus, in particular, is related to the development of mechanisms for risk mitigation and liquidity management. of importance, are the solutions needed to converge the market requirements and the shariah compliance. increased innovation also calls for greater emphasis on the implementation of best practices and higher standard of risk management. vital to this is the implementation of the prudential standards promulgated by the ifsb. there is also a need to leverage more on it applications and the strengthening of management capabilities of the islamic financial institutions. going forward, with the increased awareness and understanding of islamic finance, the role of market discipline will become increasingly important in driving islamic financial institutions towards ensuring shariah compliance in the operations, in improving operational efficiency and in instituting sound and dynamic risk management practices. the forces of innovation also | 0.5 |
and the lab β, voxeu column, 2 february. schnabel, i. ( 2022 ), β a new age of energy inflation : climateflation, fossilflation and greenflation β, speech published on 17 march, european central bank. sibert, a. ( 2005 ), β central banking by committee β, international finance 9 ( 2 ). sou ( 2019 : 46 ), β a new sveriges riksbank act β. sveriges riksbank ( 2023 ), β account of monetary policy 2022 β. 11 | lars heikensten : behind the granite walls up at brunkebergstorg - monetary policy in practice speech by mr lars heikensten, first deputy governor of the sveriges riksbank, to the riksdag's social democrats, stockholm, 21 march 2001. * * * the theme for today β s seminar is monetary policy in practice. i find it extra stimulating because it is a subject i don β t often get a chance of talking about. while thinking about how to arrange what i want to say, i felt that, besides talking concretely about how we at the riksbank go about assessing inflation, it would be a good idea to spend some time on some matters of principle. in that way i hope to lay a good foundation for the ensuing discussion. first i shall say a little about monetary policy β s purpose and our target. then i shall describe how we make our assessment and how the executive board works. before winding up, i shall also consider some issues connected with communication and transparency. β hate inflation β as we all know, monetary policy β s purpose is to safeguard low inflation. that has been the case in any event since the beginning of the 1990s. it became explicit, of course, when the riksbank adopted an inflation target in february 1993. since 1999, moreover, the riksbank act states that the objective of the riksbank β s operations shall be to " maintain price stability ". so why is this our objective? basically, there is now a broad consensus that low inflation is good for economic development and accordingly contributes to gains in prosperity. while it is true that in certain situations the economy can be stimulated by means of low interest rates, this works only if there are unutilised resources. taken too far, it is liable to result in bottlenecks that push prices and wages up. there is then a risk of households and firms gradually starting to act in the belief that inflation will continue to be high β inflation expectations become firmly fixed on this. in other words, in the long run monetary policy is not capable of influencing growth. what does underlie a country β s economic development and thereby its prosperity are such factors as the labour force, a willingness to invest and technical progress. the best the riksbank can do is promote an economic development that is more stable, with smaller fluctuations around the long - term trend. it therefore seems to me that the economic debate is somewhat lops | 0.5 |
emmanuel tumusiime - mutebile : urban land management as a potential financing mechanism for urban development discussion by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, of prof. paul collier β s presentation on urban land management as a potential financing mechanism for urban development, 24 may 2016. * * * the essence of paul collier β s argument is that the binding constraint to development in africa is a lack of connectivity in african cities. the lack of connectivity arises from a combination of the low population to land densities and poor transport services which characterise african cities, including kampala. it impedes the functioning of labour and product markets and thereby prevents firms from achieving optimal economies of scale and formal sector status, which in turn depresses labour productivity. consequently the key to development in africa is massive investment in african cities, by three sets of actors ; households investing in residential property, private sector businesses investing in commercial property, including multi - story residential buildings, and the public sector investing in urban infrastructure. most of this investment will entail structures of various types. to mobilise this investment major reforms are needed to create well functioning land markets, long term urban planning and mechanisms to raise finance for the huge volumes of investment that would be needed. paul collier estimates that the average african city will need approximately $ 50 billion of investment in structures β buildings and infrastructure β if its population is to enjoy middle income country standards of living. although there are many useful insights in paul collier β s thesis, there are also a number of important aspects which can be questioned. let me elucidate these. african development and structural transformation has undoubtedly been held back by the paucity of private investment in labour intensive industries, such as manufacturing, as a result of which the vast majority of the labour force in the urban areas, including kampala, has to earn its living in very low productivity informal household