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elizabeth a duke : opening remarks at the public hearing on potential revisions to the home mortgage disclosure act opening remarks by ms elizabeth a duke, member of the board of governors of the federal reserve system, at the public hearing on potential revisions to the home mortgage disclosure act, washington dc, 24 september 2010. * * * good morning. on behalf of the board of governors of the federal reserve system, i β d like to welcome everyone to the last of our series of public hearings held to discuss changes to the home mortgage disclosure act ( hmda ). the knowledge and feedback we have gained from these hearings will help us to assess the adequacy of current mortgage data, examine the need for additional data, and explore possible changes to regulation c, which implements hmda. i β d like to thank our colleagues at the federal reserve banks of atlanta, san francisco, and chicago for hosting the first three hearings. our series of hearings kicked off just as congress passed regulatory reform legislation earlier this summer. the dodd - frank act provides for some changes to hmda data collection and submission, and we look forward to hearing from our panelists and members of the public about the implementation of these changes. the new law also transfers authority for hmda rulemaking from the board of governors to the new consumer financial protection bureau ( cfpb ). all information gleaned from these hearings will inform our own work for the time that we continue to have rulewriting authority. when that authority transfers to the cfpb, be assured that we will hand over the most current thinking about changes to regulation c. over the course of these hearings, we have heard from key players in the home mortgage market : lenders and other market participants, academics and researchers, consumer advocacy and community development organizations, data experts, regulators, and other public officials. although they play different roles, we believe that all share a common goal : to ensure that the mortgage market is responsible, transparent, efficient, and serves the needs of consumers and market participants alike. clearly, the recent mortgage crisis has highlighted the potential ramifications of a mortgage market that is not functioning well. hmda data do not create the market or solve all market problems, but they do help us understand what is happening in the market. the time is certainly ripe for reviewing and revising the data elements, standards, and reporting formats. hmda has three purposes. one is to provide the public and government officials with data that will help show whether lenders | to be justified. they reflect diverging fundamentals in different countries β ie the different economic situation and levels of public debt. it is questionable whether the convergence of yields in the years before the crisis reflected the right assessment of the various risks underlying these investments. currently, refinancing conditions for the peripheral countries have improved notably. hence, omt will hopefully never have to be activated. however, market sentiment can change very quickly. in january 2010, greece received offers of about eur 25 billion for its five - year government bond issue with a volume of eur 8 billion. a couple of weeks later, greece was no longer able to refinance its liabilities via the capital market. although there are currently small improvements in gdp growth in several european countries, the risk of renewed tensions in sovereign debt markets is still alive given low growth and the slow implementation of reforms on the one hand and the expected tapering of the fed β s quantitative easing programme on the other hand. lower investor confidence, besides sending european government bond yields and cds premia higher in the secondary markets, has also impacted the primary markets. the space left by external creditors was occupied by domestic investors such as banks, who increased their investments particularly following the introduction of the three - year ltros. the trend towards renationalisation is a development that needs to be monitored. it reinforces the interdependence of the sovereign sector and the domestic banking system. european banks often only invest in the sovereign bonds of their home countries. credit institutions must increase their risk awareness in terms of sovereign bonds. on the one hand, banks should have credit limits for individual countries. this would reduce dependencies on certain debtors. on the other hand, these bonds have to be secured by a sufficient level of equity. in the medium term, government bonds should be treated like corporate bonds. experience has taught us that sovereign bonds are not a risk - free asset. furthermore, risk - appropriate treatment would lead to increasing yields of countries with unsound finances. therefore, market regulation would provide an incentive for fiscal discipline. the current initiative to establish an effective single supervisory mechanism is a step in the right direction. it will help us to identify risks at an earlier stage and is therefore also important for disentangling the critical link between sovereign and bank funding. however, the banking union, consisting of a sound single supervisory mechanism and single resolution mechanism, is a future project to prevent future problems. existing burdens have to be | 0 |
increasing share of their wealth to vehicles that were managed or advised by professional asset managers. at the same time, advances in the technology of modeling, pricing, and trading of risk over the past several decades gave added impetus to the migration of credit to securities markets. competition from the securities market has significantly affected all segments of banking, but the most dramatic changes have occurred at the very largest banks. one could say that their strategic response was, " if you can't beat them, join them. " freed from the constraints of the glass - steagall act by incremental regulatory changes that were expanded and codified in the gramm - leach - bliley act of 1999, the very largest banking organizations have michael gibson and patrick parkinson, of the board's staff, contributed to these remarks. the views expressed in these remarks are my own and do not necessarily reflect those of my colleagues on the board of governors. significantly increased their capital markets businesses, including arranging and underwriting securitizations, securities custody, prime brokerage, and both over - the - counter and exchange - traded derivatives. they have also made significant inroads into both traditional asset management and the management of hedge funds. indeed, the largest commercial banks are now major competitors in many of the business lines that were historically viewed as the province of investment banks. together, the very large commercial and investment banks have become indispensable to the efficiency and stability of the securities markets. for example, the $ 2 trillion hedge fund sector is critically dependent on a relatively small number of commercial and investment banks that serve as secured creditors and derivatives counterparties. and, as the financial market turmoil has revealed, banks provide liquidity support to various short - term financial markets, including the commercial paper market and markets for various types of tax - exempt debt. competition from securities markets has also affected smaller banks significantly, though less dramatically than larger banks. for example, the portfolio share of commercial real estate loans, which are not amenable to standardization and therefore are difficult to securitize, has increased markedly. setting aside the 100 largest banks, the share of commercial real estate loans in bank loan portfolios nearly doubled over the past 10 years and is approaching 50 percent. the portfolio share at these banks of residential mortgage and other consumer loans, which are more readily securitized, fell by 20 percentage points over the same period. the implications for financial stability from the recent market turmoil the changing business of the largest | and that trading conditions in markets might not always be highly liquid led to an underpricing of both credit and liquidity risks. at the other end of the originate - to - distribute chain, a good part of the risk associated with the securitization of subprime mortgages was not distributed into the market but was retained by banks. the most glaring example is their exposures to super senior tranches of collateralized debt obligations ( cdos ) that had invested in subprime mortgage - backed securities. super senior cdo tranches β the last to bear the costs of defaults on the underlying mortgages β were considered to be extremely safe investments, and little of the risk of these instruments was truly distributed into the market. three things hindered the distribution of super senior cdo risk. first, underwriters sold some of the risk to off - balance - sheet vehicles, but they also provided explicit or implicit liquidity backstops to the vehicles. much of this risk came back onto banks'balance sheets when liquidity pressures emerged in the second half of last year. second, underwriters chose to retain some of the super senior exposure, in some cases reportedly because they met some resistance when they attempted to sell them at very slim spreads. the underwriters evidently misjudged the risk of those positions, in some cases because they relied too heavily on external triple - a ratings. third, underwriters hedged some of the risk with monoline financial guarantors. but some of the guarantors took on so much subprime - related risk that their financial condition had become highly correlated with the performance of the subprime mortgage sector, which has called into question the effectiveness of those hedges. as i mentioned earlier, the growth of securitization is in large part a response to the growing demands of institutional investors for fixed - income securities. these investors clearly had a financial incentive to do better due diligence on the subprime risks they were taking on, but they largely failed to do so. we can only speculate as to why this was the case. i see three possibilities : first, they underestimated the potential for a nationwide decline in house prices ; second, they relied on credit - rating agency analyses that have proven to be inadequate ; or third, they simply misunderstood the risk of these often very complex securities. the complexity of cdos is one example of a widespread increase in the complexity of the capital market activities | 1 |
assuming constant interest rates - typically lead to instabilities or indeterminacy. 16 at the same time, bringing exogenous assumptions on the interest rate policy into line with the expectations of economic agents underlying these forecasts in a credible and convincing way constitutes a considerable challenge in practice. the aforementioned simulation of alternative interest rate paths is thus barely practicable. an alternative to this would be to use market interest rates, as opposed to a fixed interest rate. if the central bank β s reaction function is understood by the public and the markets and if its monetary policy enjoys credibility, the interest rate path expected by the market will mostly be consistent with the envisaged inflation target. however, if new economic shocks arise, it can be extremely difficult to communicate necessary deviations of the monetary policy stance from the interest rate path anticipated in this way. this can place an undue restriction on the ability of monetary policy to react in a timely manner to changes in economic conditions and in risks to price stability. last but not least, inflation forecast targeting neglects the information stemming from monetary developments. up to now it has not proved possible to integrate the monetary side into the inflation forecast in a satisfactory manner. whether this will ever be possible in a convincing way - not least on account of the different horizons involved - remains a matter of conjecture. at any rate, the governing council is adhering to its stance of considering all important indicators and of according monetary factors a prominent position in its assessment of the risks to price developments and thus in its monetary policy. 2. 4 the medium - term orientation of the ecb β s strategy and the role of money for good reason the ecb has chosen a strategy which does not focus exclusively on either a single indicator or a single analytical tool - be it money or an inflation forecast. by contrast, the strategy offers an appropriate means of bringing together different analytical perspectives and of using all the information relevant to decision - making in a systematic way. the advantages of this approach are increasingly being recognised, not least from the perspective of the relationship between monetary and credit developments and asset prices. the appropriateness of inflation targeting strategies has come under particular scrutiny in the context of the share price booms witnessed in the 1990s, their subsequent collapse and the effects that this had on the financial system. 17 if financial imbalances accumulate and there is, for example, a sharp, broadly based increase in asset prices, there is little sense in continuing to pursue an inflation forecast for consumer prices over | in order to finance further consolidation and reduce high tax burdens without undermining the sustainability of public finances. in view of the enlargement of the european union, it is more important than ever that governments be mindful of their own particular responsibility and thereby help to ensure lasting prosperity. see ecb, 2003b, p. 33. bibliography akerlof, g. a., w. t. dickens and g. l. perry ( 1996 ), the macroeconomics of low inflation, brookings papers on economic activity, 1, 1 - 59. alesina, a., o. blanchard, j. gali, f. giavazzi and h. uhlig ( 2001 ), defining a macroeconomic framework for the euro area, monitoring the european central bank 3, cepr, london. angeloni, i. and m. ehrmann ( 2003 ), monetary policy transmission in the euro area : any changes after emu? ecb working paper no 240. angeloni i., a. kashyap and b. mojon ( eds. ) ( 2003 ), monetary policy transmission in the euro area, forthcoming, cambridge university press, cambridge. atkeson, a. and t. bayoumi ( 1993 ), do private markets insure against regional shocks in a common currency area? evidence from the us, open economies review 4, 303 - 324. balassa, b. ( 1964 ), the purchasing power parity doctrine : a reappraisal, the journal of political economy 72, 584 - 596. bayoumi, t. and b. eichengreen ( 1993a ), shocking aspects of european monetary unification, in : f. giavazzi and f. torres ( eds. ), adjustment and growth in the european union, cambridge university press, cambridge, 193 - 230. bayoumi, t. and b. eichengreen ( 1993b ), is there a conflict between ec enlargement and european monetary unification, greek economic review 15, 131 - 154. bean, c. ( 2003 ), asset prices, financial imbalances and monetary policy : are inflation targets enough? mimeo, bis, march 2003. begg, d., f. canova, p. de grauwe, a. fatas and p. lane ( 2002 ), surviving the slowdown, monitoring the european central bank 4, cepr, london. | 1 |
in the case of residents. institutional framework β’ replacement of the earlier foreign exchange regulation act ( fera ), 1973 by the market friendly foreign exchange management act, 1999. delegation of considerable powers by rbi to authorised dealers to release foreign exchange for a variety of purposes. increase in instruments in the foreign exchange market β’ development of rupee - foreign currency swap market. β’ introduction of additional hedging instruments, such as, foreign currency - rupee options. authorised dealers permitted to use innovative products like cross - currency options, interest rate swaps ( irs ) and currency swaps, caps / collars and forward rate agreements ( fras ) in the international forex market. liberalisation measures β’ authorised dealers permitted to initiate trading positions, borrow and invest in overseas market subject to certain specifications and ratification by respective banks β boards. banks are also permitted to fix interest rates on non - resident deposits, subject to certain specifications, use derivative products for asset - liability management and fix overnight open position limits and gap limits in the foreign exchange market, subject to ratification by rbi. β’ permission to various participants in the foreign exchange market, including exporters, indians investing abroad, fiis, to avail forward cover and enter into swap transactions without any limit subject to genuine underlying exposure. β’ fiis and nris permitted to trade in exchange - traded derivative contracts subject to certain conditions. β’ foreign exchange earners permitted to maintain foreign currency accounts. residents are permitted to open such accounts within the general limit of us $ 25, 000 per year. iii. financial sector and monetary policy reforms : an assessment banking sector an assessment of the banking sector shows that banks have experienced strong balance sheet growth in the post - reform period in an environment of operational flexibility. improvement in the financial health of banks, reflected in significant improvement in capital adequacy and improved asset quality, is distinctly visible. it is noteworthy that this progress has been achieved despite the adoption of international best practices in prudential norms. competitiveness and productivity gains have also been enabled by proactive technological deepening and flexible human resource management. these significant gains have been achieved even while renewing our goals of social banking viz., maintaining the wide reach of the banking system and directing credit towards important but disadvantaged sectors of society. a brief discussion on the performance of the banking sector under the reform process is given below. spread of banking the banking system's wide reach, judged in terms of expansion of branches and the growth of credit and deposits indicates continued financial deep | and yet others with gaps or imbalances in the broader regulatory framework. however, if there is broad agreement that appropriately regulated mutual fund activity can play a large part in financial development in all its dimensions, these barriers can surely be addressed in a collaborative way between the three stakeholders β the investors, the fund managers and the regulators. bis central bankers β speeches | 0.5 |
in its market share in favour of emerging economies. this is merely a reflection of the growing significance of these countries for the global economy. 7 accordingly, many eu countries have witnessed similar developments. there are, however, two very divergent developments responsible for this aggregate trend ; both of which proved highly beneficial for switzerland in dealing with the latest crisis. while many european countries intensified their trade relations with the emerging economies of eastern europe as part of the eu β s expansion eastwards ( cf. chart 1a ), swiss exporters focused more on the asian market ( cf. chart 1b ). as a result, switzerland β s share of exports to emerging asia β not including the four tiger economies β practically doubled in the last 20 years, and recently amounted to around 6 %, compared to around 4. 5 % for the eu. 8 chart 1a chart 1b sources : imf direction of trade statistics ( dots ) 9, federal customs administration ( fca ). this divergence in the regional focus becomes even more apparent when asia is viewed as a whole. this is because switzerland maintains far closer trade ties with asia β s industrialised countries than the eu does, particularly with the four asian tiger economies of hong kong, the usd value of goods exports to developing and emerging economies ( excluding the tiger economies of hong kong, singapore, south korea and taiwan ) has grown by an average of 7. 5 % since 1990, i. e. it has quadrupled. goods exports to industrialised counties increased by 4. 7 % annually during the same period, representing an increase by a factor of only 2. 5. from 1990 to 2008, the gdp of developing and emerging economies rose by an average of almost 8 % ( china alone grew by more than 10 % ). the gdp of the eu15, by contrast, rose by just 1. 9 % on average ( us : 2. 7 % ). the usd value of swiss goods exports to emerging asia ( excluding the tiger economies ) has grown by an average of 9. 1 % since 1990 ( since 2000 : 18 % ). the corresponding growth rates for germany amounted to 11. 4 % ( since 2000 : 17. 8 % ), and for the eu, 9. 6 % ( since 2000 : 13. 6 % ). including intra - eu trade. singapore, south korea and taiwan. overall, switzerland β s share of exports to asia, including japan, came to 15 % last year β more than twice the eu average. 10 | only a gradual improvement in the economy and employment. to put it plainly, these housing - related headwinds are part of why i do not expect growth greater than 4 percent this year. and while 4 percent is not terrible, at that rate it will still take a very long time to get back to full employment. the second key question is, how concerned should we all be about a flare - up in inflation β and aren β t the measures the fed has taken inflationary? many have expressed concern that federal reserve policy actions that expanded our balance sheet dramatically will cause inflation. i firmly believe that in the short run inflation is likely to remain quite low β and that in the longer term we have the tools, and the steadfast commitment, to address inflationary pressures. indeed, while monetary policy works with lags, i would note that it has been more than two years since the fed β s balance sheet expanded dramatically. since that time, core inflation of course, the views i express today are my own, not necessarily those of my colleagues on the board of governors or the federal open market committee ( the fomc ). bis central bankers β speeches has fallen and core inflation measures using the cpi or pce indexes are at something like 50 year lows. today i will briefly address the role of the low inflation rate for the economy and policymaking. in doing so, i will discuss why inflation concerns have not materialized to date, and why i expect core inflation to remain below 2 percent over the next several years. question 1 : housing and the economic recovery the economic recovery officially began in the third quarter of 2009, according to the organization responsible for dating our recessions β the national bureau of economic research ( nber ). despite being a year and a half into the official recovery, the recovery period has been so tepid that there has been very little improvement in the percentage of the population employed ( see figure 1 ). the percent of the population employed in december was 58. 3, close to the low of this cycle and below the 59. 3 percent employed in july of 2009, when the recovery officially started. for context, the number was around 63 percent when the recession began. the recent stability of the employment - to - population ratio reflects the poor labor market performance of the current recovery. we are simply not generating enough jobs to reduce the number of unemployed persons. nor are we, by the way, providing job opportunities for the so - called β discouraged workers | 0 |
mentioned earlier, the greater demand for asset and wealth management services, both institutional and individual. one of the results of the positive growth story in asia, especially mainland china, is a new dynamic along the β value - chain β of the asset management industry globally. at the top of the value - chain are the end - investors, sometimes referred to as β asset owners β. they include pension and endowment funds, sovereign wealth funds and private wealth of individuals. this group of investors is primarily responsible for asset allocation. the asset owners would normally invest via asset managers β such as mutual funds, hedge funds and private equity funds β whom i refer to the middle part of the value - chain. at the bottom of the chain are service providers such as fund administrators, custodian banks and dealer brokers. they provide services to the asset managers. therefore, asset allocation decisions by end - investors, either institutional or private wealth owners, have a knock - on impact throughout the rest of the asset management value - chain. currently, the portfolios of asset owners in the advanced economies are still significantly underexposed to emerging markets. for example, at present, a typical us pension fund has just 6 % of their investment exposure in emerging markets. not surprisingly, given the economic challenges facing the advanced economies outlined earlier and the growth opportunities in asia, there is growing interest from these end - investors in increasing their investment exposure to asia, rather than relying on investing in fixed income products of the developed economies as they have in the past. this change in allocation preference towards asia will generate significant demand for asset and wealth management services that hong kong β s financial institutions are well placed to provide. but the immediate question is : are we in hong kong ready to meet this growing demand? well, we do start with a number of strengths and advantages. as asia β s premier asset management centre, hong kong is the largest hub for asian hedge funds and the second largest hub for private equity in asia, only slightly trailing mainland china. hong kong β s private banking platform offers unparalleled access to the growing wealth pool in mainland china and across asia. we already have the largest number of overseas asset managers seeking to invest in the financial market in mainland china through the qualified foreign institutional investors ( qfii ) framework. we are also the first springboard for asset managers from the mainland seeking to grow their overseas footprint. in order to attract business from asset owners, asset managers are increasingly realising they need to demonstrate their commitment to | lending for infrastructure projects in asia as european banks deleverage and retrench. for policymakers, this is a triple - whammy : subdued growth, asset inflation and capital retrenchment. and compounding this are very high levels of uncertainty and volatility, as markets alternate between risk - on and risk - off. all of which makes policy calibration highly challenging and economic forecasting somewhere between extremely difficult and impossible. position of hong kong β s banking system given this backdrop, it is very important that we understand and monitor the developments in the us and europe as closely as possible. that way we will be able to calibrate our policy response and take swift appropriate action. this is especially important in view of the bis central bankers β speeches potential for a further deterioration in the european situation and how it might impact hong kong β s banking system. so please allow me to make a few brief points to address this : β’ first, i would make clear that the hong kong banking sector β s exposure to the eurozone β s peripheral countries is essentially immaterial. we do not expect to have any significant direct impact should there be an escalation of the crisis in those countries. β’ second, while there have been signs of european banks reducing their lending to asia, so far the scale has been manageable, and this has not caused significant credit tightening in asia. in hong kong, any slack left behind by european banks has been effectively picked up by japanese, australian and other asia banks keen to expand in the region. β’ third, if we cannot predict the future, we can anticipate a range of possible futures. as a result, as you would expect, the hkma has been diligent in developing proper contingency plans for a wide range of possible scenarios. this of course includes working with the banking sector in hong kong to ensure our banks are fully prepared for potential shocks. we have, for example, asked our banks to step up their contingent funding plans and to maintain sufficient high - quality, liqueο¬able assets to meet any unexpected developments. in addition, we have been active internationally β both bilaterally and multilaterally to ensure we have a coordinated, well - informed and mutually supportive approach. this includes our work as a member of the financial stability board. so, while there are challenges, we are very much alive to them. we monitor the risks closely and work continuously with our partners to prepare, and stand ready to | 1 |
union, 2019 / c 366 / 02 and imf ( 2019 ) article iv consultation : denmark, imf country report, no. 19 / 178. page 15 of 23 the purpose of the ccyb is to prevent a negative impact on the real economy when the financial system is under stress. the buffer has to be built up when systemic risks increase and before financial imbalances grow too large, making the financial sector vulnerable to negative shocks. the buffer has to be released if stress occurs in the financial system and there is a risk of severe tightening of lending to households and firms. the council published its framework for assessing the ccyb in december 2014. 21 denmark was one of the first countries to develop and publish a method to assess the ccyb. in denmark, the ccyb could potentially have been set at a positive rate from 2015. this was one year earlier than in many other countries. the danish framework was gradually phased in from 2015 to 2019. the buffer rate could be set at up to 2. 5 per cent in 2019, and from 2020 it can be set at a higher value if justified by the assessment basis. the initial method for assessing the ccyb comprised three steps. for step 1, the council identified five key indicators for the build - up phase and two key indicators for the release phase. 22 in step 2, other quantitative and qualitative information was taken into account. based on an overall assessment, the level of the buffer rate was determined in step 3. it became clear, however, that the method entailed a risk that the buffer would be built up too late in the financial cycle to make a difference if there was a need to release it. one reason was that one of the few key indicators was the so - called credit - to - gdp gap recommended by the basel committee and the esrb. there are some challenges in using this indicator for the current credit development. one of the weaknesses of the indicator is that it relies on a statistically calculated trend that is boosted by the very high lending growth and high level of lending in the pre - crisis years. this results in a highly negative credit - to - gdp gap in denmark in subsequent years, indicating no need to activate the buffer. however, even moderate lending growth can mask the build - up of risk, e. g. if credit quality requirements are eased and new loans are granted to more risky firms. and risks can be amplified by the already high level of | 1. 4 % to 7. 9 % in fy06, in line with the annual target of 8 %. like other developing countries where transmission mechanisms are not immediately obvious or efficient, it takes well over a year or more for high interest rates to curb the credit growth. thus far while credit growth has decelerated, it remains fairly robust as demand pressures from both public and private sector remained high during the course of the year. consequently, it is no surprise that while food cpi decelerated as the government eased constraints by allowing imports of essential products ( sugar, cement and selected pulses ) and enhanced its distribution mechanism, the core inflation ( excluding volatile components of cpi i. e. food and energy ) is 7. 1 % for fy06. although the rate of passthrough from the higher prices of energy and other commodities to core consumer price inflation appears to have remained relatively low, the cumulative increases in energy and commodity prices have been large enough to account for the recent inflationary pressures in core cpi. anecdotal reports suggest that the labor market in pakistan is tight. while labor productivity remains low, the wage increases will generate additional pressures. over the medium term, managing inflationary expectations and perceptions and designing an appropriate monetary stance, which aligns economic activity with the economy β s productive capacity, will remain a challenge. financial sector reforms : consistent with trends observed in growing asia, structural changes in financial markets have been remarkable and significant. first, a word on the financial sector β s scope and scale : - financial assets grew by 70 % over the past five years and in cy05 reached rs 5. 1 trillion ( $ 85 billion ), equivalent to 80 % of gdp ; - the banking sector grew at a faster pace relative to non - bank sectors and accounts for 71 % of the financial industry assets ; - market capitalization of the stock exchange grew steadily and recently peaked at 44 % of gdp relative to 10. 3 % in june fy00 latest financial sector assessment for pakistan and the banking sector review 2005 1, which will be released by july 2006, together lend comfort that : ( i ) banking sector profitability ( after tax ), at over $ 1 billion, is at an all time high and the return on assets ( after tax ) increased to 1. 9 % in cy05 2 from 1. 2 % in cy04 ; surpassing the relevant international benchmark. the rapid growth in profits also resulted in considerably higher return | 0 |
the government bonds held by euro - area banks are issued by just one sovereign β their domestic government. for example, in december 2014, 98 % of the loans from greek banks to euro - area sovereign debtors were granted to the greek government. is it clear that in cases where the ties are so close, doubts concerning government solvency have a direct negative impact on the banking system. it is in this particular context that we have devoted the first main article of this year β s annual report to the topic of the sovereign - bank nexus. in particular, the article examines what would happen if sovereign loans were backed with capital, on the one hand, and if large exposures were subject to limits, on the other. because of the potentially significant consequences, especially of the application of the large exposure limit, any reforms would require a certain transitional period. however, the macroeconomic effects of such new rules would no doubt be positive. financial stability would be enhanced, incentives to pursue this type of fiscal policy would be increased and lending to private borrowers would become more attractive which, in turn, might boost capital stock and economies β growth potential. it would therefore be important not to lose any time. this article should be seen as a contribution to this debate. against this backdrop, it is a welcome development that the basel committee has now added the regulatory treatment of lending to sovereigns to its agenda. furthermore, the european systemic risk board published its report on this topic just the day before yesterday. in the foreword to the report, mario draghi quite rightly said that a discussion on the topic was long overdue. if it is not possible to reach a consensus at the international level on eliminating the privileged treatment of loans to sovereigns, we should push ahead with a european solution in order to make this important contribution to the long - term stability of the euro area. as well as focusing on major issues relating to a stability - oriented regulatory framework, the bundesbank also takes a look at the bigger picture, including, for example, the topic of payment transactions. the second main article in this year β s annual report therefore examines digital structural change in payment services. bis central bankers β speeches 8. bundesbank profit and risk provisions ladies and gentlemen, finally i would like to come now to our annual accounts and hence also to this year β s bundesbank profit. the profit and loss account for the 2014 financial year closed with an annual surplus of β¬2. 95 billion. the annual surplus | covered some of the facts about hft in foreign exchange, i will conclude by summarising the lessons and issues that the report highlights : on market functioning : hft has had a marked impact on the functioning of the fx market in ways that could be seen as beneficial in normal times. hft helps to bis central bankers β speeches distribute liquidity across the decentralised fx market, improving efficiency, and has narrowed spreads, at least for smaller trade sizes. but liquidity for larger trade sizes may have become inferior. the introduction of hft to the market has affected the ecology of the fx market in ways that are not yet fully understood. questions remain about hft participants β willingness to provide liquidity on a sustained basis under different market conditions. while hft generates increased activity and narrower spreads in normal times, it may have reduced the resilience of the system as a whole in stressed times by reducing the activity of traditional market participants who may have otherwise been an important stabilising presence in volatile environments. that said, recent experience suggests that hft participants are not necessarily flightier than traditional participants in times of market stress and may be quicker to re - enter the market as it stabilises. furthermore, the market infrastructure itself, such as the various electronic trading platforms, is also changing in reaction to the growth of hft and is likely to have a significant impact on how different market participants execute trades over time. for example, hft has led to traditional liquidity providers developing proprietary liquidity pools through which to hedge their own risk. banks are internalising more transactions in - house using the same technology that makes hft viable. however, this takes liquidity out of the main markets such as reuters and ebs. as a result, less information is flowing to the market on trading activity ; a development that might detract from the price discovery process, at least for some market participants. on hft and systemic risks : the 6 may 2010 flash crash in equities shows that rather than hft per se, algorithmic execution more generally can be a trigger of systemic risk. rather than being an initiator of such shocks, hft may accelerate and propagate shocks initiated elsewhere. it is important to bear in mind that, while hft is dependent on technology to function and that trade positions are often being open and closed faster than human comprehension, there still remains an important human element. the hft models are continually monitored by human traders to ensure that | 0 |
particularly in its macroprudential surveillance and network analysis role. we therefore continue to solicit your support for our proposals, including those for more relevant data. i encourage you to look more closely at the proposed amendments where sufficient safeguards and checks and balances are incorporated. concluding remarks let me conclude by urging all in this assembly to remain focused on financial stability and the well - being of our ultimate stakeholder β the financial consumer who entrusts upon banks their hard - earned savings or looks upon banks to have a better future. after all, it is for him that we are laying a foundation to enable / capacitate him today, so he can build a better tomorrow for himself and his family. thank you for your continued support throughout the years at mabuhay po kayong lahat! 3 / 3 bis central bankers'speeches | we remain crystal clear that price stability as well as the safety and soundness of banking institutions are important policy objectives. but we are as clear that cash, capital, and contingent markets, together with clearing and settlements, should be collectively considered when talking about the financial system. macroprudential policy does not take away from any existing objective. it adds another facet to our desire for the financial market to be a value proposition. ultimately, 1 / 2 bis central bankers'speeches the goal is to ensure that our financial system β works β for us and facilitates in improving the welfare of individuals, from savers to borrowers, to investors and issuers, to intermediaries, to infrastructure operators, and digital service providers. speaking as a central banker, we understand the added challenges that macroprudential policy put forward. but we are also committed to the value proposition of finance and to making the financial system increasingly resilient to different forms of shocks. we are proud to take on the mantle of financial stability as part of our mandate under republic act no. 11211, the amended charter of the bsp which president duterte signed into law in february 2019. we also recognize that financial stability is a collective effort and thus, the fscc principals are here with you today. collectively, the fscc is thankful that a review of our macroprudential framework is central to the financial sector assessment program, or fsap, currently being completed by the international monetary fund ( imf ) and the world bank ( wb ). with this framework, we are joining the list of nations who subscribe to the global best practice of releasing to the public their macroprudential policy framework. we look forward to the insights from the fsap expert panel so that our macroprudential policy framework best contributes to a well - functioning financial system. this should include the work on our systemic risk crisis management framework. this framework represents the council β s enduring commitment to manage systemic risks at the highest level of policy. while we are happy to announce the strategy framework today, getting to this point certainly has been a journey. from the initial efforts of governor tetangco, to the developments introduced by governor espenilla, it is now my honor to take the baton in this never - ending relay of making the philippine financial system an enabler for the filipino people. maraming salamat po. 2 / 2 bis central bankers'speeches | 0.5 |