enterprises. only about 3 percent of the labour force in uganda is employed by a formal sector business. but it is debatable whether the binding constraint to private investment is really the poor connectivity of african cities, rather than other potential constraints such as the poor institutional environment for business, low quality of the workforce or a lack of competitiveness unrelated to urban connectivity, for example because of overvalued real exchange rates. i would like to see empirical evidence to support the contention that the poor urban connectivity, rather than other factors, is the binding constraint to private investment. | new risk - based capital ratios and more - extensive information about credit quality of their portfolios and their risk measurement and management practices. other disclosures include : corporate structure, market risk disclosures for standardized and internal models approaches, disclosure for operational risk measurement, interest rate risk and foreign exchange risk. such disclosures are expected to encourage banks to be more transparent to financial markets which should then promote market discipline. uganda β s preparedness the key element that countries should consider before moving on to basel ii is whether a good baseline supervisory system is in place. that is, whether the basel committee β s basic core principles, including its preconditions β have been complied with. for uganda, the answer to this is in the affirmative. yes, we have a good baseline supervisory system in place. the major milestone that enabled uganda to move towards full compliance with the basel core principles was the enactment of the new financial institutions act ( fia, 2004 ). in addition bank of uganda fully shifted to the risk based supervision approach since january 2003. the fia, 2004 allows bou to prescribe higher on - going capital requirements for a specific financial institution if the supervisory review process reveals existing risks that warrant such increases which is in line with pillar 2. the fia, 2004 also outlines some disclosures including a prescription for the form and content of the annual accounts which provides a good ground for pillar 3 under the new capital accord. many aspects and possible effects of basel ii have been debated at various levels, including its potential effects on banks β costs and on the competitive positions. such costs include : revamping the it systems and or acquisition of new systems, training costs for staff and additional staffing needs, insufficient historical data, time consuming transitions, internal models and risk quantification costs and disclosure overload. as to whether these associated costs will be transferred to the beneficiaries of financial services remains a subject for research and discussion within the sector. thank you! | 0.5 |
. for example, a popular initiative launched this spring seeks to amend the constitution to give the snb a direct role in financing the national pension scheme. before i delve into why the direct financing of government tasks by the snb is not in keeping with the principles of regulatory policy, it is helpful to first contextualise the snb β s profit development. for it is likely that the increase in these desires is tied above all to the growth of our balance sheet and our high profits in the past few years. these high profits have led to an increase in our so - called distribution reserve. at the end of 2021, it amounted to chf 103 billion. the distribution reserve exists because the snb does not pay out all of the distributable profit at once. 1 it corresponds to a profit or loss carried forward in the balance sheet and is part of the snb β s equity capital. the distribution reserve helps to smooth the annual distributions to the confederation and the cantons by serving as a buffer that balances out the fluctuations between years with profits and years with losses. for more information on the distribution approach, cf. jordan, thomas j. ( 2021 ), snb distributions β not a matter of course even when profits are high, speech held at the 113th ordinary general meeting of shareholders, zurich, 30 april 2021. page 3 / 5 the level of the distribution reserve in recent years has led some observers to overestimate the potential for snb distributions and view the annual distribution of up to chf 6 billion as too low. however, the good results of the past few years were achieved during an exceptional financial market environment shaped by globally declining interest rates, low inflation, high liquidity and rising share prices. but this environment has now changed sharply. in the first half of 2022, interest rates increased worldwide and stock markets declined, leading to considerable price losses on the snb β s bonds and shares. the accumulated book profits from the past were reversed by a book loss. the snb recorded a loss of around chf 95 billion for the first half of 2022, which corresponds to almost the entire distribution reserve. the current profit distribution approach is therefore not β as has often been criticised β overly cautious. the loss in the first half of the year underlines that a larger balance sheet is accompanied by larger fluctuations in absolute terms in the annual result, and that substantial profits can be followed by substantial losses. this clearly demonstrates why the government must not | is a cornerstone of our economic system. it is the tool whereby capital that is not needed at one point in the system can be used productively elsewhere. the credit system facilitates projects β in the areas of consumption and investment alike β which would not be possible otherwise, and thereby makes our economy dynamic and flexible. this promotes growth and prosperity. money and credit have always been closely linked. today, money creation and lending take place in a two - tier system, namely via the snb and the