emphasize that the rapidly changing technology that is rendering much government bank regulation irrelevant also bids fair to undercut regulatory efforts in a much wider segment of our economy. the reason is that such regulation is inherently conservative. it endeavors to maintain the status quo and the special interests who benefit therefrom. new ideas, new products, new ways of doing things, all, of necessity, raise the riskiness of any organization, riskiness for which regulators have a profound aversion. yet since the value of all wealth reflects its future productive capabilities, all wealth creation rests on uncertain forecasts, which means every investment is risky. or put another way, you cannot have wealth creation without risktaking. with technological change clearly accelerating, existing regulatory structures are being bypassed, freeing market forces to enhance wealth creation and economic growth. in finance, regulatory restraints against interstate banking and combinations of investment and commercial banking are being swept away under the pressures of technological change. much the same is true in transportation and communications. as we move into a new century, the market - stabilizing private regulatory forces should gradually displace many cumbersome, increasingly ineffective government structures. this is a likely outcome since governments, by their nature, cannot adjust sufficiently quickly to a changing environment, which too often veers in unforeseen directions. the current adult generations are having difficulty adjusting to the acceleration of the uncertainties of today β s silicon driven environment. fortunately, our children appear to thrive on it. the future accordingly looks bright. | u. s. proposals for basel ii implementation, the agencies did not think it would be appropriate to replace the existing basel i capital rules for small, noncomplex banks in this country with the basel ii standardized rules. the agencies concluded, based in significant part on input from small community banking organizations, that the implementation costs of such an overhaul generally would exceed its regulatory benefit. instead, the agencies intend to propose, through a notice of proposed rulemaking, a simpler, more modest set of revisions to our existing basel i - based capital rules for smaller u. s. banks - revisions known as basel ia. basel ia as noted, we anticipate that only one to two dozen institutions would move to the u. s. version of basel ii in the near term, meaning that the vast majority of u. s. institutions would continue to operate under basel i - based rules. the u. s. basel i framework has already been amended more than twenty - five times since its introduction, in response to changes in banking products and the financial services marketplace. in october 2005, the agencies issued an anpr for basel ia, which discussed possible changes to increase the risk sensitivity of the u. s. basel i rules and to mitigate competitive distortions that might be created by introducing basel ii. we have reviewed comments on the anpr and are working on a notice of proposed rulemaking, which we hope to have out very soon. in drafting all of these regulatory capital proposals, we continue to consider the balance between risk sensitivity and regulatory burden, since more risk - sensitive capital requirements generally imply greater burden. thus, we are mindful that amendments to the basel i rules should not be too complex or too burdensome for the large number of small - and mid - sized institutions to which the revised rules might apply. indeed, a number of those commenting on the anpr advocated leaving existing rules unchanged. as noted, the agencies are taking into account potential competitive effects that basel ii might create between those institutions that would adopt basel ii and those that would not. indeed, we recognize that many of the thousands of depository institutions that would remain under the current capital rules may be concerned about the potential uncertainty surrounding basel ii. as part of our efforts to analyze and address these concerns, the federal reserve published a series of research papers focused on potential competitive effects in areas such as small business lending, mergers and acquisitions, and residential mortgage markets. the agencies have been taking into account the issues raised in those papers | 0.5 |
risks in the economy to be spread out, shared, and more efficiently managed. and the third lesson is the need to have in place an effective mechanism of economic and financial surveillance to identify potential risks, especially those relating to financial sector and capital flows issues, which are the two most important risks for emerging markets. all three lessons are now well known. and we have seen conscious efforts by national governments and ifi β s such as the imf to take heed of these lessons. in asia, at the national level, we see a region - wide move toward a more flexible exchange rate regime, with a disciplined framework in the conduct of monetary and fiscal policies. as for the financial sector, after the initial restructuring and consolidation, the framework of policy has moved towards risk - based supervision, to an adherence to international standards, and to the undertakings of formal financial sector assessments either under fsap or within the country β s own financial stability evaluation framework. at the international level, the imf has also come up with many new and important initiatives. as for the financial sector, its financial surveillance process has been deepened with the introduction of fsap and the surveillance of international capital markets under the financial stability forum, and the publication of the global financial stability report. more importantly, the recent initiatives on the new direction of financial sector surveillance is another important step in understanding the linkages between macroeconomic stability and financial vulnerabilities. the new direction aims to integrate financial sector analysis and issues with the article iv process, and then to link the bilateral surveillance with multilateral surveillance. in our view, this is an ambitious undertaking, but is a move in the right direction. the challenge, as we see it, will come from the implementation process, especially on the issue of what should be the adequate scope in terms of issues to be covered, choice of countries, and the analytical approach to be used. these are important questions that will need to be worked out, taking into account resources at the fund. our view is that the initial move on the new direction should not be overly ambitious. it is better for the process to move forward gradually, focusing first on the most systemically important economies. but as far as emerging markets economies are concerned, if surveillance is to be effective in preempting crisis, then i think one question that can be asked is whether the improvements that we are now seeing, as well as the new direction to be taken, are adequate or credible as a mechanism of | ##ification to better reflect the increasingly important role of the yuan in international monetary system. last but not least, i hope that the inauguration of our beijing representative office will be more than just another success story. i truly hope that the spirit and friendship behind this long - standing relations and successes, nurtured earnestly over centuries, will continue to serve as solid foundations that will lead to even greater and closer future cooperation between our two nations. let me end by thanking everyone for being an important part of this success. and, with your royal highness β permission, may i propose a toast to future success and cooperation as well as to your royal highness β s good health and prosperity. thank you. bis central bankers β speeches | 0.5 |
per cent to 108, 2 per cent ; that of greece from 107, 4 per cent to 165, 3 per cent and the italian ratio increased from 103, 1 per cent to 120, 1 per cent. these data illustrate three important points : first, that sovereign debt crises in some countries did not originate in the public sector ; that debt ratios can accelerate very quickly from seemingly benign and sustainable levels ; and that any given level of debt may be seen to be sustainable, but if the bond markets change their view on this, spreads rise to the extent that the costs of servicing these deficits can rapidly turn sustainable deficits into unsustainable ones. these debt ratios have increased because of widening current fiscal deficits in response to the crisis, and not necessarily because of previous excessively large deficits. for example, in 2007 ireland and spain had fiscal surpluses and the deficit / gdp ratio in portugal and italy were 3, 1 per cent and 1, 6 per cent respectively. greece on the other hand already had a deficit of 6, 5 per cent. bis central bankers β speeches at a time of continued private sector and bank deleveraging, excessively deep public sector austerity is likely to generate and reinforce negative growth and debt dynamics : as growth falls, the debt to gdp ratio increases, and if debt is reduced too fast, growth will fall even more. there is no doubt that some countries have excessive fiscal burdens and unsustainable fiscal positions. those countries have to adjust, and take the pain, but a key question is over what time horizon. nor does it mean that all countries should be following austerity measures. if they do, and the austerity measures proposed are excessive, it will only reinforce the global downturn. the pace of fiscal consolidation has to be more measured, and it is for governments and the central banks to ensure that their interventions keep the markets in check. as krugman and layard have argued, β at a time when the private sector is engaged in a collective effort to spend less, public policy should act as a stabilising force, attempting to sustain spending. at the very least, we should not be making things worse with big cuts in government spending or big increases in tax rates on ordinary people β. this does not mean that governments should go on a spending spree. more focus should be placed on the efficiency of government expenditure, to ensure that it is of the type that is likely to generate growth, | t t mboweni : the challenge of employment equity with specific reference to transformation at the south african reserve bank address by mr t t mboweni, governor of the south african reserve bank, at the black management forum annual conference, durban, 13 october 2006. * * * the president of the black management forum, former presidents and executive members of the black management forum, members of the black management forum executive, ordinary members of the bmf, distinguished guests, ladies and gentlemen, when we were approached by the bmf leadership to address this august gathering on challenges of employment equity with specific reference to the transformation process at the south african reserve bank, we were more than pleased to oblige and grabbed the opportunity with both hands primarily because the progress we have made at the bank since 1999 has been remarkable. this does not in any way imply that our current transformation milestones are a destiny already reached, but we thought that we could share with you how we have embraced transformation as a journey which will hopefully someday help us realise the desired south african end - state 1. when one takes into consideration that the bank comprised mainly, but not only, of afrikaner white males in technical and strategic decision making positions in 1998 at the bank, we are certain that all might concur that the road to transformation at the bank was paved with many serious challenges / obstacles and presented an extremely steep gradient of resistance. it is against this opening scene and milieu that we can lay claim that the progress made has been indeed remarkable and to some extent ( maybe ) exemplary. allow me to share with you the facts and figures of employment equity and transformation at the bank. this will entail a little walk back in the history of the bank β s workforce movements and composition, but the historic walk will serve as empirical support of the bank β s transformation and equity successes. a historically significant starting point would be the year 1994. in that year the bank β s total staff comprised 21 per cent blacks and 38 per cent females. the management levels, however, comprised 1 per cent blacks and 12 per cent females. when we joined this transformation journey after 1998 2, we had a workforce that, in total comprised 36 per cent blacks and 42 per cent females, but the management levels comprised only 13 per cent blacks and 19 per cent females. the strategic general management level comprised only 15 per cent blacks and 7 per cent females. thus the workforce composition of 1998 will effectively serve as the starting point of numerical transformation | 0.5 |
##a ), frankfurt am main, 24 august 2021. work stream on non - bank financial intermediation ( 2021 ) β non - bank financial intermediation in the euro area : implications for monetary policy transmission and key vulnerabilities β ecb occasional paper series, 270 / september 2021. 19. the fsb created a system - wide monitoring framework to track developments in nbfis in response to a g20 leaders β request at the seoul summit in 2010. 20. kristalina georgieva ( 2021 ) β financial stability priority : boosting the resilience of investment funds β imf managing director launch event for β investment funds and financial stability β paper. 21. fabio panetta ( 2022 ) β patient monetary policy amid a rocky recovery β speech by fabio panetta, member of the executive board of the ecb, at sciences po, 24 november 2021. | β long - term investing and sustainable finance : challenges and perspectives β welcome address by paolo angelini deputy governor of the bank of italy banca d β italia and lti workshop β long - term investors β trends : theory and practice β rome 11 july 2022 1. introduction i am glad to welcome you to the third banca d β italia and lti joint workshop on β long - term investors β trends : theory and practice β. we held the previous edition online. this year we can again benefit from being here in person. however, thanks to one of the few positive consequences of the covid - 19 epidemic, we will also have remote interaction, to broaden participation as much as possible. i am very happy about our continued collaboration with lti. directing investments toward longterm objectives contributes to durable, sustainable and inclusive economic growth and to the stability of the financial system. today, i would like to focus on the issue of sustainability, which is also the topic of two interesting contributions in this workshop. banca d β italia has long been active on this front. since 2010 we publish an annual environment report, documenting the ecological footprint of the bank and our efforts to reduce it. last year, during the italian presidency of the g20, the bank played a leading role in defining an ambitious multi - year agenda for sustainable finance and the fight against climate change. 1 one of the cornerstones of the agenda is the attempt to redirect financial flows to support the transition towards a sustainable economy. we took several initiatives aimed at addressing the need for highquality, granular, and internationally comparable data. 2 in 2022, the bank also became a member of the steering committee of the network for greening the financial system ( ngfs ). internally, we set up a climate change and sustainability committee, which helps define the bank β s financial strategy, and a permanent hub of experts to stimulate and coordinate analyses and policy initiatives across the various directorates involved. 3 there are important challenges β also of a theoretical nature β on the road to sustainability, which need to be addressed by policymakers, academia, and industry players. i shall elaborate on some of these issues, mainly from the perspective of the financial investor, without the pretense of being exhaustive. 4 2. sustainable finance : key challenges there is a general consensus that we need to improve the quality, comparability and availability of non - financial data. the most widespread metrics are the so - called | 1 |
edgar meister : eu banking sector stability statement delivered by mr edgar meister, member of the board of the deutsche bundesbank and chairman of the bsc, frankfurt, 24 february 2003. * * * in my capacity as chairman of the banking supervision committee ( bsc ), i am very pleased to present to you the committee β s report on eu banking sector stability, which has been prepared with the assistance of the working group on macro - prudential analysis, chaired by jan brockmeijer from the dutch central bank. the report summarises the outcome of one of the main lines of the committee β s activity, namely our regular monitoring of banking sector stability in europe. this is an activity that we have developed over the past few years through the cooperation of the eu national central banks, the eu banking supervisors and the ecb. we have now reached a stage where we felt we could share our findings with a wider audience. the stability analysis is based on a wide range of quantitative and qualitative information drawn from national supervisory data sources and the ecb, as well as on an exchange of information among the member organisations of the bsc, the eu central banks and supervisory authorities. the bsc has already achieved substantial progress in terms of harmonising consolidated bank profitability and balance sheet data - something which is of pivotal importance for macro - prudential analyses. i am confident that today β s presentation will be the starting point for what will develop into a good tradition. the main purpose of the document is to provide an overview - from an eu - wide perspective - of the resilience of the eu banking sector and of the potential threats to its stability. the report also places into the public domain new eu - level information on bank profitability and solvency developments. i believe that the report - and, more generally, the monitoring activity of the committee reflected in the report - will bring two main benefits. first, the eu - wide scope of our analysis complements the similar analysis carried out by the competent authorities at the national level with reference to domestic banking systems. second, the close cooperation among central banks and supervisory authorities produces substantive value added in terms of forming an assessment of the relevant issues. let me now turn to the main findings of the review. we find that banks β profitability weakened in 2001 and showed a further weakening in the first half of 2002. the downward trend in profitability has come about as a result of two adverse developments in the eu banks β operating environment. first | to eu banks stability. in this context, we find that the risk outlook is crucially dependent on the timing and speed of the recovery in the eu economy. however, the outlook for growth in the eu also hinges on global recovery. developments in the us and possible military action against iraq are key external factors in terms of potential risks. adverse macroeconomic developments would impact quite strongly on eu banks β profits owing to a significant increase in provisioning needs and a reduction in income from traditional retail banking. nevertheless, we remain confident that the eu banking sector will continue to display a notable capacity to withstand any further shocks in the economic and financial market environment. given this situation, efficient banking supervision is of paramount importance. given the challenges posed to eu banks and potential cross - border implications, coordination among supervisors and central banks in the eu is essential. in particular, the bsc is taking due account of this necessity and providing a common forum. in this connection, it is worth mentioning that stability analyses and the monitoring of structural developments in the eu banking sectors form the core of the bsc β s work. thank you very much for your attention. | 1 |
##h scholarship award and the shariah research grant for 2006 are still open to qualified candidates until the end of the year. apart from this, many other initiatives have been taken by the relevant bodies in malaysia to strengthen talent development at all levels in islamic finance. at the strategic leadership level, malaysia has established the international centre for leadership in finance or iclif as part of an effort to spearhead the development of a new generation of world class leaders in the financial services sector including islamic finance towards high performance and excellence. in the development of technical expertise, the islamic banking and finance institute malaysia ( ibfim ), the industry training arm, has played an active role in producing well - trained and high calibre individuals with the necessary skills in islamic finance. ibfim offers advisory, training and consultancy services on islamic banking and finance and organise seminars, workshops and conferences to create awareness and training to meet specific requirements of the industry. the programmes on offer include the fundamental aspects of shariah, islamic banking and takaful and risk management in islamic financing. ibfim has been working closely with the industry to ensure that their training and education programmes are tailored to meet the changing needs of the industry. ladies and gentlemen, in conclusion, the future success of islamic finance will depend on the co - ordinated and concerted collaborative efforts of all stakeholders, namely the islamic finance practitioners, educators and researchers. in this regard, all parties should put in relentless efforts to continuously promote the development of islamic finance into one which is progressive, dynamic, responsive and sustainable. while the increasingly more competitive prevailing environment raises the pressures to produce immediate - term results, it is the investment in human capital and in research and development that will secure the long - term sustainability of the industry. with the grace of allah, and with the support of all those involved in islamic finance, it is our hope that inceif will make a meaningful contribution to the future development of islamic finance for the benefit of the ummah. in closing, once again, i would like to express our deepest appreciation to the yang berhormat dato'mustapa mohamed, minister of higher education for gracing this occasion and for accepting to witness inceif partnership with nine institutions of higher learning. thank you. | next year, an enhanced macroeconomic surveillance framework applicable to the euro area will also be implemented. this comprises the introduction of an early warning mechanism based on a scoreboard of predefined macroeconomic indicators. at the same time, the european commission will assume responsibility for using these indicators in order to identify potential macroeconomic imbalances and excesses, and then reporting thereon to the political authorities. the ecb is of the opinion that the current reform efforts in both areas are not sufficiently extensive. in fact, the governing council of the ecb considers that while the proposals tabled by the european commission may indeed go some way towards improving macroeconomic and fiscal surveillance in the euro area, they fall short of the quantum leap forward that is needed in the surveillance of the euro area and in order to guarantee the smooth functioning of economic and monetary union. as regards fiscal surveillance, greater automaticity of procedure and the definition of clear and binding regulations for reducing debt ratios are required. in terms of macroeconomic surveillance, clearly defined sanctions are necessary. efforts must focus more clearly on the most vulnerable countries ( those which have suffered from losses in competitiveness ), in order to ensure the sustainable effectiveness of the latest framework. moreover, the procedure requires more transparent and more effective trigger mechanisms. in the future, the stability of the euro, the stability of the financial system and sound economic and financial policies will need to be viewed as inseparable from one another. the monetary union was designed to be an economic and monetary union. what we need now is also the second pillar. bis central bankers β speeches the ecb has done what it can by pursuing a stability - oriented monetary policy, by keeping the value of money stable and by providing for crisis - related liquidity needs. the other policy domains mentioned are now called upon to shoulder their part of the burden and safeguard the stability of both the financial system and the single currency over the long term. a single market and a common currency also demand well - coordinated economic and fiscal policies. this calls for clear rules and mechanisms for monitoring these policies. allow me to now briefly discuss the three key areas which i consider to be vital to the longterm success of the euro. these elements are : a sound fiscal policy, sustainable economic growth and a stable financial system. 1. sound fiscal policy the soundness of public finances was to be guaranteed by the stability and growth pact. unfortunately, however, the rules of the pact have been ignored all too often β even | 0 |
9, 000 staff with the islamic financial institutions. they are also reinforced by the workforce of domestic and foreign conventional financial institutions. this expertise that resides in malaysia allows for the development of innovative products so as to ensure that the product design and structure, as well as the risk management aspects that are being rigorously addressed. there is also positive response from the local and foreign financial institutions to establish international islamic bank, international takaful operator, as well as international currency business unit to undertake international currency business in islamic finance in malaysia. to date, eight financial institutions have been granted approval to set up such international currency business units in malaysia. commercial banks and investment banks licensed under the banking and financial institutions act 1989 ( bafia ) are allowed to establish international currency business units to carry out islamic banking business under their existing entities. to enhance the delivery system to facilitate their establishment, an " executive green lane " has been accorded to expedite applications by expatriates for long - term employment passes with multiple entry visas. in addition, the foreign investment committee rules are also relaxed further to allow for 100 percent foreign equity ownership in these financial institutions. the mifc portal has also been launched as the primary source of comprehensive online information on the latest initiatives and developments, and enables convenient access to application forms, procedures and guidelines related to entrance and participation in the mifc. this portal, is now accessible online at www. mifc. com. the large gathering of practitioners here for these two days to discuss the wide ranging matters that relate to issuers and investors will contribute to enhancing the collective understanding and expanding the boundaries of our knowledge on the opportunities in the sukuk market and the potential that the malaysian sukuk market provides and its linkages with other international islamic financial systems. this would facilitate greater cross border flows and not only contributing to enhancing greater international economic and financial integration, and thus to the global growth, but also towards financial stability of the international financial system. on this note, i wish you a successful conference. supplementary information : the mifc secretariat is pleased to announce that the mifc portal has been launched as a key communication platform to strengthen the global identity and branding of malaysia as an international islamic financial centre, or mifc. the development of the mifc portal is an important initiative to promote awareness and global outreach of the mifc. the mifc portal provides comprehensive information on the latest initiatives, incentives and developments in the mifc. in addition, the mifc portal enables convenient | zeti akhtar aziz : current issues and developments in islamic banking and finance keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the asli β s conference on developing islamic banking and capital market : β new opportunities, new market and new frontier in islamic banking and finance β, kuala lumpur, 25 august 2004. * * * islamic banking and finance has emerged as a financial intermediation process that is competitive and resilient and that contributes to the overall wealth creation, growth and development of our nation. amidst an increasingly challenging and competitive financial environment, the evolution of a comprehensive islamic financial system seeks to meet the range of requirements of a rapidly changing economic environment, with its soundness and stability secured through the robustness of its regulatory framework supported by the strength of its financial infrastructure and the sophistication of its products and services. indeed, the strength of the respective components of the system and the interconnections of its markets will open new frontiers in islamic banking and finance and will maximize the potential and opportunities that it accords. distinguished guests, it is my pleasure to be here today at this conference organised by asli to speak on the current issues and developments in islamic banking and finance. the islamic financial system in malaysia has evolved as a viable and competitive component of the overall financial system, complementing the conventional financial system as a driver of economic growth and development. the rapid progress of the domestic islamic financial system, reinforced by significant developments in the islamic financial infrastructure, including the legal and shariah infrastructure and the regulatory and supervisory framework, has strengthened the position of the islamic financial system as an increasingly important component in meeting the changing requirements of the new economy. the financial sector masterplan launched three years ago provides the strategic direction envisioned for the development of the islamic financial sector looking beyond the near term and taking a longer - term perspective into the needs and requirements of the future. the strategies outlined in the plan have emphasized the development of the respective building blocks of the various parts of the financial sector that need to be put in place to form the solid foundation on which sustainable future progress can be achieved. the expansion of the islamic financial system in malaysia has therefore taken place with attention given for the development of a comprehensive system. towards a more diversified islamic financial system at the onset of our journey in the development of a comprehensive islamic financial system that is progressive, efficient, dynamic and sustainable, due attention was thus given to the development of the key | 0.5 |
that teaching and scholarship should highlight the sifi problem, appraise the regulatory approach toward such institutions since the crisis, and consider alternatives. an appraisal of whether more or, as some would have it, fewer measures are needed under the approach taken in the dodd - frank act and related regulatory actions will, i admit, be a little challenging. some measures β including stress testing, capital requirements, and resolution planning β are still in train, and others may be forthcoming as a result of the research program 2 / 8 bis central bankers'speeches the federal reserve is launching to consider the potential for additional explicitly macroprudential features in capital and liquidity stress testing. 3 still, i think it is feasible to teach and assess the general approach of using multiple regulatory tools that impose requirements that force systemically important firms to internalize the costs their distress or failure would impose on the financial system, and then leaving the regulated firms to make decisions as to how to alter their size and activities in order to make themselves most profitable within the stricter regulatory constraints. this approach can be usefully compared to structural or other approaches to the sifi issue, such as caps on overall size or reimposition of the glass - steagall separation of commercial and investment banking. in addressing this topic, i have found it useful to try to specify as clearly as possible the adverse systemic consequences that may be feared by public authorities confronting the possible failure of a systemically important institution. this exercise helps identify the regulatory measures that would be most effective in promoting the resiliency and orderly resolvability of such institutions. on virtually any short list of concerns would be reliance on short - term wholesale funding sources, which may dry up quickly under stressed conditions. a firm with inadequate sources of liquidity may then be forced into responses with systemic implications, such as fire sales of assets and termination of credit extensions to their own counterparties. the other major vulnerability revealed by the financial crisis was systemic risk that may be created through so - called shadow banking activities β that is, credit intermediation outside the prudentially regulated banking system. here is where the integration of traditional lending and capital markets is most clearly in evidence, albeit in quite different ways. in truth, many shadow banking channels passed through prudentially regulated institutions, as with the notorious structured investment vehicles and asset - backed commercial paper conduits. changes in accounting and in bank capital and liquidity requirements have done a great deal to guard against | to strengthen cross - border and cross - sectoral co - operation between supervisors, to enhance convergence in supervisory practices and to reinforce collaboration between supervisory and central banking functions. the eurosystem supports these conclusions. there are clear benefits in keeping supervision close to the institutions being overseen at the national level, while financial integration requires co - operation between the relevant authorities to be stepped up. in my view, positive developments have already occurred in the implementation of these recommendations. for example, the banking supervision committee of the european system of central banks β chaired by deutsche bundesbank directorate member edgar meister β has enhanced and continues to develop its regular monitoring of the soundness of the european union banking system as a whole, as well as its analysis of structural banking and financial developments. these activities rely extensively on the close and constructive co - operation established within the committee between central banks and banking supervisory authorities. indeed, the eurosystem regards the promotion of co - operation between central banks and supervisory authorities as one of its main contributions in the field of prudential supervision. however, the full implementation of the β brouwer recommendations β requires additional work in order to establish an effective information exchange β both in times of calm and in times of crisis β and to achieve further convergence in supervisory practices. in addition to the financial stability considerations, the issue of supervisory co - operation also needs to be looked at from the angle of the efficiency of the financial system. indeed, increasing attention is being paid by policy - makers and market participants to the remaining inefficiencies in the financial sector and the residual obstacles to financial integration. for instance, the recent β gyllenhammar report β drew attention to the need for greater standardisation of supervisory compliance requirements and practices because of the cost burden on financial institutions developing cross - border businesses. these conclusions were further reinforced in the recent report by the economic and financial committee under the chairmanship of yet another compatriot of mine β kees van dijkhuizen, the dutch treasurer - general. in a similar quest for greater efficiency, considerable attention has also been paid to the community regulatory process, with emphasis on the need to achieve swift rule - making and consistent implementation in different member states. the recent institutional agreement achieved on the implementation of the β lamfalussy procedures β represents a major step forward in the field of securities regulation. it removes the burden of detailed and cumbersome regulation at the community level by delegating rule - making powers to a | 0 |
jens weidmann : making the financial system more resilient keynote speech by dr jens weidmann, president of the deutsche bundesbank, at the 2013 fese ( federation of european securities exchanges ) convention, berlin, 27 june 2013. * 1. * * introduction president jochumsen ladies and gentlemen thank you for having me here today at this year β s fese convention. it is the first time i have attended this event, although there are numerous points of contact between securities exchanges and central banks. central banks and securities exchanges have in common that they provide the economy with an infrastructure which is essential for a well - functioning market economy. exchanges provide functioning and regulated platforms for the trading of securities, and so contribute to an efficient allocation of capital and resources. central banks maintain price stability, thereby among other things also contributing to allocation efficiency and laying the foundation for sustainable growth. another important task of central banks is to smooth the operation of payment systems. the eurosystem provides important infrastructure for the financial system, in particular target2. by establishing target2 - securities the eurosystem will also provide a harmonised and centralised method of settling securities in central bank money in europe that will improve settlement efficiency. 2. the role of financial market regulation some years ago, financial integration in europe was considered a one - way street leading to greater wealth. this view has been challenged by the financial crisis, since it has shown the flip - side of financial integration in europe, which is mutual contagion. in order to reap the benefits of financial integration without having the downside risk of contagion effects, microprudential regulation needs tightening and effective macro - prudential regulation has to be established. more generally, the crisis has also challenged the formerly wide - spread view that the outcome of financial deregulation is always good. adair turner, the former chairman of the british fsa, self - critically confessed in a speech he gave at cass business school in 2010 : β we were philosophically inclined to accept that if innovation created new markets and products that must be beneficial, and that if regulation stymied innovation that must be bad. β i definitely do not want to deny the merits of innovative, flexible financial markets. but with hindsight, i think it is also hard to deny that insufficient financial market regulation as well as inadequate oversight and supervision helped macroeconomic and financial imbalances to emerge or to intensify. moreover, differences in the speed | β. bis central bankers β speeches regulation is not an end in itself. the costs and benefits of the planned measures, including their side - effects and interactions, have to be weighed up. one example of this is the planned financial transaction tax. while a fundamental political consensus has been reached on the introduction of the tax in some countries of the eu, the unintended side - effects have to be considered carefully. in its originally envisaged form, the tax would also cover collateralised money market transactions, known as repo transactions. this would cause considerable harm to the repo market, which plays a key role in the redistribution of liquidity among commercial banks. however, hampering it would make banks more dependent on liquidity provision by central banks. 5. conclusion to sum up, over the past five years, substantial progress has been made in the regulation of the financial system. nevertheless, there is no room for complacency. there are still shortcomings in financial regulation to be eliminated. this notwithstanding, it is necessary to thoroughly assess the impact of the different reforms and measures. ensuring that players in the financial system have to, and are able to, better bear losses and risks themselves in future will make the financial system more stable. strengthening the principle of liability will help the financial system to serve the economy and society better. thank you for your attention. bis central bankers β speeches | 1 |
and makes the bank weaker. to correct this shortcoming in our system, we should craft policies that either incent or require weak and vulnerable firms to cut dividends quickly in order to conserve capital. this would introduce a dampening mechanism into our system. another example of a reinforcing mechanism is a situation in which firms have incentives to structure activities to minimize regulatory capital or other requirements without transferring risk. creation of off - balance sheet funding vehicles, structured products and complex corporate structures to minimize regulatory requirements and tax obligations reduces transparency, introduces new risks and limits the effectiveness of resolution regimes. other examples of reinforcing mechanisms in our system are : β’ collateral tied to credit ratings. credit downgrades lead to increased collateral calls, which drain liquidity, forcing asset sales, further weakening the firm subject to the collateral calls. β’ collateral and haircuts. when volatility rises and that leads to increased haircuts, the result can be a vicious cycle of forced asset sales, higher volatility and still higher haircuts. β’ compensation tied to short - term revenue generation, rather than long - term profitability over the cycle. this causes risk - takers to take on too much risk because they are compensated on the upside. this risk - taking extends the boom, setting the stage for a bigger bust. although some of these practices might appear sensible from the narrow perspective of an individual firm or market, this crisis has shown us that when all firms or market participants simultaneously take an action that appears to be in their immediate, narrow interest, the collective impact on the system as a whole can be disastrous. we need to find ways to weaken or eliminate these reinforcing mechanisms and we need to introduce new dampening mechanisms into the financial system. incentives some of the pro - cyclical dynamics embedded in our financial system occur because market participants do not always have the incentive to behave in ways that will be good for the system as a whole. this occurs, in part, because market participants often do not have to bear the full costs of their actions. for example, the incentive to take on more risk without regard for the broader implications of those actions arises from a number of factors, including poorly constructed compensation schemes, ineffective risk management and gaps in regulatory oversight and risk capture. one problem evident during the crisis has been the reluctance of banking organizations to raise sufficient capital to be able to credibly have the resources to withstand particularly adverse economic conditions. this reluctance stemmed, in part, from | within this review, we will be able to carry out an extensive discussion of how the society perceives the policy pursued and its results. in the course of the review, representatives of the bank of russia will hold meetings with business associations, representatives of small, medium - sized and large enterprises, government authorities, the academic and expert community, including professional financial market participants, and citizens from various social and demographic groups. some of these meetings will take place at the bank of russia β s regional branches. such analysis is conducted by many central banks, in the first place by those having a long experience of inflation targeting. some central banks carry out such reviews on a regular basis ( canada, sweden, norway ). the us fed accomplished its review not so long ago. the ecb completed a similar project in july 2021. as to the bank of russia, this is our first experience of such a profound and comprehensive analysis of the achievements of our monetary policy, but we will definitely continue this practice. in the future, the bank of russia plans to make 1 / 3 bis central bankers'speeches such reviews regularly, every five years. the range of topics to be reviewed by our analytical units includes six work streams. work stream 1. inflation target format. this topic is obviously drawing the greatest attention. within this work stream, we will consider once again what format of the target would ensure the highest confidence in it and what inflation rate could be the best measure of price stability. furthermore, we will analyse whether the russian economy has formed the conditions for reducing the inflation target. work stream 2. the operational procedure of monetary policy. the main issue of this block is how effectively the monetary policy pursued achieves its operational objective, which is to keep money market rates close to the key rate. we will also consider whether we need to adjust our operational procedure given the evolution of the russian financial market. work stream 3. retrospective assessment of the effectiveness of the monetary policy pursued. this block of topics is probably the most challenging one technically. within this work stream, we will try to estimate, relying on our model - based approaches, what results we could have achieved through our monetary policy if we had known what we know now when making our earlier decisions. i would like to stress straight away that we will not assess our actual decisions as they were made when we had less information than today. nevertheless, this is a very useful practice to analyse the robustness of the monetary policy pursued, which will provide helpful insights for | 0 |
incomes are the compensation paid to owners of, for example, machinery and inventories, commercial real estate, residential property and land. as a large part of this capital is owned by firms, it follows that an expected increase in corporate profits must lead to higher growth of either total gdp or of the gdp share that consists of capital income. experience shows, however, that in the long term the profit share is fairly constant at around one - third of gdp ; the remainder, approximately two - thirds, consists of wages. the stable long - term relationship between these shares accordingly means that the trend rate of increase in corporate profits roughly matches gdp growth. historically, therefore, the increase in corporate profits should lie between 2 and 3 per cent. the historical statistics on the profits of swedish listed companies are rather inadequate but a look at the american companies in the s & p 500 index shows that their long - term profit growth does not quite come up to the trend for gdp ( diagram 3 ). there have been periods, however, when profit growth was above this trend ; the profit share was then probably higher in the total economy but sooner or later it fell back to the long - term trend. diagram 3 : united states : real profits ( s & p 500 ) 1 00 trend 1. 5 % per year 1 87 0 18 80 18 90 1 90 0 1 91 0 1 9 2 0 1 9 30 1 9 4 0 1 95 0 1 96 0 19 70 19 80 1 99 0 2 00 0 source : shiller. the profits of listed companies can, of course, rise comparatively rapidly in the short run. if the profit share moves up from, say, 30 to 35 per cent, this implies a temporary increase in profits of 15 to 20 per cent, spread over the years when the profit share is elevated. such a temporary increase in the profit share has not been uncommon in connection with technological breakthroughs. it occurred in sweden in the 1990s and also early in the twentieth century in the era of electrification. the profit share followed a rising path up to the end of the 1910s and this was accompanied by higher gdp growth ( diagram 4 ). it is perhaps hardly surprising that this led many shareholders to believe that profit growth would continue to exceed the historical trend in the longer run. that did not happen. an elevated profit share tends to fall back sooner or later and corporate profits then return to their longterm path. neither do i believe that in connection with the ongoing technological breakthrough we can look forward | urban backstrom : the swedish economy speech by mr urban backstrom, governor of the sveriges riksbank and chairman of the board of directors and president of the bank for international settlements, to the swedish shareholders β association, orebro, 30 october 2001 * * * first a word of thanks for the invitation to come to orebro and discuss matters to do with the swedish economy with you. it is now a fortnight since the riksbank presented this year β s third inflation report. some more statistics have been published in the meanwhile but the information they contain does not point to anything particularly new. so today one can hardly arrive at an assessment of economic developments in sweden one to two years ahead that differs all that much from the picture outlined in the report. those of you who want to know more about our assessment should consult the riksbank β s website, www. riksbank. se. the whole report can be downloaded, as can all the figures on which the tables and charts are based. diagram 1 : the β new economy β concept in swedish media. ( number of hits ) 2001 jan. oct. sources : mediearkivet and presstext. there are, however, a couple of questions concerning the swedish economy and the outlook in the somewhat longer term that i should like to dwell on here today. diagram 2 : β the it - bubble β affarsvarlden : it - index index nasdaq : nasdaq : composite dow jones : industrials usa dow jones industrial average, close daily [ index 1996 - 01 - 02 ] sources : hanson & partners ab. usa nasdaq composite index, close daily [ index 1996 - 01 - 02 ] one is what has happened to the discussion about the β new economy β. swedish media are mentioning the subject less and less ( diagram 1 ). i believe that mirrors how people β s interest in general has waned. and considering how rapidly and extensively prices have fallen for it and telecom shares, one is inclined to the view that all the talk about the third industrial revolution was really something of a dead end ( diagram 2 ). that leads on to my other question, namely the part that technological breakthroughs play for corporate profits and thereby for the return on equity. where did the β new economy β go? concerning my first question, perhaps it is not so surprising that we now hear less and less about the β new economy β than we did last year. share prices for it and telecom | 1 |
i framework, such as the firm β s correlation assumptions within and across portfolios and the rigor of its stress testing programs. finally, under pillar iii, supervisors will seek to ensure that accurate information about risks will be disclosed by banking organizations. areas of possible concern with basel ii procyclicality while i have emphasized the various benefits of basel ii for effective supervision and the preservation of financial stability, there clearly are some possible downsides of the new approach. concerns have been raised that the adoption of the new accord will have some destabilizing effects on the international financial system, and emerging market economies in particular. chief among these is the concern that basel ii will amplify procyclicality as basel ii adopters severely tighten credit standards in response to rising capital requirements in the event of deterioration of credit conditions. we do expect that minimum capital requirements will rise and fall in response to changes in the risk of a bank β s activities, just as the internal economic capital models currently used by banks reflect changing risk exposure by changing capital levels. by itself, this will mean that, even with some changes the basel committee made over the years to lessen the effect, some procyclicality still remains. however, the procyclicality debate should include not only whether capital requirements will rise and fall with economic cycles, but also whether the new requirements provide useful signals to banks, supervisors, and market participants that will lead them to take appropriate action in response to a changing economic environment. with more gradations in the basel ii framework, banks, supervisors and the marketplace will have an early warning signal when credit quality deteriorates and when it improves. a more risk sensitive measure should give bank managers accurate signals to adjust lending policies in a more gradual manner early in cycles, dampening severe contractions or expansions in lending. with its emphasis on planning and risk analysis, the new accord will require banks ( and their supervisors and rating agencies ) to think more systematically about the level of capital needed during upturns in order to weather downturns. herding behavior another concern that some have raised is that the uniformity imposed by basel ii in calculating capital requirements will result in homogeneous assessments of risk, which in turn will amplify herding behavior in the market place. the new accord does set requirements for bank risk management by requiring certain types of inputs, and it does set the correlation factors for asset types, but it does not mandate that all banks must have | the debate as to whether the united states is or is not a β new economy β. no one disagrees that the surge in the production of computers and software has been integral to the recent upswing in productivity. where the differences in view enter is over the deeper sources of productivity growth and the sustainability of the productivity improvements - that is, whether they are temporary or permanent. those suggesting that there is no β new economy β argue that the recent improvement in us productivity growth is easily explained : it is a combination of a normal cyclical reaction to a surge in demand and a pickup in the growth of the capital stock, most notably high - technology equipment and software. once growth in demand settles down, this view holds, and investment in high technology slows, productivity growth will moderate. even proponents of this view recognize, however, that the rapid increase in productivity and output growth in the computer industry will likely increase the growth rate of the economy over the longer term. by contrast, those supporting the idea of a β new economy β tell us that what we are witnessing in the us economy is the fruition of some longer - term trends in information technology, deregulation, globalization and labor markets. more specifically, proponents of a β new economy β contend that advances in computer power and software - combined with deregulation in the telecommunications, transportation and financial industries - have produced many new profitable business opportunities. using advances in technology and tapping into highly liquid world capital markets, many new and existing firms have been able to exploit these opportunities quickly. furthermore, the proponents of a β new economy β argue, information technology has produced numerous cost savings for business operations. the growing role of the internet as the medium to exchange large volumes of information and conduct efficient transactions - among businesses as well as between businesses and consumers - will lead to a further acceleration of productivity growth. thus, this view concludes, the increase in the output of the computer / software industry is both a cause and an effect of these deeper trends. we are just at the early stages of understanding the surge in productivity growth. but recent empirical work is beginning to grapple with some of these issues. it appears that a significant part of the increase in productivity relates to increased quantities of capital per worker, primarily computers and software. however, the largest part of the improvement in productivity growth has yet to be fully understood. we can not yet resolve the β new economy β debate. nevertheless, i am persuaded that the longer productivity improvement continues, the harder it | 0.5 |
more interdependent, and old actors whose roles were eroded by new and upcoming stars have found new niches. thus, commercial banks make loans that they repackage and sell to hedge funds, mutual funds and insurance companies ( frequently bypassing investment banks ), but hedge funds also do a lot of trading that improve the revenues of investment banks. many companies bypass commercial banks completely and rely for funding in their initial stages on venture capitalists, that eventually resource to investment banks to float the companies in the stock market. all this in a framework where it is ever more common to observe financial institutions that diversify risks by transforming into massive financial supermarkets that provide services usually associated with commercial banks, investment banks and asset management. this state of affairs certainly means a huge challenge on central bankers and financial regulators. for us these developments might mean the sudden vanishing of a good part of what we knew about the transmission mechanisms by which monetary policy affects the real side of the economy and inflation, and especially its lags. the global financial imbalances, the lack of response of long term rates to tightening, the tame response of prices to the dollar devaluation against the euro, are all events hard to reconcile with the traditional knowledge. for regulators, the actual diversification of risks, and the resilience of the system to large shocks are questions of utmost interest that, however, do not have a proper answer at the moment. in the first case because its hard to know who owns what in terms of risk nowadays, and the other case because we can tell for sure if the shocks we have seen so far were really large enough. the collapse of ltcm in 1998, the dotcom bust in 2000, the amaranth crash were very large shocks indeed, and the fact that we are wondering today whether they were large enough is, in itself, reason for satisfaction, if not complacency. 5. impact of intermediation on emerging economies in this context, emerging economies exhibit better macroeconomic management, which has significantly contributed to improving their financial position, as reflected by narrower spreads. however, the reasons for today β s narrow spreads in emerging markets are, in my opinion, beyond market changes resulting from structured products or credit default swaps or the emerging countries β mostly sound fundamentals. in my view, many of the reasons lie in the gradual adjustment of global imbalances. an expectation that the us dollar will depreciate is leading investors to seek assets in other cu | . this is a strategic option β not only a by - product of the managed float, but a prudential policy in itself. among other advantages, such a policy ensures macroeconomic stability, enhances confidence in the domestic currency, and reduces the impact of external shocks as well as the cost of public and private financing. while this insurance policy is generally a less visible benefit, in cases of stress recalling to it provides specific advantages in terms of financial and monetary stability, as we could see in the recent critical episodes. finally, one more thing about the managed float. since several studies outlined the theoretical basis and macroeconomic implications of these kinds of regime three decades ago, their use has been growing among emerging countries. indeed, early research on exchange rate management came into being as a result of the collapse of the international monetary system devised at bretton woods, where a sort of peg was established between the various world currencies and the us dollar as the gold standard currency. empirical work expanding and fine - tuning the analysis of many scholars showed that several developed and emerging countries can be considered β managed floaters. β less than a half of inflation targeting countries effectively apply a pure float. in this sense, the literature states that the reaction functions of central banks in inflation targeting emerging countries have a significant coefficient for the nominal exchange rate. this means that the exchange rate is an important variable for monetary policy conduct. there are several reasons to avoid sharp fluctuations in the domestic currency and to mitigate excessive volatility, above all in developing countries with a limited capacity to absorb external resources through their capital markets. by mitigating fluctuations around a trend, this regime combines the needs of the various segments of the economy while preserving consistency with the whole of economic policy. recent literature in foreign exchange matters factors in segmentation of and restricted access to financial markets into the analysis. the most relevant conclusions suggest that, in terms of maximizing social welfare, the best choice is a less flexible foreign exchange regime with more limited access to hedge instruments. this argument becomes more convincing where there is nothing like an international monetary system and a weakening economy in the country with the main reserve currency in the world. this is the most realistic conceptual framework for the current stage at which our economy is. furthermore, in our case β with a long tradition of pegs, high inflation, devaluation processes, runs to the us dollar, and a shallow capital market β it is necessary to β manage β the float as a transition towards a | 0.5 |
their opinion, this would generate significant income for the treasury and facilitate the full removal of the capital controls much sooner than is currently projected. but the danger is that foreign exchange reserves would be depleted commensurate with the rise in government revenue. it is not as easy to control the scope of transactions in this way so as to prevent undue strain on the reserves, the banks β liquidity, and the treasury β s short - term financing. the main problem, however, is that the incentive for long - term investors to purchase kronur from distressed investors will disappear as soon as the exit tax is imposed. the difference between the onshore and offshore exchange rates, which is the incentive for the transaction, would revert to the treasury. this reduces the likelihood that the problem can be solved within the private sector, without tapping the nation β s foreign exchange reserves. those most concerned about the harmfulness of the capital controls must also realise that substantial revenues from the exit tax could provide an incentive for the authorities to maintain the controls for as long as possible. i mentioned just now that non - resident owners of treasury bonds did not participate significantly in the auctions held earlier in the year, and that some of them may continue to invest in treasury bonds for the long term. this does not mean that they will not want to sell when the capital controls are removed, given the foreign exchange risk that may be perceived at that time. in order to reduce such selling pressure and build confidence in the process, it is planned to offer owners of short - term treasury bonds the opportunity to exchange them for foreigndenominated bonds. this will allow investors to avoid the foreign exchange risk temporarily, although creditor risk vis - a - vis the treasury will still exist. it is too early to speculate on the duration of the bonds that would be offered. that would be determined by the conditions prevailing at the time. the more successful the authorities are in reversing the trend in public sector debt, the more likely investors will be to buy long - term bonds and the better protected bis central bankers β speeches the treasury will be against the short - term exchange rate volatility that could accompany capital account liberalisation. implementation of precautionary rules is also an important part of the preparation for ultimate removal of the controls. ladies and gentlemen the capital controls are harmful. no one knows that better than those who must enforce them. they are even more harmful if they are not enforced. there are those who | want precisely dated schedules for more rapid liberalisation than is currently planned, and their impatience is understandable. but a precisely dated schedule would not necessarily speed up the removal of the controls β not without correspondingly greater willingness to take on risk. i welcome the constructive criticism and exchange of opinions that come to the fore at meetings such as this one, however, and i urge others to air their views. in my opinion, the capital account liberalisation strategy is based on sensible arguments, which i have described briefly in my presentation today. on the other hand, it is not etched in stone, and in the final analysis, experience will reveal the truth. the liberalisation strategy can be implemented in various ways and adapted to actual developments. sound ideas on this subject are most welcome. but at this juncture, i believe it is best that we follow the path already mapped out, with strong emphasis on safeguarding the foreign exchange reserves, financial stability, and treasury financing. bis central bankers β speeches | 1 |
other jurisdictions to open accounts. this is very bad for hong kong β s reputation. for those of us who know what is being done, hong kong is clearly and definitely not closed for business. one of the important points now is therefore : how can we turn around such a negative perception. 5. last month, the hkma launched a dedicated webpage on our website to provide more comprehensive information related to bank account opening and maintenance. at the same time, we have set up a dedicated email account to facilitate the public and business community to provide feedback directly to the hkma. the hkma webpage contains information about account opening and maintenance procedures, documentation and information requirements for opening banking accounts, and contact details of banks. furthermore, our webpage also provides information on what banks should not do, and useful tips for reference of customers whose account opening applications have been rejected. there is also a β what β s new β section to provide an update of banks β recent initiatives regarding account opening and maintenance. the feedback we received through the email account is handled by a dedicated team at the hkma. 6. some of you might have already browsed through our dedicated webpage and noted that 1 / 2 bis central bankers'speeches some banks have acted on your comments that a dedicated hotline would help improve customer experience. indeed, some unpleasant experience might have been caused by mis - communication or even just a language issue, and a dedicated hotline resourced with properly trained front - line staff would be helpful. 7. in our outreach to chambers in recent months, we have also received comments that it is not user - friendly for business persons overseas to make several trips to hong kong for opening a bank account. we fully agree with that. and i would like to share with you that some banks have launched what we may call a β pre - vetting β process for account opening. this means an applicant may request to first submit the documentation and information required for opening an account to the bank by mail, fax or email, and the bank will β pre - screen β or β pre - vet β them before arranging the applicant to have a face - to - face meeting in hong kong. i trust this change in process flow would be welcome by customers based overseas. 8. we are also working closely with the industry to explore the use of technology to enhance the efficiency of account opening processes, such as kyc utilities ( β kycu β ) and technology to allow remote account opening. you may | about it? as in the old irish saying, the first response is to say i wouldn β t start from here. but unfortunately, here is where we are. using the recent experience in europe as an example, we can consider a number of possible avenues as to what might be needed to rebuild trust. when it comes to the distrust of the state of banks β balance sheets, transparency about the true nature of the assets on the balance sheet will clearly help. but the transparency and the disclosures clearly need to be credible to reduce the information asymmetries. stress testing of the balance sheet by a credible independent party such as the prudential regulator ( apra in the case of australia ) can give depositors, and other investors, confidence that their money will be safe. these sorts of actions work to take the solvency risk off the table. for depositors, this is reinforced by the presence of deposit guarantees. but often it is the sovereign who is providing the deposit insurance. so if there is a lack of trust in the solvency of sovereign, this interlinkage between the financial sector and the government can amplify the problem, as has been evident in the case of ireland and spain, for example. the willingness of the central bank to provide a liquidity backstop, very evident in europe at the moment, reduces liquidity risk concerns. investors are not so concerned that they will be the ones left in the burning building when everyone else has already run to the exit. the quid pro quo for this support is that banks will be subject to more comprehensive regulation and, at least as important, more intensive supervision and scrutiny by their bis central bankers β speeches prudential supervisors than was the case before the crisis. the light touch is no longer acceptable. one can make a reasonable case that in australia β s case, this doesn β t require much change. apra has long exercised intensive scrutiny over the banks it supervises. but even here in australia, there are a number of lessons learned through the crisis that are in the process of being applied. the regulatory regime for financial institutions has tightened considerably. while this might impose some costs on the financial sector and increase the cost of financial intermediation, the benefits are sure to outweigh those costs. this is particularly the case when we see the terrible costs of the high unemployment being experienced in a number of countries around the world at the moment in the aftermath of their financial crises. a change in management practice | 0 |
jens weidmann : challenges for banking regulation and supervision in the monetary union speech by dr jens weidmann, president of the deutsche bundesbank, at the deutscher sparkassentag 2013, dresden, 24 april 2013. * 1. * * introduction mr fahrenschon mr genscher mr steinbruck ladies and gentlemen it gives me great pleasure to speak to you today at the sparkassentag 2013. for more than three years now, the financial, economic and sovereign debt crisis has been the dominant topic in the european monetary union and, at the same time, its biggest test. dated from the outbreak of the crisis on the us real estate market in the summer of 2007, this is already the fifth year in which we have been in crisis mode. that said, germany is still in relatively good shape β despite undergoing by far its worst postwar slump in 2009 and despite being one of the first countries to be affected by the spillover from the crisis on the us real estate market. germany has had to use considerable financial resources to stabilise the financial system. savings banks, too, felt the effects of the crisis β although they did so directly only in a few cases ; mostly it was through their investments. even so, savings banks had a stabilising effect during the crisis. they were a robust and reliable source of lending. and they strengthened their capital base. that is a major precondition for overcoming the challenges that are on the horizon β such as sustained pressure on margins and increased risk provisioning for the next economic downturn, which is bound to come at some time. the various aspects of the crisis β first, only a financial crisis, then an economic crisis and, finally, the sovereign debt crisis β which is still with us β have prompted a large number of discussions, changes and upheavals. this applies to the role of central banks and to the expectation of what central banks can and should β or cannot and should not β do to help resolve the crisis. it also applies to the financial system and the way it is perceived by the public at large. mr steinbruck will undoubtedly explain in more detail soon how he wishes to β tame the financial markets β. overcoming the crisis requires considerable efforts in many areas. but, as important as the issues of government debt, monetary policy and competitiveness are, i would now like to turn my attention to banking regulation and supervision. 2. reform of financial market regulation β objectives and measures roughly ten | the japanese financial sector is still suffering from its excessive effects. that is a burden not just for japan but for the world as a whole. moreover, there is the other part of the foundations which international cooperation should not undermine either : the appropriate arrangements among countries themselves and with the financial markets. international action should improve, and not harm, the operation of the financial markets. but that is precisely what happens if there are public bail - outs of investors in the event of a crisis. they encourage moral hazard, thus weakening the efficiency of the markets. therefore, publicly financed bail - outs ultimately attack the economic basis of legitimacy for free capital markets. my criticism of some of the imf β s past activities is not new. in the case of mexico and, to some extent, in the crises of a few asian countries, financial resources have been thrown into the fire too quickly and too extensively and private investors have not been adequately involved or only fairly late on. certainly, the imf has been under considerable political pressure regarding some of its actions. that explains much but does not justify everything. there must be no more rescue operations without the involvement of the private creditors. the imf cannot and should not be lender of last resort. fortunately, there is now growing recognition of this. i do not wish to be misunderstood : we have urgent need of the imf. for that reason, i cannot agree with the fundamental criticism of the imf either. we need the imf, above all, as an international monetary promoter of open borders and free markets and as an advocate of sound and transparent policies on the part of its members. that is the task of the imf. it has the function of a catalyst. it can assist many countries in following and safeguarding the road to the market economy internally. the imf can help to make global finance more efficient. nevertheless, the countries themselves must ensure that their internal financial systems have a sufficiently sound structure. and the imf can act as an intermediary in the event of a crisis. in doing so, the primary objective should be maintaining access to private capital for countries in crisis. of course, in such an event financial support by the imf might play a limited role. but support has to be linked to conditionality which covers the actual causes bearing in mind that the formula for overcoming a crisis might not be the same for every country affected. this function of the imf as a catalyst is not a minor role. in today β s | 0.5 |
geoff bascand : reflections of a central banker remarks by mr geoff bascand, deputy governor and general manager of financial stability of the reserve bank of new zealand, to financial services council ( fsc ) regenerations, online, 7 december 2021. * * * thank you for the opportunity to speak with you today. the growth in our relationship with the financial services council ( fsc ) has been enjoyable, fruitful, and indicative of our maturing engagement approach with the financial sector. we have played our part, but i am also very appreciative of how constructive and proactive richard klipin, rob flanagan and the fsc have been in fostering it as well. macroeconomic and financial volatility i came into the rbnz in 2013 β after having observed and interacted with it from close proximity in other related analytical and policy domains during my time at stats nz and treasury prior to that. this was a time in the aftermath of the gfc when central banks were reflecting on monetary and financial stability policies and how to avoid another financial crisis in the future. domestically, our housing market was surging, with loose lending standards seeing greater than 20 % of all outstanding mortgages with lvrs over 80 %. the rbnz became a fast follower of the emerging practice of macro β prudential policies. the role and interaction of monetary and macro - prudential policies has been a feature of the past decade and looms just as large today as it did in 2013. using interest rates to lean against excessive borrowing is undesirable when inflation is low, as it was then, and so the macro - prudential policies we use to mitigate boom & bust cycles in the economy provide additional freedom for monetary policy to do its role whilst containing risks from excessive leverage. while it is challenging getting macro - prudential policies understood and indeed calibrating them in terms of costs and benefits, 1 i am a strong believer they redress the inherent tendency of banks to be pro - cyclical, underestimating credit risks when asset prices are rising. i expect macro - prudential policies to remain an important policy tool in years to come, though how much they are applied in a temporary manner or via permanent standards will be a topic for future policymakers. debt - to - income restrictions to my mind are an important and probably better tool than lvrs, but perhaps a mix is best. neither will fix the housing market, and nor | in the years ahead. i want to mention a few more. central bankers β especially their financial stability representatives β are paid to think about future trends and market dynamics and worry about what might go wrong, preparing mitigation plans accordingly. cyber risks and climate risks require deeper understanding and are appropriately receiving increased focus. while risk management is the day - to - day activity of financial institutions, understanding how these risks can cumulate at the system level or be under - priced due to implicit government guarantees is appropriately a focus for the central bank. without further analysis, we don β t know how serious these risks are to system stability. important as it is to keep alert to new or emerging risks, as these two are, at the same time we need to maintain our constant watch around market, credit, liquidity, or operational risks that will inevitably raise their head in the years ahead. for the reserve bank, oversight of climate and cyber risks needs to be an β and β, not an β or β. efficiency and innovation an enduring challenge for a regulator is the tension between promoting efficient, dynamic markets that generate innovation and customer benefits with the uncertain consequences for stability, resilience, and disruption or adjustment costs. the costs of regulatory compliance play into this equation as well. proportionate regulation is the goal ; but as a prudential regulator i would put more weight on being proportionate to risk than to size. i acknowledge the weight of our endeavour in recent years has been to strengthen resilience and compliance. there is still work to do to complete this β uplift β. implementation of the deposit taker β s bill and its new prudential standards framework will keep the banking and nbdt sector occupied for a number of years yet. the focus will shift somewhat to enhancing and completing the resolution framework, including the major task of implementing deposit insurance ( compensation ). across our cofr partners, seeing through the conduct of financial institutions bill ( cofi ) and the credit contracts and consumer finance act ( cccfa ) into the way the financial sector works will absorb considerable effort. closer cofr relationships have been a big step forward 4 / 6 bis central bankers'speeches but there are more steps on the ladder to achieve joint prioritisation and integrated policy and supervisory approaches. the strengthened cooperation amongst regulatory agencies, now embedded via legislation in the formalisation of the council of financial regulators ( cofr ), should help maintain a balanced focus on efficiency, customer outcomes, and financial stability. | 1 |