commercial banks. the snb provides banks with so - called central bank money in exchange for financial assets. they can hold this central bank money as sight deposits at the snb or withdraw it as banknotes. banks use central bank money to carry out transfers for their customers and for customer withdrawals. equally, the commercial banks need central bank money for paying out loans. these payments lead in turn to the creation of new money in the banking system. what exactly happens when credit is granted? the process always begins with the bank customer, for example when he or she applies for a mortgage loan. the bank then has to page 2 / 8 check whether the customer is creditworthy and whether the loan is economically viable from a risk / return perspective. furthermore, the bank must determine whether it has, or whether it can obtain, sufficient central bank money to pay out the loan. the payment is usually made electronically by crediting the house seller β s sight deposit account, which is generally held at another bank. consequently, overall sight deposits in the banking system rise and new money is created. although money created when a loan is granted is not central bank money, private customers β sight deposits at commercial banks have equal status in payment transactions and can also be exchanged by customers for snb banknotes at any time. on the one hand, payments into sight deposits β for instance customers β salary payments or proceeds of selling their house β are an important source of central bank money for banks. on the other hand, this liquidity can flow out again rapidly since customers are able to access their sight deposits at any time. yet, it is not usually the case that all of a bank β s customers simultaneously want to withdraw all of their savings or use them for payments. as a result, the bank does not need to hold ready an equivalent value of central bank money for every franc of sight deposits ; it can use some of this liquidity for granting and paying out loans. one point i would like to stress here | 0.5 |
pointed out the differences between an asset - price bubble and a bull market. the author was of the view that people who don β t manage to enter the stock market in time or don β t dare to do so when the market has gone up will regard it as a bubble and will support the government taking measures to cool things down ; but investors who have entered the market will see the increases as a bull market. price increases can be interpreted in many ways. well, a nonmainstream view like this may have some merit and, right or wrong, it illustrates the difficulty of dealing with asset - price bubbles, particularly the courage needed to make decisions at critical moments. whether these decisions are correct or not is difficult to say with total confidence and certainty beforehand, and mistakes may be made. but we cannot avoid mistakes by not making decisions because the damage to society of an asset - price bubble is too great to ignore. and we should not just rely on the government to stop the bubble expanding. it requires the involvement of banks, corporations and individuals β they need to be more risk - conscious and self - disciplined. my colleagues at the hkma and i will do our best, and i invite everyone to work hard together to meet the challenges brought about by the global financial tsunami. | other, the monetary transmission mechanism of asian economies and their monetary reactions to internal and external shocks are also quite different. 43. how then should asian economies pursue asian monetary co - operation? the extent of the diversity of economies in asia points quite clearly to one conclusion and this is that monetary integration is inappropriate, at least for the time being. one can perhaps get a better appreciation of this argument by attempting to apply the maastricht criteria for european monetary union to asia. thus realistically asian monetary co - operation will have to be pursued under a multi - currency environment. asian monetary co - operation is not about monetary integration. the situation argues for monetary segregation, even to the extent, in the case of china, of maintaining two currencies in one country : the renminbi for the mainland of china and the hong kong dollar for the hong kong special administrative region. again apply the maastricht criteria to the mainland of china and hong kong and you will come quickly to the conclusion that the β one country, two currencies β arrangement is a sensible one. it is essential if hong kong is to continue to be stable and prosperous as an international financial centre, as provided for in the basic law of hong kong. 44. moving along the spectrum for monetary co - operation from the extreme end of monetary integration, we could consider whether some form of monetary policy co - ordination in asia is appropriate. so far, however, there seems to be a lack of interest amongst monetary authorities in asia in promoting this. perhaps there has been no such need identified. monetary sovereignty has been carefully guarded in this region. there is also concern, i suppose, on the likelihood of dominance in such co - ordination by the more influential economies in terms of size and financial clout. there has therefore been no attempt to identify the pros and cons of monetary policy co - ordination in asia. the subject has not even featured in any of the discussions amongst the regional central bank groups that i know of. but one must of course keep an open mind on the subject. the contagious turmoil in the currencies and financial markets of asia will i am sure stimulate some interest in it. without pre - judging the outcome, i expect some initiative in putting the matter on the agenda for future discussions amongst monetary authorities in the region. 45. by contrast, there is a great deal of enthusiasm amongst monetary authorities of the region to promote asian monetary co - operation when this does not inhibit the freedom | 0.5 |