employee income is likely to continue, as it is expected that firms will continue to experience labor shortages and corporate profits will remain generally high. in this situation, private consumption is expected to follow a gradual uptrend. however, as prices of daily necessities such as food and gasoline have been rising recently, consumer sentiment appears to have deteriorated, and this may have adverse consequences to which attention will need to be paid. meanwhile, housing investment, which has been suffering significant declines as a result of procedural changes accompanying the enforcement of the revised building standard law, is nevertheless expected to recover gradually as the delays in the confirmation of building applications are resolved. in fact, the number of housing starts has already been showing signs of recovery. the pace of recovery, however, is still uncertain, since sales of condominiums, whose prices are rising, remain relatively weak. regarding prices, the domestic corporate goods price index ( cgpi ) has been rising mainly due to higher international commodity prices. the year - on - year rate of change in the consumer price index ( cpi, excluding fresh food ) posted a 0. 8 percent increase in december due mainly to rises in the prices of petroleum products and food products. this positive trend in the rate of change is expected to continue : in the short run, due to the effects of high prices of petroleum products and food products ; while in the longer run, because supply and demand conditions in the overall economy are expected to tighten as the moderate economic expansion continues. c. future conduct of monetary policy i would now like to explain the bank's thinking regarding the conduct of monetary policy based on the outlook for economic activity and prices and risk factors i have described. in conducting monetary policy, it is important not to be swayed too much by short - term developments but to make forward - looking projections of economic and price trends. as i noted earlier, the growth of japan's economy, for the time being, seems likely to decelerate while prices continue to rise, although, looking forward, the economy is likely to resume a moderate expansion under conditions of price stability. given this, our basic stance on the future conduct of monetary policy remains unchanged. we will continue to carefully assess the levels of uncertainty associated with the projected future paths of the economy and prices and to remain attentive to both upside and downside risks, thereby ensuring the appropriate conduct of monetary policy. ii. the japanese and world economies over the medium to long term : issues and strategic direction i | , especially in terms of their risk preferences and investment horizons. homogenous market participants tend to magnify mistakes, increasing the risks of market instability. diversity is preferable, but irresistible forces such as rules and regulations regarding capital, risk management, and disclosure could inadvertently homogenize the risk preferences and time horizons adopted by market participants. unfortunately, there are no good answers, and central banks must stand ready to fix any problems as they arise. lastly, while central banks should have deep respect for financial markets, for the reasons i have just explained, they should be willing to stand up to the market from time to time. in order to deliver sustainable economic growth under price stability, central banks must have a very long time horizon. this point is especially relevant for financial stability, because financial cycles tend to be quite long. as alan blinder had noted, central banks must avoid a situation where β the market reacts, or rather overreacts, to perceptions about what the central bank might do, and the central bank looks to the markets for guidance about what it should do. β 3 an example of how a central bank should conduct its policy in the face of market expectations is the bank of japan β s current commitment to ease monetary policy aggressively. that commitment is conditional on there being no significant risk to the sustainability of economic growth, including the accumulation of financial imbalances. the bank of japan will, in this context, conduct an assessment independent of what markets might be thinking, while taking full account of information derived from markets. turning to europe, the european central bank is committed to fixing the transmission mechanism of monetary policy in the euro area, showing that the bank may have a different view from the market on where the various sovereign spreads should be. concluding remarks today, i have offered my views on how overconfidence in extracting information from financial markets contributed to the formation of financial bubbles that brought about the crisis. the strong emphasis, by market participants as well as public authorities, on the deep wisdom of financial markets before the crisis has now brought about a public backlash against anything that even has a whiff of using finance or market forces to solve social issues. this is unfortunate because, if used wisely, the market is still the best arbiter of economic outcomes, finance is the art of the possible, and well - functioning markets will open new horizons. the lessons for central banks that i have just described apply largely to market participants as well. the financial industry should also read | 0.5 |
of banks has heartening indicators. with increasing number of bank branches, the average population per bank branch has improved from 15, 583 in 2001 to 12601 in 2012. as per latest census, 58. 7 percent households were availing of banking services in 2011 as compared to 35. 5 percent in 2001. with liberalization of the branch licensing policy and drive towards financial inclusion, the share of rural and semi urban branches in total new branches opened reached 69. 8 percent during 2011 β 12 from a mere 23. 2 percent in 2004 β 05. the share of hitherto unbanked centres in newly opened branches has been around 20 percent during 2011 β 12. further efforts are required and are being made in view of the large number of unbanked centres in the country. the reserve bank has been encouraging banks to improve banking penetration through the business correspondent ( bc ) model, allowing β for - profit organizations β to work as bcs, leveraging technology, including mobile technology, to deliver banking services as part of the drive to enhance financial inclusion. while there has been some progress, more ground needs to be covered before we achieve the goal of meaningful financial inclusion. the extent of financial exclusion is high when compared to some of the advanced as well as developing countries. in a cross country analysis of financial inclusion, we compare poorly at 10. 64 branches and 8. 90 atms per 0. 1 million adults, say, as against brazil, which has 46. 15 branches and 119. 63 atms per 0. 1 million of the population. in this vast financially excluded populace lies our opportunity! growth, merely in terms of numbers, would not carry any meaning unless it reaches every section of society β the vulnerable, underprivileged and the marginalized. public sector banks as well as rrbs have played a key role in expanding the branch network to rural india. however, since it has been observed that the benefits of government schemes often do not reach the intended beneficiaries, reserve bank has been encouraging banks to implement electronic benefits transfer ( ebt ). since many such social security beneficiaries reside in villages with population of less than 2000, rbi has been giving thrust on expanding the benefits of ebt to all villages. slbc convenor banks have, therefore, been advised to prepare a roadmap covering all unbanked villages with population of less than 2000 and allocate these villages to various banks for providing banking services in a time bound | , inflation and the supply side bottlenecks are some concerns that need to be quickly tackled to spur growth. the poser before india at this juncture is whether we can afford to relapse to the hindu rate of growth and be content with being considered an emerging nation forever, or should we make efforts to take our due position among the leaders in the world arena? we cannot and must not revert to the hindu rate of growth. in order to overcome these challenges, we need to focus on the key areas of productivity, innovation and reforms, both at the level of the macro economy and at the individual firm / enterprise level. these will help us overcome the various bottlenecks currently shackling our growth and put us firmly on the path of sustained high economic growth. it will ensure that we are able to leverage our strengths, some of which i would be alluding to subsequently, in order to create a conducive growth environment. these reforms need to involve all stakeholders and should, necessarily, leverage on technology, which has the potential to act as a force multiplier in our efforts towards productivity, innovation and reforms. i see that some of these topics would be the focus of the technical sessions slated for later in the day. i am sure these sessions will deliberate on how the various measures could be implemented in an effective and time bound manner. the role of the financial sector in any economy is to subserve the needs of the real economy. consequently, if the indian economy has to fully realize its optimum potential, the financial sector would have to play a pivotal part. as we all know, our financial sector is predominantly bank - centric and therefore, the performance of the banking sector is crucial to the fate of the economy. the indian banking system has come a long way since the financial sector reforms, with the banks having served the economy remarkably well over the last two decades. liberalization has resulted in greater autonomy for banks in business decisions, but with the concomitant responsibility of conducting business in line with the highest standards of corporate governance, customer service and a commitment to nation building, which encompasses financial inclusion. there is no doubt in my mind that if the economic growth engine has to churn out a powerful performance, banks would, necessarily, have to be the prime mover. the domestic credit provided by the banking sector in india stands at an abysmally low level compared to many of our emerging asian peers, let alone the advanced economies. | 1 |
kevin greenidge : the role of pension plans in a growing barbadian economy remarks by dr kevin greenidge, governor of the central bank of barbados, at the eckler investment policy review for pension plans conference, bridgetown, 19 november 2024. * * * good morning. it is my honor to address you at this year's pension investment conference. i extend my gratitude to ms. wade and her colleagues for the invitation to share insights on " the role of pension plans in a growing barbadian economy. " barbados has demonstrated resilience and strength, transitioning from a challenging period to one of sustained economic growth since the second quarter of 2022. this progress is a testament to the dedication and collaboration of our people and institutions, and it has created a solid foundation for us to discuss the critical role of pension plans - not just as instruments of financial security, but as active contributors to national development. the barbadian economy is on firm footing. over the first nine months of 2024, real gdp expanded by 3. 9 percent, led by key sectors such as tourism, business services, and construction. this growth has delivered measurable outcomes : a strengthened fiscal position, evidenced by a primary surplus of $ 581. 9 million ( 4 percent of gdp ). declining unemployment, which fell to 7. 7 percent in mid - 2024. debt - to - gdp ratio down to 105. 6 percent robust international reserves, currently standing at $ 3. 2 billion β providing over 31 weeks of import cover. our progress is underpinned by strategic investments in education, digital transformation, and infrastructure - all of which contribute to the economy's foundation and, indirectly, to the pension landscape by creating jobs and boosting long - term growth potential. in this environment of sustained growth, the pension sector plays a vital role in ensuring financial security for our ageing population while fueling national development. barbados has a proud history of leadership in pensions, from being the first british colony to introduce non - contributory old - age pensions in 1938 to the establishment of the national insurance scheme in 1967. however, modern challenges demand renewed focus : 1 / 2 bis - central bankers'speeches funding deficits : as highlighted in the 2023 financial stability report, over 28 percent of defined benefit plans remain underfunded, with an average funding ratio of 84. 1 percent. shifting demographics : an ageing population and declining birth rates pose longterm sustainability challenges. the imperative is | conditions and clearly have implications for one another. β’ to illustrate the implications of monetary policy for macroprudential policy, consider the example of hong kong, where the unusually low interest rates since 2009 ( as a result of their peg to the us dollar ) have fuelled sharply rising prices across a range of residential and commercial properties ( he 2014 ). attempts to attenuate the financial stability risks from this broad property price boom with targeted macroprudential measures resulted in a large number of measures being applied, even including ltv restrictions on stand - alone car parking spaces, to which the boom had spread. β’ if loose monetary policy can lead to a build up of financial stability risks, then the converse must also be true β tighter monetary policy can be used as a means of reducing financial stability risks. most empirical estimates show that a temporary tightening of monetary policy can be expected to reduce real debt levels β and bis central bankers β speeches hence the probability of crisis β by discouraging households and firms from increasing leverage in the medium term, even if the transmission ( through reduced aggregate demand and a higher interest burden ) involves a short - run move in the opposite direction ( for example, goodhart and hofman ( 2008 ) ). β’ this was recognised in the design of the uk monetary policy committee β s 2013 guidance that it intended to maintain a highly accommodative stance of monetary policy until economic slack had been substantially reduced. recognising the financial stability risks that could emanate from a commitment to maintain low interest rates, the mpc set a β knockout β whereby their guidance would cease to hold if the financial policy committee judged that the stance of monetary policy poses a significant threat to financial stability that could not be contained by the combination of macro and micro prudential policy tools available. β’ what about the more difficult question of whether monetary policy should be used to lean against the wind. the answer is a more obfuscating β that depends. β specifically, it depends on the efficiency and efficacy of the macroprudential tools and institutional framework available, a point eloquently made by my colleague don kohn recently ( kohn 2015 ). β’ take the extreme case in which there are no macroprudential tools. in such circumstances monetary policy may be the only means of tackling system - wide financial risks, but it would come at the cost of significant effects on the real economy β precisely because monetary policy β gets in all the cracks. β | 0 |
temporarily increased by nok 20 per barrel, or a little less than usd 3 per barrel. this is a small change, well within normal variations from one year to the next. the central government β s net cash flow from petroleum activities would then increase by around nok 16 billion the first year and nok 20 - 22 billion the next. this corresponds to almost 2 per cent of norway's annual gdp. if the increase in the cash flow is taken into the economy through higher expenditure or reduced taxes in the central government budget, aggregate domestic demand will be affected. higher expenditure requires an increase in the public sector's use of real resources, primarily labour. two per cent of gdp is then a substantial figure. if the increase in petroleum revenues is used domestically, this would correspond to almost all the annual growth in the mainland economy in a normal year. if the private sector of the economy is also expanding, and the economy is already close to its capacity limit, this policy would swiftly lead to strong pressures on economic resources. this would result in a rise in wages and prices. this policy would also lead to unstable conditions in the foreign exchange market. when oil prices then fell again and central government expenditure dropped, the economy would experience a very strong contraction. the government petroleum fund was established in 1990 with a view to safeguarding long - term considerations in the use of petroleum revenues. the idea behind the petroleum fund is that the cash flow from an increase in the oil price should accrue to the fund and be invested abroad and that the increase in the oil price should not affect the wider budget. thus, rather than affecting the domestic economy, the increase in the cash flow would be invested abroad through the petroleum fund. similarly, a fall in the oil price would not affect the domestic economy, but would result in lower accumulation of foreign assets. by building up the fund, the aim of ensuring that several generations will enjoy the benefits of our petroleum wealth is also taken into account. in march 2001, the fiscal guideline and new guidelines for monetary policy were introduced. the guideline for fiscal policy implies that the central government budget deficit shall be equivalent over time to the expected real return on the government petroleum fund. the new guidelines for economic policy received broad support in the storting. the guideline specifying that only the real return on the petroleum fund is to be used means that the capital in the fund is not depleted. the capital in the petroleum fund will increase as long as there is | growth in the investment market. the key is to fortify the foundations that will facilitate entry into the formal financial system. this will encourage active participation, and in turn serve as building blocks for a robust investment market. in recent years, the bsp has taken the necessary steps to ensure that it will be easier for filipinos, especially the unbanked and underserved, to be financially included by leveraging on technology. as you can see from the slide, we have three regulatory initiatives serving as pillars of the 1 / 4 bis central bankers'speeches inclusive digital finance ecosystem, namely : ( 1 ) democratization of account ownership ; expansion of networks of low - cost touchpoints ; and ( 3 ) efficient retail payment system. allow me to discuss each one. democratization of account ownership it is essential to ensure that anyone, regardless of economic or social standing, is capable of owning a transaction account. a transaction account serves as the gateway to financial services. with it, a user can store funds and electronic payments then eventually avail of more products such as credit, insurance, and investments. in fact, we issued the policy on the no - frill basic deposit account ( bda, circular 992 ). the bda framework eases requirements of account ownership by reducing opening costs, eliminating maintenance fees, and paring down documentary requirements to the bare minimum. likewise, our amendments on anti - money laundering rules aim for wider adoption of streamlined and risk - based kyc procedures. bsp - supervised financial institutions ( bsfis ) can offer a restricted account to micro - entrepreneurs and informal sector workers without a primary id card. amendments also allow reduced, deferred, and technology - based kyc ; thus expediting onboarding of the unbanked. expansion of networks of low - cost touchpoints complementing these efforts is the expansion of networks of low - cost touchpoints. our policy on cash agent operations ( circular 940 ) enable accredited third - party establishments, such as pharmacies and convenience stores, to perform basic banking operations. these function as familiar and highly accessible transaction channels, as well as bridge cash - based and digital transactions. there is clearly public appetite for account ownership β bda ownership as of first quarter 2020 increased to 4. 64 million from 428, 000 in 2018. during the pandemic, over 4 million new accounts were opened via digital platforms, along with new online sign - ups and app downloads for digital financial services ( dfs | 0 |
, heightened competitive pressures in the retail sector, and some special factors. total cpi inflation has been restrained by low core inflation and declining mortgage interest costs, with some offset from higher gasoline prices. β’ both total and core inflation are expected to remain subdued in coming quarters before gradually rising to 2 per cent by mid - 2015 as the economy returns to full bis central bankers β speeches capacity, the special well - anchored. factors subside, and inflation expectations remain β’ the inflation outlook in canada is subject to upside and downside risks, which are similar to those identified in january. β’ the three main upside risks relate to the possibility of stronger - than - expected growth in the u. s. and global economies, a sharper - than - expected rebound in canadian exports, and renewed momentum in canadian residential investment. β’ the three main downside risks relate to the european crisis, more protracted weakness in business investment and exports in canada, and the possibility that growth in canadian household spending could be weaker. β’ overall, the bank judges that the risks are roughly balanced over the projection horizon. β’ reflecting all of these factors, the bank today maintained the target for the overnight rate at 1 per cent. β’ with continued slack in the canadian economy, the muted outlook for inflation, and the constructive evolution of imbalances in the household sector, the considerable monetary policy stimulus currently in place will likely remain appropriate for a period of time, after which some modest withdrawal will likely be required, consistent with achieving the 2 per cent inflation target. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches | our economic performance in the decade ahead? this sounds like a tall order! so before i raise expectations too much, let me say that i do not have answers for all these questions. there are, however, several important steps we can take that would increase our chances of preserving the current economic expansion and help improve our performance over the long run. let me start at the beginning - with sound economic policies.... keep inflation low and stable i see low and stable inflation as an essential building block of a strong economic structure. is this just my bias as a central banker? perhaps, but there are good reasons for it. inflation carries with it costs that are more profound and widespread than is commonly recognized. inflation magnifies uncertainty about the future : when prices are rising, the rate of inflation is rarely stable or predictable. inflation distorts and confuses the information and incentives that consumers, entrepreneurs, savers and investors rely on to make their economic decisions. and it causes households and businesses to spend time and money to try to shield themselves, or to benefit, from the effects of rising prices by turning to speculative assets ( such as real estate ) and away from productive investments. we saw a lot of this during the high - inflation days of the 1970s and 1980s. we also saw our interest rates rise higher and higher to compensate savers for expected higher inflation and for the risks caused by uncertainty about future inflation. and we saw economic booms turn into busts. so the focus of central banks on price stability these days is neither accidental nor whimsical. it is deliberate. and it has to do with reducing the toll that inflation takes on the economy and minimizing economic ups and downs. put another way, if the goal of economic policies is a productive, well - functioning economy, capable of creating new jobs and delivering higher standards of living over time, then low and stable inflation is a crucial means to that end. that is why the bank of canada and the government of canada have agreed to an explicit target for inflation control, which currently aims to hold inflation inside a range of 1 to 3 %. there are already signs that this commitment is paying off in helping to reduce the fluctuations in our economy. in the nine years that the inflation targets have been in place, not only has the underlying rate of inflation been much lower than in the previous two decades, but the pace of economic activity has been less variable from one quarter to the next.... keep public | 0.5 |
graeme wheeler : the introduction of macro - prudential policy speech by mr graeme wheeler, governor of the reserve bank of new zealand, to otago university, dunedin, 20 august 2013. * * * new zealand β s economy is now one of the most rapidly growing among the advanced economies. growth is likely to remain strong and become more broadly based over the next two years, particularly as construction activity in christchurch, auckland and elsewhere gathers momentum and provides further stimulus to the manufacturing sector. our forecasts in the june 2013monetary policy statement, which are currently being reviewed for the next statement in september, suggested that in 12 months β time the economy could be growing at just over a 3 percent annual rate, with the unemployment rate declining towards 5 percent and annual cpi inflation back within the 1 to 3 percent target range. these summary indicators, however, disguise the nature and complexity of the adjustments taking place in new zealand. included among them are the impact of the monetary and liquidity policies of major central banks, domestic economic policy settings, the powerful long - term global structural changes affecting our economy, and the effects of natural events such as earthquakes and drought1. just as firms and households develop strategies to adjust to these forces, the reserve bank also needs to respond to them in meeting its goals of price stability and financial stability. i will turn to two of the largest forces influencing our economy β our over - valued exchange rate and the over - valued housing market. 1. the over - valued exchange rate our exchange rate is over - valued relative to what would be sustainable long - term in the absence of sizeable increases in our terms of trade and productivity. against many of the world β s major currencies, the new zealand dollar is positioned in the top decile relative to its historic experience. at these levels, the exchange rate is a considerable headwind for new zealand β s exporters and those that compete with imports, although it has benefited purchasers of imported goods and services and contributed significantly to the current low level of inflation. our real exchange rate is about 16 percent above its 15 year average2. it is important to look at both long - standing structural and more recent cyclical factors when considering the reasons for new zealand β s high real exchange rate β although at any time the relative strength of these factors can change. these were referred to in a recent address delivered to the institute of directors in auckland on 30 may 2013 : forces affecting the new zealand economy and policy challenges around the exchange | niklaus blattner : system stability and security of the systems summary of a speech by prof dr niklaus blattner, vice - chairman the governing board of the swiss national bank, at the luzerner tage fur informationssicherung ( lutis, conference on information security ), lucerne, 25 may 2004. the references for the speech can be found on the swiss national bank β s website. * * * the stability of the banking system and the security of the financial market infrastructure - including the stock exchanges and especially payment and securities settlement systems - have become an important concern of central banks all over the world in recent years. this has notably happened against the background of the numerous financial crises witnessed during the past decades. moreover, events such as 9 / 11 have heightened awareness for the security of the financial markets and other infrastructures. in switzerland, the growing importance of system stability has also been reflected in the new national bank act, which entered into force on 1 may 2004. within the framework of its principal mandate of pursuing a monetary policy in the interests of the country as a whole while at the same time ensuring price stability, the swiss national bank ( snb ) is legally obliged to make a contribution to system stability and to facilitate and secure the operation of cashless payment systems. in implementing its mandate, the snb takes preventive measures as well as measures aimed at overcoming crises. for instance, in a crisis the national bank plays an important role in providing liquidity. with the new act, the snb specifically bears the responsibility of overseeing the systemically important payment and securities settlement systems. the operators of such systems will in future have to meet certain minimum requirements, which will also include requirements with regard to information security. secure and reliable information and communications structures are an essential precondition for the smooth functioning of the financial system. in the context of its mandate, the snb limits itself to systems - relevant aspects in these areas. systems - irrelevant problems concerning individual banks or payment systems, by contrast, are explicitly not a part of its mandate. this is based on the conviction that the problems in the financial system must be solved by the market itself whenever possible. | 0 |
mario draghi : monetary policy in the euro area speech by mr mario draghi, president of the european central bank, at the ecb and its watchers xix conference, organised by the institute for monetary and financial stability, frankfurt am main, 14 march 2018. * * * over the past year, the ecb has progressively recalibrated its asset purchase programme. we have thereby tuned our monetary policy stance to the changing pitch of the recovery β what i have previously termed β accompanying the recovery β. 1 during this time, the economy has developed even more strongly than we expected and confidence in the euro area has increased. but it is not because real growth is strong that we can declare the job done. there is a very clear condition for us to bring net asset purchases to an end : we need to see a sustained adjustment in the path of inflation towards our aim, which is a headline inflation rate of below, but close to 2 % over the medium term. thereafter, our monetary policy will have to be calibrated so as to ensure that inflation continues along this path. while we are now more confident than in the past that inflation is on the right track, risks and uncertainties remain. for this reason, even once the outlook becomes less dependent on net asset purchases, monetary policy still needs to be patient, persistent and prudent to guarantee the return of inflation to our aim. developments in the real economy the economy has been growing consistently above current estimates of potential growth, by more than a percentage point last year. all euro area confidence indicators are close to their highest levels since the start of monetary union, even if the latest readings came in slightly below expectations. and there are signs of pent - up demand for both consumption and investment that still needs to be satisfied. for consumption, one useful indicator is the gap between essential purchases, such as food and rent, and non - essential ones, such as electrical goods and holidays. non - essential purchases β which make up around 50 % of household spending in the euro area β tend to be postponed during recessions and then to catch up as the business cycle advances. 2 such purchases are currently only 2 % above their pre - crisis level, compared with 9 % for essential ones. this implies that discretionary household spending still has scope to support the expansion. business investment is also gathering steam as uncertainty in the euro area recedes. it now stands 7 % above its pre - crisis level and surveys point to continued strong investment | components first at the national level and thereafter in cross - border tests. to a large extent, credit institutions have already taken part in these tests. in parallel, as announced a few weeks ago, on 29 june 1999 the ecb together with the national central banks successfully completed the bilateral testing of the escb applications that are necessary for the conduct of monetary policy operations. the testing exercise, together with the parallel remedial actions, has proved that these systems are year 2000 compliant. you may recall that on 15 july 1999 we decided to close target on 31 december 1999 in order to smooth the transition not only for the escb institutions, but also for the other financial institutions. this day can thus be kept free for end - of - year operations and for making full back - ups of the relevant systems. in the area of target, as well as in the area of monetary policy implementation and liquidity management, we are also reviewing our contingency procedures to minimise any potential year 2000 - related impact. it is worth noting that general contingency procedures had already been put in place shortly before the launch of the euro. in addition, we will use an efficient communication infrastructure between the ecb and the national central banks to monitor developments over the year 2000 transition period. the ecb will also share information with the joint year 2000 council and will thereby extend its monitoring capabilities beyond the eurosystem to a global perspective. as far as our monetary policy framework is concerned, we are convinced that it is flexible enough and has built - in mechanisms designed to deal with any level of liquidity demand that might arise in the euro markets. indeed, should any adaptation be advisable, this would be of limited importance and consistent with the overall set - up. we have analysed different scenarios and have come to the conclusion that the eurosystem will be in a position to cope with any potential increase in the demand for liquidity. the stock of banknotes held by national central banks is sufficient to allow for a considerable additional demand for banknotes in circulation and the amount of collateral available in the eurosystem will be sufficient to allow for the corresponding increase in refinancing needs of the banking system. we are therefore confident that the eurosystem will continue its operations smoothly on 3 january 2000 after the century date change. we also reviewed cross - border retail payment services which are essential for the smooth functioning of the single market. we believe that citizens and businesses can only benefit fully from the | 0.5 |
legislator to make this explicit by introducing a legally binding requirement for banks to have such paris - compatible transition plans as a capstone to the legislative and private sector initiatives already being put in place. these transition plans should highlight at any given point in time, from now until 2050, the bank β s alignment and potential divergences with the relevant policy objectives through which the eu implements the paris agreement. such a transition plan should be part of a bank β s strategysetting and be closely linked to its business model and business plan. it should contain concrete intermediate milestones from now until 2050 and the associated key and performance indicators so that the bank β s management and the competent authorities can at all times understand the risks arising from a possible misalignment with the transition path. if banks fail to meet these milestones, competent authorities β including prudential supervisors β will have to take appropriate measures to ensure that this failure does not result in financial risks. for ecb banking supervision, the main concern is the level of banks β risks exposures. have the exposures been sufficiently mitigated and are they prudent? have the banks sufficiently taken into account the economy β s adaptation to the climate crisis and the associated changes in consumer preferences? as c & e risks become increasingly widespread and more material, banks will, inevitably, be exposed to them. from a supervisory perspective, adequate mitigation therefore needs to be in place. we see that more and more banks are realising this and are taking up commitments to this end. this creates the space for us to act as supervisors. but in addition to banks β exposures to an economy increasingly marred by climate change and banks β own stated intentions, a legal obligation for banks to have a clear, detailed and prudent transition plan in place would increase the consistency of the regulatory and supervisory framework and contribute to maintaining a level playing field. having references for milestones and yearly targets for every economic sector will make our oversight of banks β transition strategies more effective and thus help the european banking sector achieve an orderly transition towards carbon neutrality, starting today. formulating transition plans with these characteristics must be one of the top guiding principles for banks as they step up their risk management to address the effects of the climate crisis. it was also in this context that the european union raised its 2030 climate ambition in what is called the fit for 55 package. in the same vein, the ecb β s focus on these transition plans would be less on | mario draghi : strengthening the foundations of the euro area and maintaining price stability speech by mr mario draghi, president of the european central bank, at the wirtschaftstag 2012 β kapitalismus in der krise? die zukunft der marktwirtschaft β der volksbanken raiffeisenbanken, organised by genossenschaftsverband e. v., frankfurt am main, 7 november 2012. * * * sehr geehrte damen und herren, es ist mir eine groΓe freude, heute hier bei ihnen zu sein. i am very pleased to have the opportunity to speak to you today. small - and medium - sized enterprises β and the banks that finance them β are the backbone of the german economy. your continued success is vitally important β not only for germany, but also as a key driver of growth and employment in the euro area as a whole. for this reason, you are a very important constituency for the european central bank ( ecb ). we pay close attention to your experiences and your views of the future. for example, through surveys that we conduct twice a year, we are able to gather valuable information on the access to finance of smaller companies in the euro area. the most recent survey was released only last friday and relates to the period from april to september 2012. it contains information from about 7, 000 small and medium - size firms throughout the euro area, of which around 1, 000 are from germany. the findings are encouraging for firms in germany. banks remain willing to provide them with loans. but the situation for smes in the euro area overall is more difficult. many are reporting a deteriorating financing situation. the availability of bank loans for smes across countries has become increasingly divergent. these developments reflect the fact that the economic and financial situation in the euro area remains challenging. i would like to use my address today to discuss that situation and to share with you the ecb β s views. i will focus on two themes in particular. my first theme will be the important steps being taken by governments to put the euro area on the path back to stability. individually, they are addressing their deep - rooted economic challenges. collectively, they are working to strengthen the foundations of the euro area. my second theme will be the measures taken by the ecb to maintain price stability and to remove unfounded fears about the euro area. these measures are essential | 0.5 |
49. 7 percent over the previous year. the chinese government has taken active measures to increase imports from african countries, and encouraged domestic enterprises to invest in africa. in addition, the chinese government has provided training to nearly 7, 000 african personnel in various areas. honoring it commitment ahead of schedule, china reduced the bilateral debts of 31 african countries totaling usd1. 3 billion. in the coming years, china will take further steps to enhance its support to african countries, including continuing to provide assistance within its capacity, expanding market access and strengthening cooperation in human resources and tourism. since it became a member of the african development bank in 1985, china has actively supported the work of the bank. it has provided funds totaling usd300 million in the replenishments of the resources of both the african development bank and the african development fund. up to now, china and african development bank have had nearly 20 years of cooperation. serving as a link, african development bank has played an important role in the cooperation and friendship between china and africa. we are pleased to note that, although adversely affected by the generally weak global economic performance, african economy grew by 3. 7 percent in 2003, a growth rate higher than the global average of 3. 2 percent. in many african countries, with significantly strengthened macroeconomic management capability, the macroeconomic environment has improved. in particular, fiscal deficits have been kept at relatively low levels, inflation has been effectively contained, and terms of trade have improved. nevertheless, the african economy is still confronted with severe challenges. the primary task is to achieve sustained and rapid economic growth, a prerequisite to meet the millennium goals by 2015. china β s experiences show that, in the course of social development, countries need to formulate their poverty reduction and economic development strategies in light of their own conditions. in particular, attention should be paid to properly handling the following issues. first, countries need to strike a proper balance between stability, development and reform. in other words, the speed of development and the pace of the reforms should be carefully weighted against people β s capability to absorb relevant shocks. the ultimate goal is to improve people β s living standard. second, importance should be attached to properly addressing the issues in the development of agriculture and the rural areas, particularly in those countries where agricultural population constitutes the overwhelming majority. third, the most effective way to reduce poverty is to help the poor people develop their local economy. african countries play a leading role in their own development | - defined underlying markets and are consistent with internationally - recognized standards are available. i want to thank the many institutions here today, and the many more that have played equally constructive roles, for their efforts in this process. this month marks the one - year anniversary of sofr and is close to the one - year anniversary of the other new risk - free rates. over that year, we have seen the establishment of new futures markets, cleared swap markets, and debt markets based on these new rates. sofr futures, which did not exist a year ago, have seen more than $ 7 trillion in cumulative notional volumes. this has been a crucial development for market liquidity and is helping to spur the growth of sofr swaps and other derivative markets. and sofr is being used in cash products, with $ 81 billion in sofr - linked debt issued over the past year. new markets do not arise overnight β in normal circumstances they can often take decades to develop. what has been accomplished over the past year is remarkable. at the same time, we have only a little over two and a half years until the point at which libor could end, and the transition needs to continue to accelerate. the private sector needs to take on this responsibility, and we expect you to do so. the federal reserve β s supervisory teams are including the transition away from libor in their monitoring discussions with large firms. the federal reserve will expect to see an appropriate level of preparedness at the banks it supervises. as the alternative rate reference committee ( arrc ) continues to make progress on industry - led 1 / 2 bis central bankers'speeches approaches to the transition, the transition paths away from libor will become clearer for banks of all sizes. while we expect you to take on this responsibility, we in the public sector must also recognize our need to help. the fsb has supported this transition globally, and, in the united states, the financial stability oversight council has supported the arrc β s work. it is important that we continue to do so, and i want to thank you all today for the thoughts you have shared with us on this transition and what is needed to make it succeed. 2 / 2 bis central bankers'speeches | 0 |
fall ), pp. 47 β 68. chen n., j. imbs, and a. scott ( 2007 ), β the dynamics of trade and competition, β paper presented at ecb conference β globalisation and the macroeconomy β, july. rogoff, k. ( 2006 ), β impact of globalization on monetary policy, β in federal reserve bank of kansas city, the new economic geography : effects and policy implications, pp. 265 - 305.. the cyclical impact of globalisation on euro area prices and wages here, i will discuss the impact of globalisation on manufacturing and commodity prices and ultimately consumer price inflation in the euro area, arguing that there is evidence of only a small overall net dampening effect in last 5 - 10 years, reflecting the balance of opposite relative price shocks. 13 import prices as i argued before, intra - euro area imports have been growing strongly, but euro area imports from low - cost countries such as china and the new eu member states ( henceforth nms ) have been growing even more rapidly. based on highly detailed data disaggregated both by sectors and countries over the period 1995 - 2004, chart 4a shows that the level of import prices ( proxied by absolute unit value indices ) from china and the nms are estimated to be approximately one - quarter the import price of total euro area import prices, and about one - fifth the price of imports from high - cost countries. 14 since the start of the 2000s, the share of low - cost countries in extra - euro area manufacturing imports has increased from just over one - third to almost a half ( chart 4b ). 15 rising imports from low - cost countries are putting downward pressure on extra - euro area manufacturing import prices. overall, it is estimated that the increase in import penetration from low - cost countries over this period may have dampened euro area import price inflation by an average of 2. 1 percentage points each year, an effect almost equally accounted for by china and the nms. 16 the overall impact could be decomposed into two components ( table 1 ) : the first is the β share effect β, which captures the downward impact on import prices of the rising import share of low - cost countries combined with the relatively lower price level of lowcost import suppliers ( 1. 6 percentage points per year ) ; and the second due to differentials in the growth of import prices ( the β price effect β ), which captures the | been a little bit overstated, because the security figures are quite low in the budgets, and it is not prohibitively expensive to strengthen security. of course, it is relevant from a fiscal bis central bankers β speeches point of view, but the amounts are not very high. by contrast, if we include the cost of national defence under security, then the figures are potentially higher. however, it should be emphasised that this is not the source of france β s fiscal woes : it also has a well - known structural problem. how can we counter the surge in nationalist and populist currents in europe from an economic perspective? by delivering the prosperity and economic security that was promised when we created the euro area. today, we have the same level of economic output as we had eight years ago. the crisis caused significant economic and social pain, notably in the countries that experienced a drop in their living standards. inequality has risen as a result of unemployment. this is unacceptable socially and has political consequences. there is no obvious willingness to integrate the euro area further. we are at a turning point. integration at the financial level is progressing, but the european project as a whole needs to be further deepened. we must resist the temptation to go into reverse ; we shouldn β t agree to stand still : we must forge ahead towards more integration. as a central banker, i am more of an observer than an actor in this area. monetary policy is only one part of this. but even the harshest critics acknowledge that the ecb is an institution that functions well and has the capacity to take decisions and to avoid catastrophes. the same effectiveness would be required at the political level, even if, admittedly, it is more difficult. and, as i said earlier, the crisis did not reveal the weaknesses of monetary union, but rather the weaknesses of an incomplete monetary union. bis central bankers β speeches | 0.5 |
uncertainties that are currently prevailing. switzerland, as a model of macroeconomic rectitude and with its safe banking system, is a good example of this. in the context of increasing risk aversion, there is a search safety rather than for yield. the interest returns from investing in switzerland are minimal or negative, yet the country continued to receive significant capital inflows causing the swiss franc to appreciate to uncomfortably strong levels. attempts to stem the tide in 2010 through intervention were eventually abandoned after losses of around chf 30 billion were incurred. at that stage the swiss franc exchange rate was around chf 1, 45 to the euro. more recently, when the franc reached close to chf 1 against the euro, the swiss national bank reentered the market and announced its intention to prevent the franc from appreciating beyond chf 1, 20. to date they have been successful, but it is unclear whether this will be sustainable in the face of an extreme bout of risk aversion in financial markets. while flexible exchange rates help with adjustment, these adjustments are not easy or without costs. south africa β s attractiveness to capital flows and consequent appreciation pressures was in part due to the search for yield in an environment of abnormally low interest rates in the advanced economies. but the exchange rate response to risk aversion is the opposite to that of the swiss franc. since late july, as the eurozone crisis intensified, the rand, along with numerous other emerging market currencies depreciated. since july 2011, the rand has depreciated by about 20 per cent against the us dollar, and has traded in a range of between r6, 65 and r8, 50. as is often the case, the rand tends to be one of the more volatile currencies. nevertheless these movements have been mirrored in a number of other currencies, for example the mexican peso and the brazilian real. these exchange rate developments have implications for monetary policy. as was noted in the mpc statement, the exchange rate is now seen to impart an upside risk to the inflation outlook. how inflation responds to exchange rate movements depends on a number of complex factors, including the speed, duration and the extent of the depreciation. small changes usually have a relatively small impact on inflation, as is the case where the depreciation is expected to be of limited duration. furthermore, the extent to which pricing was | a structural growth problem with monetary policy, irrespective of our monetary policy framework. keeping interest rates artificially low may have short - term benefits, but it will result in higher inflation in the long run. we cannot β buy β higher growth and employment through high inflation. in fact, high inflation inhibits growth. low inflation, by contrast, allows for lower interest rates and higher growth. whether we operate in an inflation - targeting framework or not, our objective will still be the protection of the value of the currency. inflation targeting is a framework within which to achieve this target. it makes our objective transparent and helps to anchor inflation expectations. we would not behave differently in the absence of an explicit target. inflation targeting has been successfully adopted by many other emerging markets as well, and more recently by a number of developing economies, including ghana and uganda. the issue of private shareholding in the sarb also needs addressing, particularly in this forum. private shareholding in central banks is an historical legacy, as originally central banks were in fact privately owned. this changed over time, particularly since the 1930s. apart from the sarb, there are nine other central banks that have some page - 8 - of 11 form of private shareholding. these include the us federal reserve system as well as the central banks of belgium, greece, italy, japan, and switzerland. the critical issue is the role that private shareholders play and the potential for conflicts of interest. in the sarb, private shareholding does not impart the same rights and benefits that shareholders in private companies have. the notion of a central bank as a public policy institution, with the main goal of promoting monetary and financial stability in the interests of the general public, is remote from the traditional concept of a commercial company with a profit motive. the sarb is an independent legal person, a public institution that has no profit motive and is not owned by its shareholders or anyone else. accordingly, shareholders in the sarb : have very limited rights ; have no role whatsoever in the setting of, or influencing, the key mandates of the sarb, i. e. monetary policy and financial stability policy ; have no sway over the day - to - day management of the sarb ; are restricted to a maximum of 10 000 shares per shareholder out of 2 million issued shares ( including those of their associates ) ; receive a fixed return on their shares of 10 cents per share from profits made ( this amounts to an overall divided payment by the sar | 0.5 |
growth have gone. as discussed earlier, there are now signs of slowing domestic demand, some of which may be in response to the tightenings that have already occurred. other things being equal, this should be helpful in containing inflationary pressures. other developments, principally the lower exchange rate, will act in an expansionary direction, and potentially put upward pressure on inflation. it will be a difficult time for reading and forecasting the domestic economy, and all this will take place against the backdrop of an international economy dominated by the uncertainty of the unfolding events in the united states. markets, as always, will be looking for guidance. the more thoughtful will appreciate the complexity of the situation, the less thoughtful will be expecting to be told the β formula β that we are using. unfortunately, there is no β formula β other than the guiding principle of the inflation - targeting regime. this means that we will be assessing the outlook for inflation as judged by the factors which form the basis of our forward - looking approach to monetary policy. growth in demand and output, and the extent to which that places pressure on the economy β s capacity, are clearly important. we judge this by examining all the available monthly and quarterly time series data on economic activity, including those which give an impression of intangible factors like β confidence β. we monitor trends in commodity prices, wholesale prices, and wages, as well as the cpi and the various measures of underlying inflation derived from it. the wages data may be particularly important in the year ahead, given the difficulties in interpreting price indexes. we have to allow for structural changes - such as the increased competitive pressure in goods markets. this has been an important ingredient in maintaining downward pressure on many prices, and should be helpful in negotiating the introduction of the gst. inflation expectations are important - since it is the anticipation of price rises that drives many decisions. we need also to consider the financial side of the economy - the expansion of credit, trends in asset markets and the extent of risks which may be building up there. we then complement this essentially domestic analysis with an appreciation of what is happening in the international environment in which australian producers and consumers make their decisions. we can not afford to ignore the world price level, world interest rates, or the variable which connects both of them to the australian economy - the exchange rate. changes in the price of imports in foreign currency terms can have a large impact on domestic inflation as the opec oil price rises of the 1970s showed. | direction of more liberal trade policies. change is already occurring in that the western policy establishment is no longer pushing emerging market economies to move quickly to full capital account convertibility. as recently as october last year the imf, at its annual meeting in hong kong, was hoping to get its members β endorsement of a change to its articles to make it easier for it to encourage countries to adopt full convertibility. this proposal was not put forward at the 1998 annual meeting in washington because it was clear that it would not get support. there also seems to be greater tolerance for countries which have a generally outward - looking policy framework, but which have put in place some impediment to very short - term capital movements. i refer here to chile β s deposit requirement on foreign borrowing and to singapore β s and taiwan β s restrictions on their banks lending domestic currency offshore. the more important task is to get on with the job of improving the international monetary system, with the specific aim of reducing the degree of instability. some of this is the job of the emerging market countries, and in the first instance involves increasing disclosure by these countries β governments, companies and banks. as well as making markets better informed, and better able to judge the risks they are taking, the aim here is to make some progress on reducing the previously opaque links between governments, banks and companies, or, in other words, to improve governance. in addition, there is a lot of work to be done to bring the supervision of financial institutions up to standard - a task which will take a lot of personnel, training and time. these changes are extremely important and require a lot of effort on the part of the emerging market countries. they also mean that a lot of time - honoured ways of doing things will have to be replaced. this is bound to meet opposition, and it will require political courage as well as economic expertise to achieve results. it will be made a lot easier if the developed economies are also seen to be examining whether there are aspects of their regulations that are contributing to the instability of the international system. the most obvious reform here is to do something about the extent to which current regulations allow excessive leverage in financial markets. the immediate focus should be the close inter - connections between hedge funds, investment banks and commercial banks. the hedge funds have become the privileged children of the international financial scene, being entitled to the benefits of free markets without any of the responsibilities. our reconstruction of the transactions that hedge funds undertook in australia in june | 0.5 |
help guard against a much more serious disinflationary correction of financial imbalances later on? there are no easy answers to these questions, but we have to continue to think hard about them. the role of the exchange rate that hard thinking must equally be applied to what is, in effect, another class of asset prices. i am referring to the price of a country β s currency β the exchange rate. this is particularly true at times when we see large movements in exchange rates. so it is an issue that faces us all, given the recent sharp depreciation of the u. s. dollar against the canadian dollar, the euro, the pound, the australian dollar, and others. what does this movement mean for the bank of canada? as with other asset prices, the bank does not have a target level for the currency. its price is determined by the markets, and the floating exchange rate is an important part of our monetary policy system, as i mentioned earlier. thus, in setting monetary policy in the context of this system, we do take into account these movements, and what they tell us about demand and inflation. insofar as movements in the exchange rate do affect the prices of imported goods, we must take them into account because they bear directly on what we do target ; that is, the inflation rate. however, we have found in recent years that the passthrough from exchange rates to prices has been less pronounced than in the past. we also try to ascertain the primary causes of the movements in exchange rates, and whether these movements are giving any information about factors that are affecting real economic performance. to the extent that movements in the canadian dollar reflect fundamental factors at work in the canadian economy, such as strong economic performance or higher prices and stronger demand for non - energy commodities, then we clearly need to take these into account. * * * * * let me close by reiterating that aiming for low, stable, and predictable inflation is a crucial component of the oecd policy framework, along with sound fiscal policy, structural reform, and trade liberalization. in my view, the debate about the role of asset prices in monetary policy is not an argument for moving away from inflation targeting. but i hope that my discussion of the potential role of asset prices in monetary policy underscores the idea that we should never stop looking for ways to improve our economic policy framework, so that we can continue to promote sustainable economic growth and prosperity. | jose de gregorio : imf challenges and policies for the global economy statement by mr jose de gregorio, governor of the central bank of chile, speaking on behalf of the southern cone countries of latin america international monetary and financial committee meeting, washington dc, 24 september 2011. * * * in the past few months, the near - term prospects for the global economy have worsened significantly and financial risks have increased. what some time ago was a modest, albeit unbalanced recovery, risks turning into a new economic downturn, particularly in major advanced economies ( aes ). this new scenario poses urgent challenges to the imf and to the membership in terms of decisive political and policy responses to solve fundamental weaknesses and mitigate the negative impact of this new downturn. against this backdrop, the fund β s surveillance capacities, and a well - functioning international monetary system ( ims ), are being and will again be put to the test only a couple of years after the 2008 β 2009 great recession and financial crisis. i. the immediate challenges ahead and the fund β s policy advice two forces are influencing each other and weighing down on economic prospects in major advanced economies. on the one hand, uncertainty and volatility have increased to their highest levels since october 2008, constraining credit and leading to more cautious behavior by households and financial institutions. on the other hand, fully credible medium - term fiscal consolidation in those economies with high debt burdens is still lacking, prompting even higher sovereign spreads and more calls for short - term fiscal retrenchment when private demand has yet to recover to its pre - crisis levels. the policy debate surrounding the appropriate fiscal and monetary policy mix, as well as the assessment of public debt sustainability, have become muddled. it would be paradoxical that only a few years after witnessing an example of successful global policy coordination and sound financial policies, which staved off another great depression, the lessons learned were to be ignored. the fund can provide guidance and leadership on a number of issues, and the membership should heed its advice. in particular, we would like to note that : the political will to achieve meaningful short - term fiscal adjustment is more present in those core aes where public sector financing conditions are benefiting the most from flight to quality, whereas in cases of more acute solvency concerns, and thus higher spreads, adjustment fatigue is dangerously settling in. the negative growth implications of further short - term fiscal retrenchment have not been given proper regard | 0 |
3. 8 percent and 3. 9 percent respectively ( 2. 8 percent in 2013 ) and inflation rose from 2. 9 percent in 2014 to 4. 8 percent in 2015. to face the external shock and the resulting drop in fiscal oil revenue, the government initiated a programme of spending rationalisation in 2015, notably through the prioritisation of investment projects. in 2016 fiscal consolidation further included a relatively low reduction in current expenditure ( - 3. 3 percent ) and a more substantial reduction in capital spending ( - 16 percent ), totalling a 9 percent reduction in public spending. furthermore, the 2016 budget includes an upward adjustment of the tax on energy products ( petroleum, diesel, electricity and gas ). this is aiming at reducing public finances β vulnerability to oil price decline and lies within the strategic objective of ensuring medium term fiscal sustainability. moving ahead, the gradual fiscal adjustment should also rely on increasing non - hydrocarbon revenue. 2. impact on financial stability like other central banks, the bank of algeria faced the need to strengthen the surveillance of systemic risk, particularly in relation to the volatility of hydrocarbon prices in international markets and the interconnectedness of financial institutions within the banking sector. to address these concerns, banking legislation, as amended in 2010, has extended the central bank β s mandate to include the objective of financial stability. with this amendment, the financial stability mandate becomes of equal importance to the price stability mandate. in practice, it is worth noting that the contribution of monetary policy to monetary and financial stability in algeria is crucial in view of the dominance of the banking sector in the financial system and its potentially important role in the development of financial intermediation. this contribution is of particular importance in the context of persistent excess liquidity in the money market since 2002. to strengthen the operational framework of financial stability, and following the introduction, in 2010, of new accounting rules of international standard, risk assessment rules with regard to new financial products and the introduction, in 2011, of new regulations regarding liquidity risk identification, measurement, management and control, the council of money and credit ( the monetary authority ) promulgated in 2014 a new prudential framework to ensure conformity of the prudential rules to the new basle norms and standards. within this new regulatory framework, the minimum tier one capital adequacy ratio is set at 9. 5 percent, exceeding the minimum ratio recommended by the basle committee, and the adequacy ratio, based on regulatory equity | is likely to increase to a level of over 50 percent in the fourth quarter of 2014. third, on the β quality β front, jgbs with all maturities, including 40 - year bonds, were made eligible for purchase. as a result, the average remaining maturity of the bank β s jgb purchases will more than double to about seven years. by working on interest rates across the yield curve, it is expected that the effects of the qqe on financial conditions and economic activity will be strengthened. in addition, in order to affect premiums of risk assets, purchases of exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ) were increased. assessment of the qqe to date the qqe has already started to exert effects. let me point to three favorable turns, as shown in chart 4. bis central bankers β speeches first, there has been a favorable turn in financial markets and corporate finance. as shown in chart 5, stock prices are rising. long - term interest rates, while once faced with increased volatility, have been almost flat recently despite a rise in interest rates overseas. also, in terms of corporate finance, bank lending has gradually been increasing its growth rate, and lending rates have been at historical low levels. second, there has been a favorable turn in the public β s expectations. consumer sentiment and business sentiment have improved markedly. many indicators suggest that inflation expectations have been picking up in the market, as well as among firms and households. a recent development in one such indicator is shown in chart 6. this development, together with low and stable nominal interest rates, has been effective in lowering real interest rates. the third favorable turn is in economic activity and prices, as shown in chart 7. private consumption remains resilient on the back of improved household sentiment and the wealth effect from the stock market rally. business fixed investment is showing signs of picking up, in line with improved business sentiment and corporate profits. the year - on - year rate of change in the cpi has turned positive, reflecting both improvement in the economy and the yen β s depreciation. ii. unconventional monetary policy, real interest rates, and natural rate of interest in this way, the bank β s qqe has already started to gradually exert effects. now, as in chart 8, let me next look at the transmission mechanism of the policy effects from the two perspectives of real interest rates and the natural rate of | 0 |
prioritise delivering in line with, and making a strong contribution to, the evolution of the european supervisory framework. this remains a cornerstone of our approach to both business as usual supervision and changes driven by brexit. one area where greater regulatory convergence is needed is in relation to recovery and resolution. the central bank does not operate a zero failure regime. all firms can face difficulties. some may recover, but others may fail. where failure does occur, it should happen in an orderly manner without significant financial stability or consumer protection issues. an appropriate framework is necessary to ensure failure is managed in a manner that minimises the impacts on financial stability, policyholders and beneficiaries in both home and host member states. in banking, the recovery and resolution framework, while not perfected, is further advanced than in the insurance sector and lessons can be learned from this framework. in 2017, eiopa published an opinion calling for a minimum degree of harmonisation in the field of recovery and resolution for insurers6. in august, the esrb published its view that an effective recovery and resolution framework would reduce risks to financial stability from a failure in the insurance sector7. in 2018, eiopa will start to assess the need of a harmonised approach to national insurance guarantee schemes. i am supportive of these efforts in this area. 2 ) supervisory and regulatory priorities i will turn now to our supervisory priorities for insurance firms. the main, overarching objectives of prudential supervision of insurance firms is the safeguarding of financial stability and the protection of policyholders and beneficiaries. in the central bank, we are focussed on delivering an effective, intrusive, analytical and outcomes - focused approach to 2 / 7 bis central bankers'speeches supervision. this is risk - based and anchored by our prism8 supervisory methodology. these objectives, which are directly relevant to any consideration of the opportunities and risks relating to insurtech & innovation, require that insurance firms : have sufficient financial resources including under a plausible but severe stress ; have sustainable, capitally accretive business models, over the long - term ; are well governed, have an appropriate culture, with effective risk management and control arrangements in place, which are commensurate with their nature, scale and complexity ; can recover if they get into difficulty, and if they cannot, are resolvable in an orderly manner without significant externalities or taxpayer costs ; and fully meet reporting and disclosure requirements. observations so | john hurley : managing financial stability in ireland comments by mr john hurley, governor of the central bank and financial services authority of ireland, at the central bank of luxembourg on the occasion of the publication of its financial stability review, luxembourg, 28 april 2008. * * * it is a great pleasure to be here today at the launch of the financial stability review and on the occasion of the 10th anniversary this year of the creation of the banque centrale du luxembourg. i would like to thank governor mersch for the invitation to speak about arrangements for managing financial stability in ireland. as you may be aware, for the last five years, the central bank and an autonomous financial regulator have operated together in ireland within the one organisation β the central bank and financial services authority of ireland. there were various reasons behind this choice of structure. a key consideration was the sharing of responsibility for financial stability, realising the synergies that existed between the central banking and financial regulation functions. other advantages included optimising the use of technical skills, benefiting from economies of scale in the provision of shared services and promoting communication between both areas. a key consideration was the sharing of responsibility between the central bank and the financial regulator for financial stability. the new organisation was notable for two reasons. first, it established a single financial services regulator. the second notable aspect of the new organisation was the location of the financial regulator within the broader central bank and financial services authority of ireland. this reflected the fact that, prior to the re - organisation, the central bank had been the main locus of expertise in these supervision activities in ireland. the end result is an organisation that consists of two constituent parts, each with their own responsibilities. both sides are bound together, however, by integrated membership of the central banks β board of directors and the financial regulator β s corresponding regulatory authority. although both parties have their own responsibilities, there is a shared high - level objective of contributing to financial stability. the central bank has an explicit legal mandate, in both domestic legislation and under the maastricht treaty, to contribute to financial stability both in ireland and across the euro area. the financial regulator contributes to the work of the central bank in discharging its responsibility in relation to the maintenance of overall financial stability. it makes this contribution in two broad ways. first, it maintains confidence in the solvency and safety of individual institutions. second, it protects and informs consumers. although the central bank β s and financial regulator β s roles in contributing to financial | 0.5 |
will spare no effort and will make recourse to its entire expertise in order to speed up this process. in this context, what i would like to say is that the national bank of romania will strengthen its historical ties with the romanian academy with a view to drawing up extensive works, meant to be a β point of reference β inspiring strategies or programmes and entwining the visions and ideals of coexisting generations in contemporary romania. actually, one of the conclusions revealed by the troubled 130 year history of the national bank of romania, as well as by the universal history is that every time public debate descends from the field of free confrontation, among scientific, well - grounded hypotheses, into an arena of noisy or authoritarian arguments, irrespective of the immediate outcome, it will eventually take its toll on all walks of life. the current global economic and financial crisis has given us a warning once again that there is no valid substitute for consistent economic policies. everywhere in the world, the correction of economic policy errors is painful and most of the time hard to understand by the general public and inherently tardy. the sustainable development of romania hinges on the consistency of economic policies and the euro adoption strategy in the following years may represent a catalyst for achieving this coherence. ladies and gentlemen, in 1881, the year when the national bank of romania actually started its activity, george enescu, a music genius, was born. he was an outstanding composer and violinist boasting a brilliant international career. this evening, we will enjoy his wonderful music. the national bank of romania invites you to an anniversary concert performed by exceptional artists of the β george enescu β philharmonic orchestra, conducted by the renowned conductor horia andreescu. we will also be delighted by the talent and virtuosity of a young pianist, andrei licaret. all these artists will give us a great joy in this splendid hall of the romanian athenaeum with a programme comprising well - known musical compositions from the national and international repertoire, selected from the β eastern flank β of the european union : enescu, smetana, chopin, bela bartok, grigoras dinicu. i thank you once again and i invite to take the floor mr jean claude trichet, the president of the european central bank, a close friend of the national bank of romania. | and overall economic activity as the year progresses. macro - financial environment 2 / 6 bis - central bankers'speeches there is no doubt that the macro - financial environment remains very challenging both domestically and globally. over the past twelve months many asset prices have fallen sharply, yields have risen, and market volatility has increased substantially. the fragility of certain markets and its participants β particularly in the non - bank financial sector β was made all too apparent by the gilt market disruption in the uk in september. the inflationary challenges are being experienced most acutely as shocks to people's real incomes and an erosion of their living standards. the profit margins of businesses, particularly the smaller businesses with less scope to pass on cost increases to customers, will suffer due to the size of their energy bills and other costs as well as falling revenues as customers reduce discretionary spending. taken together, these pressures have the potential to lead to an increase in repayment challenges for some borrowers. 3 overall, risks to the irish financial system have risen. however, there are a number of reasons to believe there is resilience in the system to meet these risks. while some mortgage customers are experiencing directly the effects of our interest rate decisions, there is substantial resilience across the mortgage market. lower levels of indebtedness, a gradual shift towards fixed rate borrowing, pandemic savings and substantial housing equity, are all ensuring that the mortgage market as a whole has significant capacity to absorb shocks. even in the sme sector, where cost increases will severely tighten profit margins for many, indebtedness has fallen continually for a decade, reducing the risk of macroeconomic spillovers between the financial sector and the real economy. regulatory priorities we continue to engage with the banking sector, other lenders, insurers and investment firms to ensure the financial system plays its proper role in supporting the economy and users of financial services. banks and other lenders in particular have a key role to play by : providing the lending and deposit services required to support a well - functioning economy ; supporting customers who may be experiencing difficulties in light of the changed macro - economic environment, including in particular customers in or facing arrears on existing loans ; and developing and implementing strategies which preserve long term sustainability and firms'capacity to continue to support the economy through this period and into the future. the financial sector continues to change rapidly, in particular through digitalisation and technological innovation. the entrance of new types of participants in the | 0 |