as to any other euro area country, and our decisions have followed exactly the same rules under this government as under the previous ones. the ecb is the central bank of greece, but we are also the central bank of 18 other countries and we cannot bend our rules to suit the occasion. the greek government can relieve funding constraints by pursuing policies which will open the way to disbursements by other member states under the programme and, ultimately, restore market access. let me add that the ecb β s monetary policy stance is currently very accommodative. greece also clearly benefits from this. bis central bankers β speeches | , to give firms that are already of systemic importance a sense of which mergers will face very close scrutiny. a third answer is that, once an acquisition is consummated, dodd - frank provides only narrow authority to order divestiture on financial stability grounds. though the board can recommend action by the fsoc, i have already noted that the test for such action is β grave threat to financial stability, β presumably a significantly higher standard than the β risk to financial stability β that can constitute an adverse effect for purposes of sections 3 and 4 of the bank holding company act. unlike section 7 of the clayton act, which permits the antitrust authorities either to restrain a merger beforehand or undo it thereafter, the federal reserve β s authority under the bank holding company act to disallow the merger on financial stability grounds appears to lapse after the merger is completed, but for the narrow authority vested in the fsoc. of course, one motivation for the passage of hart - scott - rodino in 1976 was the perceived reluctance of courts to order potentially disruptive divestitures once companies had completed the merger. in any case, the legal and practical impediments to such action counsel an additional measure of caution by the federal reserve in considering acquisitions by firms that can reasonably be expected to raise significant financial stability concerns. for all the attention paid to financial stability analysis in the last few years, it is still β relatively speaking β a fledgling enterprise. even if we hypothesize a viable working theory of financial stability that commands a rough consensus, translating that theory into administrable standards and processes is a task that will take years. 41 but while the absence there are eight u. s. banks on this list, as well as many foreign - based firms with significant u. s. operations. however, the buckets to which they will be assigned will not be finalized under more up - to - date data is available and analyzed next year. once final agreement has been reached by the basel committee, ordering the systemically important banks into categories with progressively increasing surcharges, the federal reserve board intends to propose matching provisions for covered u. s. banks under its section 165 authority. in conducting our annual reviews of the capital levels and planning processes of major u. s. bank holding companies, we have already instructed the eight firms on the basel committee list to include their estimated required surcharge in their plan for reaching their ultimate capital requirement. the basel committee has | 0 |
play an even greater role in maturity - matched refinancing of mortgages in switzerland in the future. in addition, banks can improve their liquidity by holding portfolios of swiss mortgage bonds themselves. mortgage bonds could be converted into liquidity quickly and simply, as required, by means of repo transactions β either in the swiss franc interbank market or at the snb. | news conference 15 december 2022, 10. 00 am introductory remarks by andrea m. maechler in my remarks, i will talk in more detail about the implementation of today β s monetary policy decision, which thomas jordan has already touched on. i will start, however, by giving you an overview of how we have steered interest rates since the switch to a positive snb policy rate in september. the switch from a negative to a positive snb policy rate required us to make an adjustment to the implementation of our monetary policy in the money market. the new approach comprises two elements : reserve tiering β that is, tiered remuneration of the sight deposits that banks and other financial market participants hold at the snb β and reserve absorption. this approach has proved successful. following our monetary policy decision on 22 september, secured short - term swiss franc money market rates moved quickly towards the new snb policy rate ( cf. chart 1 ). we are also continuing to see solid activity among participants in the money market, which ensures a robust basis for the calculation of saron. from the outset, the market responded favourably to the deployment of our monetary policy instruments to absorb liquidity. on the very day of the monetary policy assessment in september, we started conducting repo transactions on a daily basis and issuing snb bills on a weekly basis ( cf. chart 2 ). in this way, we were able to reduce the liquidity supply in the money market sufficiently to allow us to steer interest rates effectively. with today β s interest rate increase, we are also raising the interest rate on sight deposits above the threshold. for domestic banks, this threshold is calculated on the basis of their minimum reserve requirements. 1 by remunerating sight deposits above the threshold now at 0. 5 %, we ensure that our tighter monetary policy will continue to be passed through efficiently to interest rates in the money market overall. further information is available in the instruction sheet governing interest on sight deposits. page 1 / 2 berne, 15 december 2022 andrea m. maechler news conference page 2 / 2 | 0.5 |
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