benefits from a prospering economy, because the demand for financial services from companies and private households increases, not least in the area of management and investment of assets. switzerland is a prime example of the positive interdependency between financial developments, on the one hand, and overall economic prosperity, on the other. in terms of the usual indicators of the financial development of a country β such as the size of the financial sector or access to financial services β switzerland has one of the most advanced cf. levine 2005. bis central bankers β speeches financial systems in the world. 2 at the same time, the economic importance of the banking industry in this country is above average. it generates an annual gross value added of some 6 % of gdp and currently employs about 150, 000 people. in addition, at least in the years before the financial crisis, the industry made a significant contribution to overall economic growth. 3 when banks are familiar with the local conditions and are also able to integrate knowledge concerning swiss macroeconomic conditions into their business decisions, this enables them to provide particularly efficient services to the swiss economy. it is therefore advantageous for our country to have locally established banks which make their decisions here in switzerland. it is not only with services which benefit companies and households located in switzerland that the swiss banking industry creates value added. as we all know, the industry is also very active in the international arena β on the one hand, via exports, 4 that is, through the cross - border provision of financial services from switzerland, and on the other, through its actual presence abroad. in this respect, the most important source of income is the crossborder wealth management business for private customers. with a share of an estimated 26 % of the world market, the swiss banking centre is the leader in this area. 5 in addition, the two big banks, ubs and cs, are among the most important institutions worldwide in some areas of investment banking, such as derivatives and foreign exchange trading. how did switzerland, a comparatively small country, end up with a banking centre with such a wide international reach? a number of different elements may serve to explain this. first, i would like to mention the conditions which make the banking centre attractive for international investors. they include political, legal and economic stability, reliable banks, and a convertible currency whose value remains stable. in addition, a role in the steady inflow of foreign funds was played by the banking secrecy provisions established in 1934 and the enhanced protection of privacy associated | with these provisions. these advantages appear particularly striking from a historical point of view, since, after the two world wars, neutral switzerland presented a great contrast to the surrounding countries, which were suffering from currency turmoil, inflation and an increased risk of expropriation. 6 second, switzerland β s prosperity and the relatively narrow local capital market β in terms of swiss economic power β mean that swiss investors seek investment opportunities beyond the national borders. at the same time, our economy also has a strong international focus. to a large extent, swiss companies, households and institutional investors would be in a position to call upon the services of international swiss banks for their asset investments and business operations abroad. third, the international position of the banking centre is closely related to the growth and expansion of the international business of the big banks, which has forged ahead since the 1990s. 7 this expansion was motivated, not least, by the desire to move into new, potentially profitable investment banking areas. thus, the expansion of the balance sheets of the two cf. cihak et al. 2012. cf. bakbasel 2013. these comments here are limited to banks. apart from banks, the financial industry also includes insurance service providers which, in switzerland, generate 4 β 5 % of additional value added. in 2012, income from exports of bank services contributed some 20 % to switzerland β s current account surplus. cf. swiss national bank 2013b. cf. swiss bankers association 2013. in terms of the level of total managed assets, both onshore and offshore, ubs is also currently the leading bank worldwide. cf. straumann 2006. cf., for example, tille 2010. bis central bankers β speeches big banks in the 15 years before the financial crisis is largely attributable to investment banking. 8 manifold challenges for the swiss banking centre since the onset of the financial crisis, however, the international operations of the swiss banks have come under increased pressure on a number of fronts. first, the financial crisis has shown that a large, highly developed and internationally integrated banking industry means risks as well as growth opportunities. in particular, the crisis clearly demonstrated that some individual banks are so important for the economy that they have to be rescued by the state in the event of a crisis. this is the β too big to fail β ( tbtf ) issue. because of the de facto state guarantee associated with the tbtf issue, the borrowing costs of these kinds of bank are implicitly subsidised | 1 |
- term time horizon, and, obviously, according to the type of spending concerned. however, we are struck by the disparity and fragility of estimates of the same multiplier, which can double in size, depending on the method used. this means there is a risk that everyone uses these concepts in a way that serves their political preferences : certain people advocate tax cuts while others want to increase spending. in truth, few people possess the wisdom to put these multipliers into perspective and analyse them in greater detail, instead of betting time and time again on β supposedly self - financing β fiscal stimulus measures. page 11 of 19 how to define β future expenditure β more broadly, it is still difficult today to formally calculate productive or " future " expenditure, i. e. spending that would have the most favourable long - term effects on economic growth and output capacity or on the climate transition. a consensus appears to be emerging in economic research literature whereby spending on public investment has a more positive effect on growth than operating expenditure. for example, according to our internal models, mediumand short - term multipliers are higher for public investment than for public sector wages. but would this also be true in respect of expenditure on any roundabout or multimedia centre? there is fierce debate around what exactly investment or productive capital actually includes : β basic β infrastructure like roads, bridges and airports generally form the common denominator, to which building construction is sometimes added. β social β infrastructure such as education or public health page 12 of 19 facilities constitute another potential category of productive expenditure : investment in education and skills boosts labour productivity and the economy's innovation capacity. more recently, β digital β infrastructure has sometimes been included in productive expenditure, albeit with less clearly defined boundaries, and before us the enormous challenge of artificial intelligence. this list of questions without answers may appear frustrating. but it is also, primarily, a call for more research, and paris should be a centre of excellence here thanks to institutions that are pioneers in this area ( france strategie, oecd in the international arena, etc. ). as with other areas of economic policy, research in this field can help drive the action which i want to speak about next. iii. and yet, it is still possible to transform public services the key issue with operating expenditure neither our strategic review of the past few decades nor economic research offers much hope for progress. this leaves one way forward, namely practitioners and their commitment on the ground | since clarified and qualified the analysis in " economie du bien commun, iv where he called for the creation of " real public service bosses ", and for them to be afforded " considerable managerial freedom accompanied by strict ex - post evaluation ". npm gave rise to performance incentives based on indicators and assessments. the outcome of these measures would appear to be useful without being decisive, and the illusion of npm has gradually dissipated. in particular, measuring the performance and quality of certain public services sometimes runs into intrinsic measurement difficulties. v more than twenty years on from this research, twelve years after philippe aghion and alexandra roulet called for a " rethinking of central government β, vi it is page 9 of 19 regrettable that macroeconomic analysis is still of so little assistance to public management. research literature focuses almost exclusively on assessing the success of fiscal adjustment strategies, omitting the fundamental aspects of the quality and effectiveness of public spending. certain questions have barely even been tackled. i would like to mention three, beginning with measurement of the output of public services. how to measure the output of public services? the inherent lack of a selling price for non - market public service output has never really been overcome, and national accounting uses a simplistic arrangement to get around this, consisting of measuring it as the sum of production costs vii - in other words, mainly public employee remuneration. this basically means that the only way to increase public service output today is to increase costs and the number of public employees. but how can we gauge the effectiveness and quality of public spending and public services without having any visibility over their'real'output? the concept of the " efficiency frontier ", part of a nascent research field that is little used in france, may provide a partial answer to this question. viii it involves comparing the relationship between each type of public spending and one or more international performance indicators ( for example, the pisa scores for education ) between different countries. however, this remains a little - known, insufficiently operational concept with recurring methodological difficulties for comparing public spending between different countries. page 10 of 19 how to interpret fiscal multipliers? another area of economic research providing a greater body of work is the calculation of fiscal multipliers. the effect of a fiscal measure on the economy varies depending on the channel used ( public expenditure or tax ), how it is financed ( whether debt is used or not ), whether there is a short - or medium | 1 |
banks β commercial interests. abif will complement the broader economic integration of asean. β’ as asean economies develop further, their corporates will expand their operations into the region. β’ the banks who have been servicing these corporates in their home markets are well placed to follow their customers and support them as they regionalise. bis central bankers β speeches β’ abif will provide them an enhanced vehicle to do so. more importantly, abif will be a vehicle to help grow a group of strong pan - asean regional banks with the scale and the capability to compete alongside the global banks. as asean becomes an economic powerhouse, so must our asean banks. looking ahead, a key priority for banking integration will be to help banking groups with operations in several asean countries to share and transmit information across borders. β’ for banks with pan - asean operations, the segregation of data and systems in multiple countries due to data on - shoring requirements may hinder effective group risk management and raise data security concerns. β’ we should harness technology to support the pooling of data in regional and global data centres. β’ data aggregation will help enhance consolidated risk management and ensure better protection of customer data. insurance integration in insurance, asean member states have agreed on an asean insurance integration framework. β’ asean members have agreed in - principle to liberalise the cross - border supply of marine, aviation and goods in international transit ( mat ) insurance in the seventh package of financial sector commitments of the afas. β’ when this agreement is signed and ratified in 2016, insurance companies will be able to offer mat insurance across asean β s borders. β’ this move will help to lower the cost of insuring cross - border business risks and help to spur intra - asean trade. the next key steps will be to liberalise the catastrophe insurance and reinsurance markets. β’ asean β s insurance penetration rate is barely half the global average, even as the incidence and severity of natural catastrophes in asean continue to increase. β’ this large and widening gap in insurance coverage leaves asean countries vulnerable to economic loss and production disruptions from natural catastrophes. β’ as risk exposures grow in scale, size and complexity, they will exceed the capacity of individual states to underwrite the risks confronting their communities and economies. liberalising asean β s insurance markets will reduce the cost of insurance protection to governments, to businesses as well as to consumers. β’ the insurance business is premised on the law of large numbers and risk pooling β the wider the distribution of risks, the more cost | integration is a win - win proposition. by exploiting economies of scale and strategic complementarities, every country in asean stands to gain. economic and financial integration in asean owes at least as much, if not more, to the natural functioning of market forces as it does to official initiatives like free trade agreements. integration in asean, more so than it has been in the european context, is a bottom - up, organic process driven by : β’ trade and investment flows arising from the production networks of global mncs spanning the asean region ; and β’ cross - border capital flows arising from the operations of global and regional banks. bis central bankers β speeches the success of asean financial integration therefore requires active industry collaboration and participation. the industry has an important role to play in working with regulators and governments to identify and clear roadblocks to growing their business across borders. the asean bankers association, representing the banking associations across all asean members, is well placed to play this role. β’ coming from the industry, you know what makes commercial sense, where the specific obstacles are, and you know how to persuade your governments and regulators to press on with economic and financial integration. β’ i wish you fruitful discussions and look forward to your ideas. thank you. bis central bankers β speeches | 1 |
with financial turmoil. let me just remind the opposition of the us congress, and the us people in general, to support with 20 billion dollars the rescue of mexico in 1995. many of the arguments used today against the support for greece are similar to those used against mexico. with the benefit of hindsight the decision taken in 1995 by the us administration is now widely praised, as will be the case in a few years β i believe β for the european decision to support greece. let me also recall the lack of support of the american people, and of congress itself, for providing the us administration with the funds necessary to sustain the us financial system through the tarp programme in september 2008. the us president had to go public, stating that β the instability can ripple throughout and affect the working people and the average family and we won β t let that happen β before congress finally voted the package. let me move to the economic reasons underlying the choices which have been made over the past few months, which are equally important. they are not always clearly perceived, especially across the atlantic. let me list a few. first, past experience has shown clearly that within an economically integrated area like the euro area a currency devaluation does not allow a growth stimulus that would support faster fiscal consolidation. the countries which had to make strong corrective fiscal manoeuvres before the euro β as was the case in italy after leaving the erm in september 1992 β have suffered large interest rate spreads for a protracted period, because of renewed uncertainty about the monetary regime after the devaluation, as well as about the fiscal system. with every devaluation, inflationary risks rapidly appeared, which required more monetary tightening than would be the case within the euro. several countries, like belgium, ireland and the netherlands implemented fiscal consolidation while maintaining a stable exchange rate and a high primary budget surplus ( i. e. net of debt interest ). another forgotten aspect is that the possibility of revaluing the currency has not allowed more virtuous countries to insulate themselves from the exchange rate instability affecting neighbouring countries, particularly in those which devalued. after the exchange rate realignments, germany recorded in 1993 a recession comparable in size to that of france and italy. another aspect that is also often ignored is that the return to a national currency is not an event comparable with a change in the exchange rate parity. it would involve a renegotiation of all contracts, especially financial ones, within individual | for societies like the us, where the funding of welfare rests largely on the private sector, rather than the public. if the economic growth potential is reduced, investors must also adjust their expectations of being able to finance their health care, education plans and their pensions. i would now like to move on to the second area of intervention β aimed at restoring sustainable growth, to which the us and european authorities are committed. it concerns financial regulation. there β s close cooperation on this agenda item and it β s taking place in various working groups, in particular in the basel committee and the financial stability board, which includes representatives of 20 major industrial countries. coordination is undoubtedly more difficult in this field, not only because of the structural differences between the financial markets but also because these markets are partly in competition with each other, and operators are seeking to influence the respective authorities to shift regulatory changes in the desired direction. i do not want to list here the areas of convergence and divergence between the two sides of the atlantic in negotiations that are not yet finished. i would rather express β in my personal capacity β a number of concerns on issues which have not yet been clarified and are still marked by much uncertainty. the first concerns the scope of application of financial regulation, which should be strengthened to give greater credibility and stability to the system. the basel committee is focusing mainly on the banking system in order to strengthen the capital and liquidity requirements, and particularly to reduce the pro - cyclicality of the rules. there is a commitment to establish new rules no later than the g20 summit this autumn, for gradual implementation by the end of 2012. however, while in europe it is already known that the new rules, once agreed, will be included in a community directive with immediate application in all member states, it is unclear what the degree of implementation in other countries, particularly the us, will be. in the light of what happened with basel ii, the risk of only partial application is a concern. another source of concern is the β shadow β financial system not previously subject to regulation. the g20 summit a year ago in london indicated the general commitment not to leave significant parts of the financial sector, such as investment banks, hedge funds, private equity funds and so forth, outside the regulatory perimeter. work on this part of the financial system is not progressing as hoped, however. there is a risk, again, of focusing only on banking, and overlooking an important part of the financial system, whose influence has come to dominate | 1 |
is a difficult undertaking. we would all benefit from a resolution of the problems in the euro area. the actions by the ecb have brought a period of calm to financial markets, and so bought more time. but, as the president of the european central bank, mario draghi, has said on many occasions, only politicians can produce lasting solutions to the problems facing the euro area, whether by restoring competitiveness to the periphery or creating a framework for a transfer union. the euro area illustrates a major problem for the world economy as a whole β the need to rebalance domestic demand away from countries with trade deficits to those with trade surpluses. without that, an increasing number of countries are coming to the view that only a lower real exchange rate will provide the stimulus to demand that their economies require. several have taken action to achieve that end. that is a recipe for competitive depreciations, what some have called β currency wars β. yet the existing configuration of exchange rates is unlikely to deliver stability. for almost two decades the world has struggled with, but failed to resolve, this problem. so it is hard to be optimistic about how easy it will be to manage the resulting tensions. the fall in our own exchange rate, of some 25 % between late 2007 and the beginning of 2009, has reduced the gap between our exports and imports in real terms from around 3Β½ % of gdp to around 1Β½ %. but the persistence of the current account deficit is evidence that an adjustment of sterling of that order was certainly necessary for a full rebalancing of our economy. with that diagnosis and prescription, what then is the prognosis : what does 2013 hold in store for the uk economy? on friday we shall see the first official estimate for growth in the fourth quarter of last year. as we saw throughout last year, quarter to quarter changes in growth rates tell us little about the underlying strength of the economy, affected as they are by one - off factors such as the diamond jubilee and the olympics. the continuation of the β zig - zag β pattern of growth rates last year means that, whether negative or positive, growth in q4 will almost certainly turn out to have been considerably weaker than in q3. inflation too has disappointed recently. it is set to remain above target for much of this year β in part because administered and regulated prices, such as those for electricity and gas, rail fares and university tuition fees, will put unusually strong upward pressure on inflation. | 2017 ) β final report : recommendations on outsourcing to cloud service providers β, december, available at : https : / / www. eba. europa. eu / sites / default / documents / files / documents / 10180 / 2170121 / 5fa5cdde - 3219 - 4e95 - 946d0c0d05494362 / final % 20draft % 20recommendations % 20on % 20cloud % 20outsourcing % 20 % 28eba - rec - 201703 % 29. pdf? retry = 1 let me stop here. i have no doubt that the quality of the discussions we have today will allow us to deepen our understanding of these challenges in order to draw useful conclusions in terms of economic policy. and allow me to express once again my gratitude to the co - organisers of this event for making this conference possible, and to wish all the participants a very fruitful meeting and a pleasant stay in istanbul. | 0 |
than a term rate, and doesn't incorporate a significant bank credit risk premium. we think that bbsw can continue to exist even if credit - based benchmarks, such as libor, are discontinued in other jurisdictions. for many financial products, it will still make sense to reference a credit - based benchmark that measures banks'short - term wholesale funding costs. this is particularly the case for products issued by banks, such as frns and corporate loans. the counterparties to these products would still need derivatives that reference bbsw so that they can hedge their interest rate exposures. in the event that libor was to be discontinued, with contracts transitioning to risk - free rates, there may be some corresponding migration away from bbsw towards the cash rate. this will depend on how international markets for products 4 / 5 bis central bankers'speeches such as derivatives and syndicated loans end up adapting in a post - libor world. the infrastructure is already in place for bbsw and the cash rate to coexist as the key interest rate benchmarks for the australian dollar. the ois market is linked to the cash rate and has been operating for almost 20 years. it already has good liquidity at the short end, and the infrastructure is there for longer term ois. a functioning derivatives market for trading the basis between the benchmarks is important for bbsw and the cash rate to smoothly coexist. such a basis swap market is also in place, allowing market participants to exchange the cash flows under these benchmarks. conclusion there are three main points i would like to leave you with concerning interest rate benchmarks. first, the longevity of libor cannot be assumed. you should be considering today what that might mean for any contracts you have that reference libor. please do not hope that if you wait long enough, all the problems will go away. users of libor should pay close attention to the work being undertaken by isda to establish more robust fall - back provisions on contracts. second, in australia, in contrast to other markets, the changes to enhance the longevity of bbsw are well advanced, and it has been possible to anchor the benchmark to a greater number of transactions. third, users should consider whether risk - free benchmarks are more appropriate for financial contracts than credit - based benchmarks. there is still a place for robust credit - based benchmarks in the financial infrastructure, and we expect that bbsw and the cash rate will be able to coexi | ##st as the key benchmarks for the australian dollar. 1 i have talked about this issue previously : debelle g ( 2017 ). β interest rate benchmarks β, speech at finsia signature event : the regulators, sydney, 8 september ; debelle g ( 2016 ), β interest rate benchmarks β, speech at kanganews debt capital markets summit 2016, sydney 22 february ; debelle g ( 2015 ). β benchmarks β, speech at bloomberg summit, sydney, 18 november. 2 the instruments traded in the bank bill market are typically negotiable certificates of deposit ( ncds ). 3 see < www. aph. gov. au / parliamentary _ business / bills _ legislation / bills _ search _ results / result? bid = r5962 >. 4 for more details about the methodology for the cash rate, see < www. rba. gov. au / mktoperations / resources / cash - rate - methodology / >. the rba has also conducted a self - assessment against the iosco benchmark principles : < www. rba. gov. au / mkt - operations / resources / cash - ratemethodology / compliance. html >. 5 / 5 bis central bankers'speeches | 1 |
ida wolden bache : policy rate kept on hold introductory statement by ms ida wolden bache, governor of norges bank ( central bank of norway ), at the press conference following norway's announcement of the policy rate, oslo, 20 june 2024. * * * presentation accompanying the speech chart : policy rate kept unchanged at 4. 5 percent the monetary policy and financial stability committee decided to keep the policy rate unchanged at 4. 5 percent. norges bank is tasked with keeping inflation low and stable. the operational target is inflation of close to 2 percent over time. we are also mandated to help keep employment as high as possible and to promote economic stability. we have raised the policy rate significantly in recent years in order to tackle high inflation. the economy has cooled and inflation has slowed. but we still have a way to go. inflation is higher than our target, and the rapid rise in business costs will likely contribute to keeping inflation elevated ahead. it is, therefore, our judgement that there is a need to keep the policy rate at today's level for some time and somewhat longer than we had envisaged earlier. let me say a little more about the background for the rate decision and the committee's assessments. chart : international inflation has slowed sharply international price inflation has slowed markedly since the peak in 2022, and inflation in the euro area and sweden is now below 3 percent. goods inflation is low, while services inflation remains elevated in a number of countries. in sweden and the euro area, central bank interest rates have been lowered recently, while there are expectations that central banks in the us and the uk will start cutting rates later this year. compared with march, when we last presented projections, the market expects fewer rate cuts this year. norwegian policy rate expectations have also risen slightly. the interest rate differential between norway and other countries influences the krone exchange rate. we do not have a policy target for the krone exchange rate, but we are concerned with the krone exchange rate because it affects the outlook for the norwegian economy. the krone has depreciated over the past couple of years. a weaker krone means an increase in imported goods prices. the past krone depreciation is still contributing to keeping inflation elevated. since march, the krone has strengthened a little. chart : low growth in the norwegian economy 1 / 3 bis - central bankers'speeches the norwegian economy gradually cooled through 2023, and growth has remained low so far | the monetary stability sector will also implement more streamlined cash management operations system this year, among others. at the same time, we are reorganizing our supervision and examination sector to adopt to a rapidly changing environment and implement reforms that will make our banking system stronger, more efficient, at par with international standards, and more responsive to the needs of our economy and our people. the resource management sector, on the other hand, will ensure that bspers are properly equipped with the appropriate skills and expertise required by our institution. 2008 also marks our shift to a more meaningful appraisal system in accordance with our merit system for salary adjustments and promotions. even the way we estimate and produce our currency requirements at the security plant complex is undergoing review to make it more efficient and responsive to the needs of the economy. indeed, change is happening around us. now, more than ever, we need to be open to change, to be flexible to be dynamic to achieve the goals we have set under our medium term development program. nevertheless, even as we welcome change, we should, at all times, remain faithful to the five core values of our institution, which are : patriotism, integrity, excellence, dynamism and solidarity. these core values should serve as our enduring and lasting guides as we deal with the opportunities and challenges ahead of us. ladies and gentlemen of the bangko sentral ng pilipinas. by tradition, this is the time of year when we commit to do better through what we call new year β s resolution. as our joint new year β s resolution therefore, let us commit to be guided by our core values, at all times, wherever we may be. muli sa ngalan po ng ating monetary board at nang aking pamilya kasama na ang aking maybahay na si elma at tatlong anak, ako po ay nagpapasalamat sa inyong lahat at humihiling na sana ay maging masaya, malusog, masagana, at matagumpay ang 2008 para sa ating lahat, at sa ating mga kababayan! mabuhay ang bangko sentral! mabuhay ang pilipinas! | 0 |
our policy, with a material contribution from oil prices as well. this central role played by monetary policy can be further demonstrated by looking at the channels through which our policy has been working. one channel has been the divergence of monetary policy cycles across advanced economies since mid - 2014, and its consequences for exchange rates, which have helped insulate euro area exporters from weakening global demand. they have in fact been able to maintain or even regain market shares as world trade has slowed. but still more important has been the effect of our policy package on the domestic economy. as i have outlined in detail elsewhere2, since we adopted our credit easing package, we have seen a substantial easing in financing conditions for the euro area economy. market financing costs have fallen, while bank lending rates for both firms and households have dropped by more than 110 basis points and are now at historical lows. this has been accompanied by rising lending volumes and improved access to finance, especially for small - and medium - sized enterprises. and crucially, our policy has not only eased financing conditions on average, but triggered a remarkable convergence in borrowing costs across different euro area countries. granular data show that in june 2014 the median lending rate for firms in vulnerable economies was 120 basis points higher than for those in stronger ones β despite overnight rates being close to zero. today the difference is only 20 basis points. without this, it is likely that large parts of the euro area would have been remained stuck in a self - sustained credit crunch. the recovery is progressing and gaining momentum as this policy stimulus has worked its way through the economy, the atypical makeup of the recovery β relying mostly on monetary policy and oil prices β has been gradually shifting towards a stronger contribution from underlying growth forces. this is evident from the fact that, as the impetus coming from oil prices wanes, the economy is accelerating rather than slowing. there are indeed three features of the recovery which give us confidence that it may be gaining its own momentum, although β given the severity of the slump we are emerging from β monetary policy still remains critical to facilitate the transition. the first is that the recovery is being propelled by a virtuous circle between rising consumption, employment growth and labour income. as low financing costs and, initially, low oil prices have 2 / 6 bis central bankers'speeches fed through into household spending, the labour market has strengthened and real disposable incomes have accelerated. around 50 % of the rise in real labour income since mid - | it goes without saying that in each case the relevant metric is euro area inflation not the inflation rates of any individual country. for the first criterion, the assessment does now seem to be improving : our latest projections foresee the path of headline inflation now much closer to the target over 2017 β 2019. but the inherent uncertainty in the forecasting process needs to be mitigated by cross - checking with other available information on inflation dynamics. particularly useful here are measures of underlying inflationary pressures, since they can be monitored in real - time and tend to be more informative than headline inflation for medium - term price developments. for us to be confident in the second criterion β that inflation is not just converging towards our aim, but stabilising around it β we would need to see signs of such pressures building. but there is so far scant evidence of this. much of the increase we have seen in headline inflation in recent months has been driven by its volatile components. of the 1. 4 percentage point rise from november last year to february this year β when inflation peaked at 2 % β more than 90 % was explained by energy and food price inflation. measures of underlying inflationary dynamics, by contrast, remain subdued. one such measure, hicp excluding food and energy, has hovered around 0. 9 % since mid - 2013 and still shows few convincing signs of an upward trend. most alternative measures are also sluggish by historical standards and show little movement towards our aim. an important source of subdued underlying inflation trends has been weak domestic price pressures, driven partly by subdued wage growth. despite the domestic nature of the recovery, annual wage growth in terms of compensation per employee reached the historical low of 1. 1 % in the second quarter of 2016. wage growth has since recovered somewhat β rising to 1. 4 % by the end of last year β but remains well below historical averages. this is where the issue of levels comes in β that is, the significant degree of labour market slack. decomposing the forces that have weighed on wage growth3, we find two principal drivers : first, the still - high unemployment rate and its effect on wage bargaining dynamics ; and second, a below - average contribution from past inflation in wage formation, caused by the last few years of exceptionally low headline inflation. as monetary policy has successfully supported demand and stabilised inflation expectations, both of these drivers should wane going forward. their dragging 4 / 6 bis central bankers'speeches effect on wage growth, | 1 |
francois villeroy de galhau : insurance in a world of disruption speech by mr francois villeroy de galhau, governor of the bank of france, at the 9th international insurance conference, paris, 27 october 2017. * * * ladies and gentlemen, i am very happy to be here today as supervisor in my capacity as president of the acpr, and also as guarantor of the smooth financing of our economy in my capacity as governor. in these two respects, the insurance sector is both close to me and important to me. thank you for inviting me to speak on this theme of disruption. to put it more clearly, and as you have pointed out, mr. president [ bernard spitz ], the world is in turmoil in many ways. this undeniably represents a challenge for insurers, but also a motivation : the raison d'etre of insurance has always been to be a vector of protection and stability in the midst of uncertainty. this morning, i would like to stress the essential role that insurance must play in our economy, by emphasising two areas : its financing and its digitalisation. but before that, i would like to mention the very recent developments in monetary policy. i. our monetary policy is in itself a source of stability yesterday, at the governing council presided by mario draghi, we took the important decision to reduce our net monthly asset purchases by half β to eur 30 billion β until september 2018. this is an essential step towards their possible end later ; a step that is justified by our confidence in the gradual convergence of inflation towards our target of 2 % over the medium term : we consider the economic recovery in europe to be β increasingly robust and broad - based ". in parallel, we said that we will continue to ensure β ample β monetary support, rather than β very substantial β support as mentioned in our previous statements β thanks to the whole range of our instruments, including the sizeable stock of assets that we will continue to hold in line with our policy of reinvestment, and our forward guidance on interest rates. in this new paragraph, the governing council stresses an essential point that i have often referred to over these past few weeks : our non - standard monetary policy is not a solo β it is not simply about net monthly purchases, and we shouldn β t focus too much on them β ; it is a group of instruments that we can play, by following a predictable sequence, as part of our gradual normalisation strategy | rafael buenaventura : raising the bar on consumer banking service speech by mr rafael buenaventura, governor of bangko sentral ng pilipinas ( central bank of the philippines ), at the bank marketing association of the philippines β ( bmap ) 30th anniversary of upgrading bank - marketing practice, makati city, 26 august 2004. * * * introduction distinguished officers and members of the bank marketing association of the philippines ( bmap ), follow bankers, ladies and gentlemen : good evening. i am deeply honored to take part in this celebration, marking bmap β s 30th year of upgrading bankmarketing practice in the country. this year β s theme of β customer service in the marketing mix of financial products β rightly emphasizes the importance of banks β clients in influencing an institution β s success. consumer banking over the last couple of years, the philippine banking system has experienced strong growth in consumer banking services. credit card receivables for example, grew by an average 25. 2 percent annually from 2000 to 2003. this has allowed more ordinary people without access to credit to now have access and on clean basis. however, this growth has also come with a price in the form of increased volume of bad accounts. many of the problems were traceable to the fact that some new cardholders did not really understand the obligations and responsibilities that came with them. as a result, past due credit card accounts rose an average 40. 4 percent, a pace much faster than the new ones granted. the number of credit card - related complaints also rose dramatically. it is in this regard that we should work hand in hand in channeling more efforts towards customer education and protection. for its part, the bangko sentral ng pilipinas ( bsp ) issued various regulations geared towards protecting both the industry and the public. for instance, in 2002 we issued circular no. 349 which significantly tightened rules on credit card and other lending operations by requiring banks and their subsidiary credit card companies to ascertain that cardholders are capable of fulfilling their commitments and by setting credit limits based on their net take home pay. moreover, the bsp took a more proactive stand by creating the consumer education committee in january of this year to help improve basic financial literacy. i commend bmap together with the credit card association of the philippines ( ccap ), the bankers association of the philippines ( bap ), the chamber of thrift banks ( ctb ) and the | 0 |
ecb's deposit rate. the bank of japan, the bank of canada, and several other foreign central banks have also used their ability to pay interest on reserves to maintain a floor under short - term market rates. although, in principle, the ability to pay interest on reserves should be sufficient to allow the federal reserve to raise interest rates and control money growth, this approach is likely to be more effective if combined with steps to reduce excess reserves. i will mention three options for achieving such an outcome. first, the federal reserve could drain bank reserves and reduce the excess liquidity at other institutions by arranging large - scale reverse repurchase agreements ( reverse repos ) with financial market participants, including banks, the gses, and other institutions. reverse repos, which are a traditional and well - understood tool of monetary policy implementation, involve the sale by the federal reserve of securities from its portfolio with an agreement to buy the securities back at a slightly higher price at a later date. reverse repos drain reserves as purchasers transfer cash from banks to the fed. second, using the authority the congress gave us to pay interest on banks'balances at the federal reserve, we can offer term deposits to banks, roughly analogous to the certificates of deposit that banks offer to their customers. bank funds held in term deposits at the federal reserve would not be available to be supplied to the federal funds market. third, the federal reserve could reduce reserves by selling a portion of its holdings of long - term securities in the open market. each of these policy options would help to raise short - term interest rates and limit the growth of broad measures of money and credit, thereby tightening monetary policy. overall, the federal reserve has a wide range of tools for tightening monetary policy when the economic outlook requires us to do so. we will calibrate the timing and pace of any future tightening, together with the mix of tools, to best foster our dual objectives of maximum employment and price stability. conclusion by using our balance sheet, the federal reserve has been able to overcome, at least partially, the constraints on policy posed by dysfunctional credit markets and by the zero lower bound on the federal funds rate target. by improving credit market functioning and adding liquidity to the system, our programs have provided critical support to the financial system and the economy. moreover, we have carried out these programs responsibly, with minimal credit risk and with close attention to the exit strategy. our activities have resulted in substantial changes to | ben s bernanke : federal reserve board's semiannual monetary policy report to the congress testimony by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington, 14 february 2007. * * * chairman dodd, senator shelby, and other members of the committee, i am pleased to present the federal reserve's monetary policy report to the congress. real activity in the united states expanded at a solid pace in 2006, although the pattern of growth was uneven. after a first - quarter rebound from weakness associated with the effects of the hurricanes that ravaged the gulf coast the previous summer, output growth moderated somewhat on average over the remainder of 2006. real gross domestic product ( gdp ) is currently estimated to have increased at an annual rate of about 2 - 3 / 4 percent in the second half of the year. as we anticipated in our july report, the u. s. economy appears to be making a transition from the rapid rate of expansion experienced over the preceding several years to a more sustainable average pace of growth. the principal source of the ongoing moderation has been a substantial cooling in the housing market, which has led to a marked slowdown in the pace of residential construction. however, the weakness in housing market activity and the slower appreciation of house prices do not seem to have spilled over to any significant extent to other sectors of the economy. consumer spending has continued to expand at a solid rate, and the demand for labor has remained strong. on average, about 165, 000 jobs per month have been added to nonfarm payrolls over the past six months, and the unemployment rate, at 4. 6 percent in january, remains low. inflation pressures appear to have abated somewhat following a run - up during the first half of 2006. overall inflation has fallen, in large part as a result of declines in the price of crude oil. readings on core inflation β that is, inflation excluding the prices of food and energy β have improved modestly in recent months. nevertheless, the core inflation rate remains somewhat elevated. in the five policy meetings since the july report, the federal open market committee ( fomc ) has maintained the federal funds rate at 5 - 1 / 4 percent. so far, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation. however, in | 0.5 |
i, as governor, can promise that we will continue to change and improve our institution, and that we will spearhead and set an example for all european integration efforts. allow me once again to thank you all, because it is owing to your work that we are here today. i would also like to give special thanks to our secretary general who was not satisfied with just a β provisional β occupancy permit, and, as a result, today we can number ourselves among the rare few in belgrade that have been granted a final occupancy permit. | radovan jelasic : the national bank of serbia β accomplishing its objectives speech by mr radovan jelasic, governor of the national bank of serbia, on the occasion of consecration of the new office building of the national bank of serbia, belgrade, 10 october 2006. * * * your eminences, reverend bishops, esteemed guests and dear colleagues, it is an honour for me to share with you all the joy of this historical moment of consecration of the new office building of the national bank of serbia. i hope that this will also mark a peaceful and blessed start of work in this beautiful building, after rather tumultuous two decades. i believe that this festive atmosphere may be a good time to remind ourselves once again of what our legal obligation to serbian citizens is, with regard to preserving the stability of the national currency and building an efficient financial system. the construction of this building began in the former yugoslavia, and was completed in today β s serbia. no one believed it was possible to finish such building and put it into use in a short time. and yet, we did it. in only three years, we renovated and completed the work which had remained unfinished during the previous fifteen or so years. this is yet another proof that the national bank of serbia always accomplishes the objectives it sets. similarly, our claim that we will succeed in transforming a completely ruined banking system into a sound and financially strong one, in which ownership has been transformed and which both citizens and economy will trust, was greeted by the same sort of disbelief. today, new foreign currency savings in banks amount to more than eur 3 billion, and in only eight months this year the sum of credits increased by around csd 100 billion. serbia β s strength today is perhaps best illustrated by the fact that this year β s foreign direct investments amounted to almost usd 4 billion, bringing us a strong dinar, which many of our fellow citizens still view with distrust, even after all this time. a similar thing happened when the national bank of serbia was entrusted with insurance supervision and when it confirmed in practice that, just like in the banking sector, it will ensure the enactment of the necessary regulatory framework, control of participants in the insurance market, supervision of their operations, consumer protection and conditions for stable development of this sector. six months ago, when monthly inflation stood at over 1. 5 % and the national bank of serbia, despite this, asserted that it was possible for this year β | 1 |
yen in 2008, the year of the lehman shock. however, measures include not only the amount of funds supplied but also steps to provide financial institutions with the confidence that they can obtain sufficient funds whenever necessary. for example, temporary measures introduced in response to the financial crisis that continue today include the complementary deposit facility, the acceptance of foreign government bonds as eligible collateral, and u. s. dollar funds - supplying operations. these measures aim to forestall a return of instability in financial markets. 3. providing support to strengthen the foundations for economic growth moreover, in order to strengthen the foundations for economic growth, the bank has been implementing a measure through which it provides long - term funds at a low interest rate to private financial institutions in accordance with their efforts in terms of lending and investment. currently, financial markets and financial institutions have abundant funds, firms have strong cash flows, and households hold an enormous amount of financial assets. nevertheless, the japanese economy has yet to show robust growth, indicating that the issue at stake is not a shortage of funds, but the unwillingness of economic entities to undertake forward - looking spending and investment. underlying this situation is the fact that the decline in the growth trend of the economy has led to a decline in firms β and households β growth expectations, which in turn gives rise to insufficient domestic demand β the fundamental cause of the current deflation. in this situation, the bank aimed to address the fundamental cause of the current deflation by making use of its function as the central bank and making more funds available to new areas of growth to raise growth expectations. while this fund - provisioning measure alone is unlikely to be enough to raise japan β s growth potential, the bank hopes that by acting as a catalyst it will prompt discussions on this issue as well as efforts to strengthen the foundations for economic growth. looking at the outcome so far, i would say that most of the objectives of the fundprovisioning measure implemented in june 2010 have been achieved. many financial institutions nationwide have shown an interest in the measure, and among the 140 financial institutions that applied, more than 100 financial institutions have been selected as counterparties. the total amount of loans provided through the two rounds of loan disbursements carried out by the bank so far is about 1. 5 trillion yen, which is already about half of the maximum amount of loans β 3 trillion yen β to be disbursed under the measure, with a year and a half still remaining until june 30, 2012, when the | let us call it β β pre - lehman β levels. expecting β pre - crisis β - levels to make a comeback β the time when risk was significantly underestimated β is neither realistic nor desirable. however, sustainable relaxation in the inter - bank money markets requires a sustainable return of confidence in the financial markets. in order to achieve this aim, it is necessary that the process of restoring banks β balance sheets continues, supported by public stabilisation funds. emu and the financial crisis for european monetary union, the financial crisis is certainly posing the greatest challenge in its history. when we recently celebrated the tenth anniversary of the single currency β s inception, it was often stated that the first ten years of the euro were a success story with regard to price stability, trade and financial integration in europe. however, it was also stated that the years ahead are likely to become even more challenging. one could say that emu is reaching puberty β if you have children, you will know what i mean. nonetheless, the value of monetary union has never been greater than during the financial crisis. try to imagine what would have happened without the single currency! probably, foreign exchange markets within the single market would have been driven by speculative activities. think of what happened in the early 1990s. currency fluctuations would aggravate both the financial crisis and real economic tensions β and do not forget the political turbulence implied by such currency tensions. it has been clear from the beginning of monetary union that there has been a greater emphasis on the responsibility for fiscal policies, wage policies and structural policies, which remains at the national level. in a nutshell, monetary union requires flexible labour markets and sound public finances β this holds true especially during times of crisis. with regard to fiscal policy, respecting the provisions of the stability and growth pact is of the essence. what is needed is a credible and strong commitment to reducing excessive deficits and to returning to the path of consolidation. rising cds premia on sovereign bonds have induced speculation about potential defaults on the part of emu countries. any concerns in this regard are unfounded and only purely hypothetical. while it is in general welcome that financial markets punish unsustainable public finances, it has to be acknowledged that even euro area member states with high yield spreads are currently facing favourable refinancing conditions given the unprecedented low interest rates. it should be emphasised that the β no - bail - out β rule, as stipulated in the ec treaty, is an indispen | 0 |
situation concrete de la femme ; celleci depend en grande partie du role economique qu β elle joue. β de beauvoir ( 1976, p. 153 ). 12 see for example del boca and locatelli ( 2008 ). references : alesina, a., p. giuliano and n. nunn ( 2013 ). on the origins of gender roles : women and the plough. the quarterly journal of economics 128 ( 2 ), 469 - 530. andreoni and vesterlund ( 2001 ). which is the fair sex? gender differences in altruism. the quarterly journal of economics 116 ( 1 ), 293 - 312. center for economic policy research ( 2020 ). gender equality and public policy. oxford university press. de beauvoir, s. ( 1976 ). le deuxieme sexe, i. paris : editions gallimard. del boca, d. and m. locatelli ( 2008 ). motherhood and participation. social policies, labor markets and motherhood. del boca and wetzels ( eds. ). cambridge : cambridge university press. diouf, i. and d. pepin ( 2017 ). gender and central banking. economic modelling 61 ( 2 ), 193 - 206. eckel and grossman ( 2008 ). men, women and risk aversion : experimental evidence. handbook of experimental economics results. c. plott and v. smith ( eds. ). new york : elsevier press. gerling, k., h. p. gruner, a. kiel, and e. schulte ( 2005 ). information acquisition and decision making in committees : a survey. european journal of political economy 21 ( 3 ), 563 - 597. istrefi, k. ( 2019 ). gender diversity, central banks and monetary policy. variances 2019 ( 10 ), 1 β 3. profeta, p. ( 2020 ). gender equality and public policy. oxford : oxford university press. profeta, p. ( 2020b ). gender equality and public policy : how women can improve decisionmaking. vox cepr podcast. riboni, a. and f. ruge - murcia ( 2008 ). the dynamic ( in ) efficiency of monetary policy by committee. journal of money, credit and banking 40 ( 5 ), 1001 - 1032. rieder, k. ( 2021 ) | elisabeta gjoni : role of money in wartime opening remarks by ms elisabeta gjoni, first deputy governor of the bank of albania, at the second conference of the museum of the bank of albania, tirana, 20 september 2018. * * * dear guests, participants, researchers, academics, numismatists, collectors, students, welcome to the bank of albania! it is a special pleasure for me to open the proceedings of the second conference of the museum of the bank of albania on β role of money in wartime β. the rich collection of coins and banknotes and other items exhibited in our museum becomes more meaningful when supported by the historic background of the period of the country of issue. the organisation of this conference, an annual one, contributes to the both the historic and educational role of the museum. this conference is also an excellent opportunity to share experiences with representatives of the main institutions of culture in albania and museums of central banks and other prominent foreign institutions in this field. i am happy to see in this room both old and new collaborators, whom we wish to be β permanent consultants β of the bank of albania. we aim to create and cultivate a solid and productive relationship with the best experts in numismatics, museology, cultural heritage and research. dear participants, today β s presentations will address the mutual, complicated and multi - dimensional relation between money and war. wars have had an impact on the economy and development of human kind from the birth of civilisations to modern times. meanwhile, in the words of the socrates, the greek philosopher, β all wars are fought for money β. we heard some good examples that illustrate this relation in last year β s conference. we heard from prof. picard about king monunius, who is known thanks to the respective coin. he had it minted for the sole purpose of raising a strong army, convinced that his might rested with the army. from prof. egro, we learned that mahmut pashe bushatlliu and ali pashe tepelena tried to introduce their coins and banknotes, independently from the ottoman empire, not for financial purposes but as a token of rebellion or an attempt to break away from the empire. later on, in ww1, we see the banknotes of the republic of korca, which are a rare phenomenon not only in terms of numismatics, but also a materialisation of the early issues as a result of the war | 0 |
which are available to borrowers at the discretion of their bank. floden, 2014 and cecchetti et al., 2011. the lvr policy can also work against the social objective of housing affordability. to be clear, the reserve bank does not have housing affordability as an objective, but it is sensible to be aware of the impact of our actions on the other goals of the government. a uniform calibration for the lvr restrictions, as was the case in late 2013 and 2014, is likely to restrict the access to credit for first home buyers, who tend to have less savings for a deposit and have not benefitted from previous house price appreciation. these controls that restrained first home buyers were necessary to protect the financial system, and to stop buyers from taking on too much debt and becoming distressed. in contrast, the effect on investors from a uniform lvr policy tends to be weaker in a rising market. we β ve recalibrated the lvr restrictions over time to target the riskier forms of investor lending, as the emerging evidence points to greater risks associated with highly leveraged investors. this also had the effect of rebalancing the burden of policy away from first home buyers. the share of new mortgages going to first home buyers has risen from 10 percent in 2014 to 17 percent by the end of 2018, a historically healthy level. in the recent years, first home buyers have accounted for the lion β s share of the high - lvr lending permitted under the policy ( figure 5 ). housing affordability remains an important challenge for public policy, and structural reforms are necessary to improve affordability in the long term. the lvr restrictions are for the purpose of enhancing financial stability, and aren β t suitable for addressing broader social challenges. figure 5 : first home buyer high - lvr lending % % share of all first home buyer lending share of all high - lvr lending exemptions can be used to mitigate the tension between the lvr and other public policies, so long as they do not undermine the financial stability objective. for example, the exemption on construction finance has helped to address concerns that the lvr policy is hindering new housing supply. the reserve bank β s consultation with stakeholders in all macroprudential policy interventions helps to inform the design of policy, including the exemptions. between november 2015 and september 2016, the reserve bank implemented targeted lvr restrictions for auckland borrowers, owing to high risks of a severe house | s our loan - to - value ratio policy, is the most well - known tool of macroprudential policy and upholds lending standards during the credit upturn, thereby lowering the debt burden of households ahead of a downturn. in the macroprudential toolkit8, we also have capital and liquidity tools that build additional buffers for banks, putting them in a better position to keep lending to the economy when things turn sour. while the liquidity tool β minimum core funding requirements β is in place, we haven β t adjusted it so far to limit risks to financial stability. so in practice our active use of macroprudential policy pertains only to lvrs. in addition to its financial stability role, the reserve bank also has responsibility for price stability. macroprudential policy and monetary policy are set for different objectives, but they do interact. for example, the official cash rate ( ocr ) may be raised in response to an upturn in the economic cycle, which generally helps with the macroprudential objective by moderating credit and house price growth. however, the impact of macroprudential policy on inflation is much smaller than the ocr, and the policy is not a lever for achieving inflation or employment goals. in general, macroprudential policy and monetary policy tend to be complementary, and together will maximise both financial stability and price stability. bascand ( 2019 ) explains in more detail how our regulatory tools fit together and complement one another. a memorandum of understanding between the reserve bank and the minister of finance lists four macroprudential instruments. these are the core funding ratio, the countercyclical capital buffer, the sectoral capital requirements, and the lvr restrictions ( english and wheeler, 2013 ). purpose relevant instruments macroprudential policy borrower restrictions ( lvrs ) reduce risk that the financial system amplifies a severe economic downturn prudential policy maintain baseline resilience of the financial system impact on financial system resilience impact on wider economy more resilient households and banks reduces potential severity of an economic downturn reduced losses in a severe economic downturn capital and liquidity instruments ( ccyb / scr ) lowers incentives on banks to deleverage in a downturn ; supports higher credit supply and economic activity capital buffers banks remain solvent through the economic cycle maintains market confidence and lowers risk of sudden increases in funding costs for households, businesses and the economy banks | 1 |
euro appreciation since the first quarter of 2012 explains a reduction of 0. 5pp in our inflation rate. this is connected with the fact that energy and food prices account for 80 % of the overall decline in hicp inflation since that date. another part reflects the process of internal devaluation to regain price competitiveness in some euro area countries. domestic inflation excluding food and energy has fallen well below the euro area average. the recent fall in services price inflation in the euro area, for example, is almost entirely accounted for by stressed euro area member states. nonetheless, we are not complacent about the risks from a protracted period of low inflation. to date, we see no distinct signs of deflation and economic agents are not postponing purchases. but we recognise that, if too prolonged, periods of low or negative inflation could unleash forces that may affect the outlook, by destabilising inflation expectations and aggravating the burden of the debt overhang of both governments and households. given these concerns, the ecb governing council has reaffirmed forward guidance and stressed its readiness to act with other measures if required. conclusions let me conclude. a session entitled β global challenges β can quickly nudge the speaker towards a rather pessimistic view, seeing only obstacles and impediments to a sustainable recovery path. but we should not let that happen. of course, the recovery remains fragile and risks loom large. but the global outlook has begun to improve. whether it is managing the exit from unconventional monetary policies, addressing structural challenges, completing the according to european commission estimates. ceps β the global economy in 2030 : trends and strategies for europe β, april 2014. bis central bankers β speeches repair of the banking system or responding to too low inflation, policy makers know their agenda and are taking action. euro area authorities are doing their part. significant progress has been made towards banking union and in enacting structural reforms to restore competitiveness β although more remains to be done. at the ecb, we are ready to act to avoid low inflation becoming entrenched in a way that would destabilise the outlook for growth. bis central bankers β speeches | council raised the key ecb interest rates by 25 basis points in april, in order to adjust the very accommodative monetary policy stance in the light of upside risks to price stability. since then we have kept the rates unchanged. at the same time, as i said in the press conference after the last governing council, we see the monetary policy stance as still accommodative and risks to price stability on the upside. accordingly, i said that we are in a state of strong vigilance and that we stand ready to act in a firm and timely manner to avoid that recent price developments give rise to broad - based inflationary pressures over the medium term. as regards our non - standard measures, the governing council earlier this month decided to maintain its fixed rate tender procedures with full allotment in its refinancing operations up to the third quarter of 2011. ii. fiscal consolidation and monetary policy let me now turn to the topic of fiscal consolidation and monetary policy. in a monetary union, the central bank when setting interest rates has to take an area - wide perspective. in the same manner the us federal reserve do not and cannot tailor its interest rate to the specific economic conditions in individual us states. setting the policy rate with a clear focus on the euro area as a whole does not, however, mean ignoring the diversity in financial conditions. since the financial crisis erupted, the ecb has adopted a number of non - standard measures to foster as much as possible a smooth functioning of the monetary policy transmission throughout the euro area. the current major challenges faced by a few euro area countries are mainly the result of some governments not conducting sound policies and not implementing reforms that would benefit their citizens and the european public as a whole. it is essential that euro area countries fully assume the responsibilities at the national level that derive from their participation in the euro area. past experiences of fiscal consolidation episodes demonstrate the long - term benefits of reducing sizeable fiscal imbalances. there are at least three reasons why well - designed fiscal consolidation is beneficial in the current circumstances. accompanied by appropriate structural reforms, it promotes long - term growth. for those economies with large fiscal imbalances, it is indispensable to bolster confidence. and for all economies it helps create buffers that would be essential to deal with unforeseen events. bis central bankers β speeches it is also for this reason that the ongoing negotiations on the governance package should produce an ambitious outcome. i have been emphasis | 0.5 |
janet l yellen : welcoming remarks speech by ms janet l yellen, chair of the board of governors of the federal reserve system, at the β monetary policy implementation and transmission in the post - crisis period β, a research conference sponsored by the board of governors of the federal reserve system, washington dc, 12 november 2015. * * * it is my pleasure to welcome you to the federal reserve board β s conference on β monetary policy implementation and transmission in the post - crisis period. β the conference aims to bring together academic and central bank economists, financial market practitioners, and policymakers to stimulate debate and research on a topic that is critically important to the federal reserve β s mission of conducting monetary policy in the pursuit of maximum employment and stable prices. the global financial crisis had profound effects on our economy, and it altered the way many think about monetary policy. at the peak of the crisis and during its immediate aftermath, unconventional monetary policy measures were designed and implemented by the federal reserve and other central banks around the world. the post - crisis period has offered policymakers an opportunity to assess a range of novel policy and operational issues associated with the conduct of monetary policy and the effectiveness of different policy options. specifically, policymakers have to carefully weigh the advantages and disadvantages of alternative monetary implementation frameworks in the presence of new policy tools. moreover, policymakers should be mindful of new channels for monetary policy transmission that may have emerged from the intricate economic and financial linkages in our global economy that were revealed by the crisis. finally, it is crucial to understand the effect of regulations and possible changes in financial intermediation on monetary policy implementation and transmission. the impressive conference program covers the following topics in three sessions : monetary policy implementation, the transmission of monetary policy, and the effect of regulation and financial intermediation on monetary policy implementation and transmission. the presentations and discussions of the 12 academic papers on the conference program will surely provide a foundation for what i expect will be a stimulating discussion of important topics over the next two days. looking ahead to later today, i am delighted that vice chairman fischer will deliver keynote remarks on the exchange rate mechanism in the transmission of monetary policy. tomorrow the conference concludes with two interesting policy panels on the effect of regulations on monetary policy and the β optimal design β of monetary policy in the post - crisis world. let me also say that i consider the topics covered during this conference highly relevant for the federal reserve system β s ongoing efforts to evaluate potential long - run monetary policy | implementation frameworks and to assess a number of issues related to the consideration of alternative frameworks. i hope the work and ideas presented and discussed over the next two days will spur subsequent research on these issues and promote further collaboration among all of you. as i have often stressed before, in addition to its responsibilities for monetary policy and financial regulation and supervision, the federal reserve takes very seriously its role as a research institution. i want to thank our research conference committee for putting together this high - caliber research conference, which has gathered distinguished speakers and guests from around the world and, i am sure, will add to our understanding of the implementation and transmission of monetary policy. welcome to the federal reserve board. i hope you all have enjoyable and productive discussions over the next two days. bis central bankers β speeches | 1 |
a helpful tool in our quest to increase what we make in india, how should we export more? the answer is simple β improve productivity by building out infrastructure ; improve human capital with better schools, colleges, vocational and on - the - job training ; simplify business regulation and taxation ; and improve access to finance. fortunately, all this is what the government is focused on. i am often asked, β what industries should we focus on, what should we encourage? β learning from our past, i would say let us not encourage anything ; that might be the surest way of killing it. instead, let us make sure we create a good business environment that can support any kind of activity, and then let our myriad entrepreneurs figure out what new and interesting businesses they will create. in the 1990s, the iits that pandit jawaharlal nehru created to supply engineers to the commanding public sector heights of the economy instead supplied managers and programmers to body shops focused on dealing with the y2k bug. these in turn evolved into our world - beating software giants. while the government did not create the software industry, it was not inconsequential by any means to its emergence and development. similarly, let us enable business activity but not try and impose too much design on it. ideas and analysis before concluding, let me emphasize one additional area of engagement with the world, ideas and analysis. today, we have a seat at most international tables, many countries want to draw us into bilateral and multilateral treaties. when we were unimportant, we used to rail against the proposals that were inimical to us, knowing it would not make an iota of difference. as we get more power, we need to develop the capability of using it effectively. today, it is an unfortunate reality that international meets are still dominated by the old powers. but it is less through brute power politics and more through the power of ideas, agenda setting, and organization that they dominate. agendas in the g - 20 are still largely set by elements of the old g - 7, and often we find that they have already agreed on their preferred approach. it is only when the big powers disagree that the rest of us have some hope of influencing outcomes. the fault is not in the power structure, it is in us. unless we amongst the emerging world put forward our agenda, build the intellectual and analytical basis for pushing it, and create coalitions to support it, we will have no chance | in assessing this impact on sectors and the economy. lastly, it would be remiss of me not to mention in this forum the role of investors. the creation and subsequent development of green bonds, aside from official initiatives and, essentially, in response to private investor demand, shows the growing interest for responsible investment. a brief look at the press will prove that this is a consolidated trend. in sum, the financial sphere, including both the banking sector and investors, supervisors and central banks, is committed to achieving sustainability goals ; but, as is known, transparency and information must be enhanced in order to continue moving forward. clearly, just as business solvency cannot be analysed without reliable and uniform accounting information, the risk of environmental activity cannot be evaluated in the absence of comparable information. allow me to conclude by stressing the importance of us all making every effort to row in the same direction so as to achieve an ambitious goal such as decarbonisation. events like today demonstrate the resolve and commitment of all those involved with this challenge. we must act realistically, mindful of the limitations, but also with sufficient ambition to overcome the difficulties we will have to face. i wish you all a very productive session. 2 / 3 bis central bankers'speeches thank you. 3 / 3 bis central bankers'speeches | 0 |
2005 ending with the card system ( namswitch ) in 2008. the namswitch system was implemented in a phased approach because of the nature of payments, facilities, and systems that are involved. the automated teller machine ( atm ) solution went live on 21 april 2008 and the point - of - sale ( pos ) was recently rolled out on 16 november 2008, thus bringing the reform project on the clearing side, to an end. ladies and gentlemen this is an achievement worth mentioning as namibia now has its own independent payment infrastructures, with the bank of namibia having adequate regulatory oversight over these systems. i am aware that to a normal eye, it is difficult to notice the changes that have taken place because this change was managed seamlessly. however with a careful eye significant benefits brought about by the reform are visible. for example it use to take about up two weeks to clear a cheque, now this only takes at most fives days and in most cases is less than that. ladies and gentlemen, on behalf of the bank of namibia and indeed on my own behalf, let me thank and commend the banking industry for a job well done. the industry has shown commitment in ensuring that all the systems were implemented. despite the slippages that we experienced along this journey, we have proven that in unison we can achieve greater things. it shows that with the spirit of teamwork we can achieve all what we intend to achieve. i believe that this is the path we will continue to follow in the future. ladies and gentlemen, we should all understand that reform projects are done with due regard to national interests. i do not believe that our intention to bring about reform initiatives will negatively affect the operation of the industry and nps. the bank of namibia understands that such initiatives are expensive and sometimes costs involved run into millions of namibia dollars. our position is that benefits far outweigh the costs incurred in the process. we all need a situation where if there are disruptions in the south african payment environment, for example, namibia catches no cold. building our own systems will also enable us manage inherent payment system risks and exposures sufficiently well. in conclusion, ladies and gentlemen, although milestones have been achieved in terms of implementing required clearing and settlement systems, certain issues remain to be addressed. i am aware that there are some card transactions that are still cleared and settled in south africa. i am pleased to learn that there are measures in place to ensure that such transactions are cleared and settled | ipumbu shiimi : namibia β s payment system reform initiative speech by mr ipumbu shiimi, assistant governor of the bank of namibia, at the namswitch press conference, windhoek, 2 december 2008. * * * members of the media mds and officials of banking institutions my colleagues, officials of the bank of namibia present ladies and gentlemen it is with great pleasure to welcome you to the bank of namibia this afternoon. we are especially grateful to the media practioners, who will share this wonderful news with members of the public, for responding positively to our invitation. we are also delighted that our partners in the payment system reform initiative, banking institutions, have joined us at this press conference. once again welcome. ladies and gentlemen, one of the bank of namibia β s responsibilities is to ensure financial stability. an efficient and effective payment system is a key factor in achieving financial stability. this means individuals and businesses are able to pay for goods and services or transfer money from one entity to another entity in a manner that is safe, cost effective and reasonably fast. for example when a person pays with a cheque, a stable and effective payment system would ensure that payment is secure and the money will be received faster. ladies and gentlemen, we have invited you to share with you information on milestones achieved in the namibian payment system reform initiative, undertaken jointly by the bank of namibia and commercial banks. until not so long ago our payment system was highly integrated with that of south africa. in fact namibia dependent heavily on south africa β s payment system infrastructures for clearing and settlements of most of the payment system instruments e. g. cards and atms. this dependency made the country vulnerable to risks that would affect the payment system in south africa and placed the oversight of critical payment system infrastructures outside the jurisdiction of namibia. it is against this background that reforms were initiated. the efforts made towards the payment system reform project started to bear fruits after the implementation by the bank of namibia of the namibia inter - bank settlement system ( niss ) on 10 june 2002. after the settlement system was put in place, there was a need to reform the clearing side of the national payment system ( nps ). the establishment by the commercial banks of namclear ( pty ) limited, in 2003, paved the way to modernise and automate various clearing systems starting with the electronic funds transfer ( eft ) system in 2004. the cheque processing system was rolled out in | 1 |
services and prices of food and beverages, both expressed relative to core pce prices ; and and are the weights of energy and food in total consumption. the core inflation forecasting equation is where is expected long - run inflation ; denotes the level of resource utilization ; controls for the effect of changes in the relative price of core imported goods ; is a white - noise error term ; and the coefficients are ordinary least squares estimates obtained using data from 1990 : q1 to 2014 : q4. for estimation purposes, is approximated using the unemployment rate less the congressional budget office β s ( cbo ) historical series for the long - run natural rate, while is proxied using the median forecasts of long - run pce or cpi inflation reported in the survey of professional forecasters, with a constant adjustment of 50 basis points prior to 2007 to put the cpi forecasts on a pce basis. ( prior to 1991 : q4, this series is based on the long - run inflation expectations reported in the hoey survey. ) the relative import price term,, is defined as the annualized growth rate of the price index for core imported goods, less the lagged four - quarter change in core pce inflation, all multiplied by the share of nominal core imported goods in nominal gdp. to decompose recent movements in inflation into its various components, the series used in the inflation model β for which data are available only through 2015 : q2 in most cases β are first extended through the end of 2015. in the case of inflation, the extensions are consistent with the medians of fomc participants β projections for total and core pce inflation in 2015 that were reported at the press conference following the september fomc meeting. 35 similarly, over the second half of 2015 is defined to be consistent with the median of fomc projections for the 2015 : q4 unemployment rate, less the cbo β s estimates of the historical path of the long - run natural rate ; the cbo β s 2015 estimate is almost identical to the median of fomc participants β most recent projections of the normal longer - run level of the unemployment rate. for changes in the prices of consumer energy and core imports, the 2015 : h2 extrapolations are based on regressions of these two series on current and lagged changes in, respectively, crude oil prices and exchange rates. this approach predicts that energy prices should decline at annual rates of about 6 percent in 2015 : q3 | as an expectations - augmented phillips curve. 21 total inflation in turn reflects movements in core inflation, combined with changes in the prices of food and energy. an important feature of this model of inflation dynamics is that the overall effect that variations in resource utilization, import prices, and other factors will have on inflation depends crucially on whether these influences also affect long - run inflation expectations. figure 6 illustrates this point with a stylized example of the inflation consequences of a gradual increase in the level of import prices β perhaps occurring in response to stronger real activity abroad or a fall in the exchange value of the dollar β that causes the rate of change of import prices to be elevated for a time. 22 first, consider the situation shown in panel a, in which households β and firms β expectations of inflation are not solidly anchored, but instead adjust in response to the rates of inflation that are actually observed. 23 such conditions β which arguably prevailed in the united states from the 1970s to the mid - 1990s β could plausibly arise if the central bank has, in the past, allowed significant and persistent movements in inflation to occur. in this case, the temporary rise in the rate of change of import prices results in a permanent increase in inflation. this shift occurs because the initial increase in inflation generated by a period of rising import prices leads households and firms to revise up their expectations of future inflation. a permanent rise in inflation would also result from a sustained rise in the level of oil prices or a temporary increase in resource utilization. by contrast, suppose that inflation expectations are instead well anchored, perhaps because the central bank has been successful over time in keeping inflation near some specified target and has made it clear to the public that it intends to continue to do so. then the response of inflation to a temporary increase in the rate of change of import prices or any other transitory shock will resemble the pattern shown in panel b. in this case, inflation will deviate from its longer - term level only as long as import prices are rising. but once they level out, inflation will fall back to its previous trend in the absence of other disturbances. 24 a key implication of these two examples is that the presence of well - anchored inflation expectations greatly enhances a central bank β s ability to pursue both of its objectives β namely, price stability and full employment. because temporary shifts in the rate of change of import prices or other transitory shocks have no permanent influence on expectations, they have only a transitory effect on inflation. as | 1 |
. therefore, to fully implement a new strategy or to rebuild an organisation to be effective in a changing environment, it is critical to reshape culture as well. 3 / 6 bis central bankers'speeches the primary responsibility for reshaping culture rests with the executive team, under the direction of the board. it is not a human resources or organisational design exercise. it is a leadership responsibility. it requires leaders to take a long hard look at the current culture, the existing business processes, the work attitudes and behaviours they foster. without first establishing what the current culture is, the issuance of lofty mission statements or long lists of core values are merely paying β lip service β to implementing effective cultural change. since employees tend to take their cues on what is important and how to behave from their leaders, negative activities and behaviour at the top foster negative behaviours further down the organisation. β a good organisational culture is about more than avoiding good people doing bad things ; it is about equipping and enabling good people to do ever better things17. β a firm in seeking to effect cultural change can take some practical steps to achieve this aim. i will suggest five as a starting point : 1. communicate and " walk the talk " - the cultural values and expectations of the firm need to be consistently communicated and modelled by the top, middle and lower management levels. 2. enhance diversity at senior levels β meaningfully addressing the acute lack of diversity at senior levels requires : more ambition, including in targets and measures ; more than lip service being paid to diversity programmes ; better building of pipelines of talent ; considering the overall construct and functioning of the executive management layer when making appointments ; and identifying and reducing barriers to change. 3. practice, process, performance β principles and values need to be reinforced through practices and processes, including training and particularly performance management. there must be clear alignment between individual roles and objectives and wider purpose, strategy and outcomes, with people held accountable for their actions. 4. ongoing assessment and checking β boards and executives need to have mechanisms and measures to understand whether the culture they espouse is consistent with the culture of the organisation, and consider how they would identify where it is not. considering how decision - making, risk identification, product development, the use of behavioural economics, the treatment of whistleblowers and everything in between works in an organisation is key to understanding the culture of the organisation. boards and executives need to consider the information they receive and | country. thank you for your attention today and for your warm and generous friendship. meegwetch, merci, thank you. | 0 |
in argentina, the monetary policy transmission channels are only just being rebuilt, since credit to the private sector accounts for 10 percent of the economy, still far below the latin american average. therefore, patiently rebuilding the power of monetary policy tools is a great step towards consolidating growth and stability. meanwhile, monetary and financial policy should be conceived under a general equilibrium approach, where fiscal solvency, the monetary balance and external sustainability are mutually determined. against this backdrop, a sustainable and long - lasting reduction of the inflation rate depends on the comprehensive, joint and coordinated action of the monetary policy, the fiscal policy, the wages policy, and the competition policy. thus, we see that the current regime of control over the money supply and the demand for money combines the necessary doses of monetary prudence ( as shown by sixteen running quarters of compliance with self - imposed monetary aggregate growth targets ) and flexibility ( which has enabled us to weather the recent turbulence ). through this scheme, by trading in the repo market, issuing central bank notes and bill, and collecting in advance the rediscounts granted during the crisis, we eliminated any potential excess money supply. in fact, in the first half of the year we sterilized 80 percent of foreign exchange purchases β up to almost ars 25 billion. and this did not affect the bank β s positive balance sheet. the monetary program sets indicative targets for all monetary aggregates. however, the achievement of these targets is linked to the change in the means of payment, since in an economy where financial normalization has not yet been achieved, it would be healthy for savings β time deposits β to be more rapidly channeled back into the financial system. deposit performance has not been affected by financial uncertainty and time deposits keep growing above the average. this is another eloquent example of the strategy developed in the past few years to face contingencies : the recovery of banking liquidity and solvency, which allows us to have a sound financial system today that acts as a β turbulence buffer. β in turn, improved profitability, together with capitalizations, strengthen the solvency of the system. just as reserves play the role of liquidity insurance to the monetary authority, banks β cash is the first defense line against unexpected events. for this reason, banking regulations fostered the recovery of liquidity, equivalent to almost 40 percent of total deposits, one of soundest of the region. we should not forget about the growing dynamism of banks in getting | situations. indeed, we have begun to buy back short -, medium - and long - term securities to inject liquidity to the market, proving that they are in fact monetary policy instruments. besides, regulatory measures were adopted β bimonthly calculation of banks β liquidity requirements β to β decompress β stress situations in the money market. clearly, for the current transition stage of the argentine economy, there is no other viable and sustainable alternative than the current managed floating regime. a system based on free floating, still called for by many, would have involved the risk of going back to the devaluation - inflation spiral that has been so recurrent throughout our economic history. in the past few days, however, we also learnt that in spite of the necessary foreign exchange stability for the current transition stage, there is no β foreign exchange insurance. β we have seen that on wednesday 25, when the upward trend was most marked, the exchange rate increased, leading to a volatility that ruled out hopes of guaranteed profits. when devaluation expectations became noticeable, threatening to manifest itself in the rest of the economy, we made it clear that we will mitigate steep increases potentially having an inflationary impact or causing uncertainty. once the foreign exchange rate was stabilized, we adopted measures to reduce the upward pressure on interest rates, a process that will continue until normalization is achieved. but, what do we mean when we talk about a stage of transition? in post - crisis periods, the macroeconomic fundamentals usually overreact to then gradually readjust themselves and converge towards a long - lasting scenario. these transition stages take time and raise enormous challenges. our neighboring countries β experience teaches us that flexibility and gradualism in both policy design and implementation are the adequate way of riding them. during the money and banking conference organized by the central bank of argentina, vittorio corbo, president of the central bank of chile, stressed the sequential process undergone by the chilean economy following the crisis of the early 1980s. four elements have been of utmost importance in this long process : consolidating fiscal solvency as a countercyclical tool, reestablishing external sustainability, restructuring liabilities, and rebuilding the financial system. once all these aspects were addressed, progress was made in the consolidation of a regime that is nowadays highly credible. thus, in 15 years, chile managed to lead inflation from around 30 percent to the current annual 2. 9 percent, after patiently building credibility and institutions. | 1 |
amando m tetangco, jr : the philippine deposit insurance corporation and the bangko sentral ng pilipinas β continuing a partnership for stability speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the signing of the memorandum of agreement on bank examination between the bangko sentral ng pilipinas and the philippine deposit insurance corporation ( pdic ), manila, 27 august 2013. * * * thank you for joining us this afternoon to witness the signing of this amended memorandum of agreement on bank examination between the philippine deposit insurance corporation and the bangko sentral ng pilipinas. our signing ceremony is brief and simple β¦ but also significant and meaningful. the moa we have signed today underscores the continuing efforts of the pdic and the bsp to enhance our respective regulatory and policy frameworks. equally important, this amended moa reflects our continuing cooperation to ensure that our joint working arrangements are responsive to the changes taking place in the operating environment of our supervised and regulated institutions. indeed, the pdic and the bsp have a long history of partnership and cooperation to achieve and maintain a sound and stable banking system. in particular, the pdic and the bsp signed the original moa on bank examination on october 11, 2005 β¦ which created the overall framework for our institutions to supervise banks through, among others, β¦ the conduct of on - site examinations, jointly or independently. while the original moa has served us well, we recognized the need to align it with current supervisory procedures, practices and requirements. the joint review committee created for this purpose was headed by pdic executive vice president imelda singzon and bsp managing director chuchi fonacier with support from their respective groups. and so today, we have this amended moa. let us give our review committee a big hand. as amended, the moa harmonizes our examination procedures to avoid overlapping of functions and efforts, enhances data - sharing arrangement, and maximizes the use of reports and resources. the amended moa also provides the pdic more flexibility in terms of the types of banks it can jointly examine with the bsp, defines the specific findings / information that the bsp examiners can share with pdic examiners, and considers the provisions as well as rules and regulations of republic act no. 9576 which amended the pdic charter. with these amendments | , we look forward to the pdic and the bsp being able to address examination findings and violations with expediency β¦ especially those involving unsafe and unsound banking activities. this is consistent with the thrust of the bsp and the pdic to promote and strengthen good governance practices in supervised banks to ensure the stability of the banking system at all times. we look forward therefore to exploring new projects and expanding existing initiatives with the pdic to realize our shared goal of delivering a better quality of life to filipinos through a sound and responsive banking system. mabuhay ang bsp at ang pdic! mabuhay ang ating mahal na bansang pilipinas! maraming salamat sa inyong lahat! bis central bankers β speeches | 1 |
particular activities some in the sector undertake. the biggest risks arise from combining high levels of leverage with holdings of illiquid assets and commitments to provide liquidity at short notice. in the current environment, those types of activities need careful monitoring, and possibly a deliberate policy response. conclusion there is no doubt that the reforms made thus far, along with a stronger framework for global co - operation mean we are in a better position to face new risks. but as we move to the next phase of post - crisis regulation, many commentators find it tempting to succumb to world - weary arguments. that any reform will be arbitraged that any insurance will promote risk taking that there is a trade - off between stability and growth bis central bankers β speeches and that there will always be financial crises. we were right to reject such fatalism when we embarked on reform and we are right to reject it now. while all recognise that future crises cannot be ruled out, the steps taken in the past six years have certainly reduced the likely frequency and severity of such crises. where banking systems have raised capital and restored trust in their creditworthiness, access to credit has returned. this central lesson from the us and the uk recoveries could not be clearer. publicly provided insurance is being removed from the system as the too big to fail problem is addressed and the public subsidy for globally systemic banks is eliminated. market forces are being restored. the system is more transparent. it is clear who bears risk. and the scope for arbitraging new regulation has been reduced through a global approach to reform that has established common standards and encompassed shadow banking. in short, any serious look at the experience of post - crisis reform shows that reform and regulation support β not damage β long - term prosperity. as i said in washington three years ago : in no other aspect of human endeavour do men and women not strive to learn and improve. the crisis showed that there was ample scope to improve the efficiency and resilience of the global financial system. through clarity of purpose and resolute implementation brisbane will mark an important milestone in our efforts. that we have reached this point is a triumph of the optimists. but we must not stop work. there is still much scope to improve. the process of reform is not over. we will continue to learn and adjust. and we must continue to manage the system effectively in the face of new risks. with that we can deliver the open and resilient financial system that can | emerge, reflecting factors such as a more favourable than expected macroeconomic environment, should be exploited to make faster progress with fiscal consolidation. at the same time, in countries where there is still a need to take additional specific measures to achieve consolidation targets, such measures should be adopted swiftly to ensure that consolidation commitments are fulfilled. this is a prerequisite for maintaining confidence in the credibility of governments β fiscal targets. positive effects on confidence can compensate for the reduction in demand stemming from fiscal consolidation, when fiscal adjustment strategies are perceived as credible, ambitious and focused on the expenditure side. the conditions for such positive effects are particularly favourable in the current environment of macroeconomic uncertainty. in order to support the process of fiscal consolidation, to underpin the proper functioning of the euro area and to strengthen the prospects for higher sustainable growth, the pursuit of far - reaching structural reforms is essential. major reforms are particularly needed in those countries that have experienced competitiveness losses in the past or that are suffering from high fiscal and external deficits. measures should ensure a wage bargaining process that allows wages to adjust flexibly and appropriately to the unemployment situation and losses in competitiveness. reforms to strengthen productivity growth would further support the adjustment process of these economies. we are now at your disposal for questions. | 0 |
gan kim yong : how private markets can underwrite asia's growth story keynote speech by mr gan kim yong, deputy prime minister and minister for trade and industry, and chairman of the monetary authority of singapore, at the superreturn asia conference, singapore, 25 september 2024. * * * distinguished guests, ladies and gentlemen, good morning to all of you. i am happy to join all of you here at the superreturn asia conference. a. since its debut in singapore in 2022, superreturn asia has served as a valuable platform for private equity and venture capital professionals to network and discuss investment trends, strategies and opportunities. b. the strong turnout today reflects the value of the event to our investors and fund managers. one of the predominant themes across regional and global conferences is that of geopolitical tensions, especially between the us and china. a. as they are the two largest economies of the world, accounting for about 40 % of global gdp, b. their strategic rivalry has caused significant impact beyond both countries, especially on trade and investment. asia β a region of opportunities despite such geo - economic tension, asia β and in particular, asean β remains a glowing, bright spot. a. against the backdrop of a 10 % decline in global foreign direct investment ( fdi ) flows, fdi flows to asean held strong, and reached a high of us $ 230 billion in 2023. b. fdi in financial activities was the highest contributor of inflows to asean last year, increasing by 52 % to us $ 92 billion. this was followed by us $ 51 billion of manufacturing investments, and us $ 21 billion of investments in professional, scientific and r & d activities. c. the us was the single largest contributor, accounting for about one - third of the 1 / 7 bis - central bankers'speeches fdi flows. china was third, accounting for 8 % of the flows, following an increase of 20 %. d. the renewable energy supply chain was a major recipient of fdi in asean. i. between 2020 and 2023, renewable energy - related industries attracted an average of more than us $ 27 billion of investments annually, about 25 % of all announced greenfield investment activities. ii. these include critical minerals, extraction and processing, renewables manufacturing, and renewable power generation. e. looking ahead, there is good reason to be optimistic about asean, and asia. i. riding on a young and growing population, asean is poised to | relative to the trajectory expected in december last year, the projection for headline inflation for 2019 has remained largely unaltered. by ensuring accommodative financing conditions, monetary policy will continue to support domestic demand by mobilising idle resources. this will lead to a build - up of domestic price pressures and ultimately pull underlying inflation up as remaining slack in the economy is gradually reabsorbed and the output gap narrows further. in turn, this will facilitate a durable return of inflation back to a level that is below, but close to, 2 % over the medium term. today, an important element keeping underlying price pressures subdued is muted wage dynamics, which are shaped by many factors. at this stage, besides weak productivity developments, there is still a significant degree of labour market slack that keeps a lid on wage growth. furthermore, the process of setting wages is to some extent backward - looking in a number of euro area countries, reflecting formal and informal indexation mechanisms. 2 additionally, the timing of wage negotiations plays a role in postponing the point in time when growing confidence that inflation is approaching the ecb β s intended medium - term level starts to become more visible in aggregate wage figures. moreover, weak wage growth could also reflect previous downward wage rigidities : difficulties in reducing wages during earlier stages of the crisis may result, symmetrically, in a slower upward adjustment of wages as labour market conditions improve. 3 overall, while we are certainly seeing a firming, broadening and more resilient economic recovery, we still need to create a sufficiently broad and solid information basis to build confidence that the projected path of inflation is robust, durable and self - sustained. underlying inflation pressures still give scant indications of a convincing upward trend as domestic cost pressures, notably wage growth, remain subdued. importantly, the economic recovery and the outlook for price stability are still predicated on the very favourable financing conditions that to a large extent depend on continued monetary policy support. absent that quantum of support, the progress towards a sustained adjustment that we see in our projections is likely to be slower or even stall. therefore, we need to look through the recent surge in inflation, which is driven by transient factors that will probably fade before long. our conclusion that a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to build up and support headline inflation in the medium term remains valid. of course, monetary policy cannot be the only source of support for growth : action from other 2 / 3 bis | 0 |
prudent, stability - focussed policy approach we have followed in recent decades. this has helped to deliver domestic economic stability, has contributed significantly to attracting foreign investment and has greatly facilitated growth. to ensure a sustainable recovery, it is very important that we maintain this approach and focus on key policy areas under our control. these include the public finances, the efficiency and effectiveness of public spending, particularly in relation to increasing the productive capacity of the economy, and overall competitiveness. the updated assessment while the emergence of a slowdown in the economy was not unanticipated, the loss of momentum has been greater than expected this year. this has arisen from a sharper - thanexpected adjustment in the housing sector alongside a deterioration in the international environment. our current forecasts are that both gnp and gdp growth will remain positive this year, albeit significantly less than 1 per cent. it will be the end of july before we finalise our forecasts, but a ballpark estimate, at this point in time, would be around 0. 5 per cent growth this year and about 2 per cent in 2009. in common with other developed economies, ireland is facing significant inflationary pressures arising from very elevated levels of energy and other commodity prices. we are all conscious of the experiences of the 1970s, when the response to the oil price increases of the time resulted in persistently high inflation. this undermined growth and employment in the economy and was especially damaging to those on fixed incomes. while the current situation is not identical, there are some similarities. it is important to accept that economic conditions here have weakened and we cannot compensate ourselves on an economy - wide basis for commodity price increases over which we have no control. as we know from past experience, if we attempt to do so, recovery inevitably becomes delayed. ireland β s competitiveness position has weakened in recent years because wage and broader cost inflation has been higher than in our main trading partners. it is vital for our growth prospects to ensure that our competitiveness position improves rather than deteriorates further. based on the potential for future growth in productivity and the labour force, the medium - term outlook for the economy remains favourable and growth will return to stronger levels, if the appropriate corrective action is taken. growth should pick up next year on the basis of a bottoming out in domestic housing output and some improvement in the external environment. residential housing market the housing market weakened significantly during 2007 with sharp declines in both output and prices. | erkki liikanen : monetary policy in theory and practice speech by mr erkki liikanen, governor of the bank of finland, at the turku school of economics and business administration, turku, 26 april 2006. * * * i would like to thank the turku school of economics and business administration and professor okko for providing me with this opportunity to lecture on monetary policy to representatives of academia. as i myself work in the practical sphere of monetary policy, it is natural that in this presentation i shall look into the relationship between theory and practice in monetary policy. according to an old anecdote, an economist is a person who, when seeing that something works in practice, asks whether it could also work in theory. robert solow's satirical comment may, in its time, have been half true, but when it comes to monetary policy it is equally clear that the influence should also operate in the right direction β from theory to practice β and that central bankers have been greatly influenced by economic research. research and accumulated practical experience have led to central bankers and economists currently sharing surprisingly similar views on monetary policy principles the world over. in the last two decades, both the theory and the practice of monetary policy have undergone sweeping changes that have resulted in a high consensus with respect to the theory of monetary policy and its conduct in practice. the gap between theory and practice is at present apparently narrower than for a long time. i shall break down my brief overview of the relationship between monetary policy practice and theory into three sections. i shall first focus on setting monetary policy objectives, then go on to dealing with the institutional framework for monetary policy and finally review monetary policy strategy and implementation. in all these areas, the practice of monetary policy has made enormous progress in the last few years, in fruitful interaction with monetary policy research. monetary policy objectives the stability of the general price level is currently widely recognised as the primary objective of monetary policy. this means that monetary policy seeks to ward off fluctuations in the overall price level, ie inflation and deflation. the objective of price stability invariably concerns the general level of prices for goods and services over the medium term. accordingly, the objective of monetary policy is not to stabilise the prices of individual goods but to review the price level for the economy as a whole, for instance, by means of a consumer price index. it is expressly the prices of goods and services that are at stake, so that monetary policy does not basically aim at stability in | 0 |
also very important not to make mistakes during an economic slowdown. would repealing the labour reform be such a mistake? as ecb vice - president it β s not my place to comment on a specific economic policy in an individual country. in general, it β s important to be particularly careful during a downturn in any country. there β s a difference between making an economic policy mistake during a period of strong global economic growth and making the same mistake during a period of uncertainty. the labour market isn β t uniform. its foundations are more or less the same, but there are different levels of productivity, capacity, and supply and demand across professions and regions. that β s why measures with pros and cons, such as the minimum wage, can have a positive impact, negative impact or no impact on employment depending on the sector we look at. brexit is one of the risks you have warned about the most. how is it being dealt with 1 / 7 bis central bankers'speeches now? brexit isn β t good news. a no - deal brexit was avoided after the election in the united kingdom, but the negotiation period is going to be very short. the uk economy remains extremely important for continental europe because it β s the second largest after germany. i hope that there will be cooperation and a sense of understanding between the different sides. the first stage will be the trade agreement, which is complicated. i β m confident that, if they reach an agreement in this field, there will also be an agreement on financial regulation and regulatory harmonisation, as that would be the best outcome for everybody. there are other major sources of global uncertainty, like the trade war, and now the coronavirus... the stabilisation of the european and global economy is a result of the lower perceived risk of a trade war and the fact that a no - deal brexit was avoided. with risks like the coronavirus there is always a high level of uncertainty at first, until more details become available and we know how it is transmitted, what the mortality rate is, etc. we will begin to see the real impact once this period of heightened uncertainty is over. do you agree with the view that the ecb has created a bubble in the stock market and the bond market? no, i don β t agree. the equity market in europe is not overvalued. if you look at the risk premium of these assets and compare it with the level | β just like any form of payment β would have to respect the rules on countering money laundering, the financing of terrorism and tax evasion. this would enable public authorities to combat any illegal activity more effectively. to summarise, the digital euro would still be a euro, only in digital form. it would both shape and promote the digitalisation of payments, while reducing the associated risks. this would in turn support the ongoing digitalisation and modernisation of the european economy. 9 why might we need a digital euro? a digital euro would be critically important in a number of scenarios, which are analysed in our report. in particular, it would be needed in the event that citizens become reluctant to use cash as they go digital. this is not the situation we face today : cash is still the most common way of making retail payments in the euro area. however, its role as a payment instrument is diminishing β in some countries rapidly so β as consumers are increasingly paying electronically : 10 as a proportion of all physical retail payments, cash payments decreased from 79 % in 2016 to 73 % in 2019. this trend has accelerated during the pandemic β with a vast majority of consumers expecting to continue using digital payments as often as they do now, or even to use them more often in the future. 11 and because of this trend, we may see a further increase in the uptake of international card schemes and solutions such as payment wallets and apps developed by large technology firms. a digital euro would ensure that even in a situation where there is rapid digitalisation in the world of payments, sovereign money remains at the core of the european payment system. this would contribute to financial inclusion. it would also shield us from the risk that a private or public digital means of payment issued and controlled from outside the euro area could largely displace existing domestic means of payment. such a development would raise regulatory and financial stability concerns and could even put europe β s monetary and financial sovereignty at risk. how could a digital euro be introduced? legal considerations and possible challenges a digital euro would raise legal, technological and policy questions that we need to address. 2 / 4 bis central bankers'speeches let me start with the legal basis. today, only euro banknotes and coins are legal tender under eu primary law. this means they can be used to pay anywhere in the euro area. 12 therefore, a key issue discussed in the report is the importance for a digital euro to have legal tender status. | 0.5 |
bundesbank is doing in this regard. first, we have been upgrading a large number of our cash processing machines located across our network of branches in germany. second, we are in the process of setting up our new state - of - the - art cash center in dortmund. once operational, this branch will pool operations previously performed by five other branches. it will be equipped with automated transport vehicles and high - bay warehouses. these substantial investments in the existing cash infrastructure are necessary to ensure that cash remains one of the variety of payment options that customers can choose from for their everyday transactions. 3 external resilience of the cash cycle 2 / 4 bis central bankers'speeches ladies and gentlemen, just like the human body, the cash cycle is essentially a closed system. working smoothly and efficiently from within is the foundation on which everything else is based. but this by itself is of little use if the system is not resilient against external influences. attempts to inject counterfeit banknotes into the financial system are one example of this. the good news : their success is limited in the euro area. enhanced security features were introduced with the issuance of the new europa series of euro banknotes. this is to keep ahead of counterfeiters, and the banknotes are also more durable than the first series. placing explosives around atms is a bolder example of an external attack that tends to receive considerable public attention. generally speaking, storing wealth β be it in electronic or physical form β will always attract illegal activities. the way to counter these is with effective law enforcement β white blood cells, if you like. safety measures tend to imply further regulations. regulations tend to generate costs. it is an obvious trade - off. but the only cash cycle that households will trust in is a safe one. trust is particularly important in times of crisis. cash is naturally immune to power outages, failing payment systems or even large - scale cyberattacks. we observe sharp spikes in cash demand in regions affected, for example, by earthquakes or hurricanes. a safe and resilient cash value chain can act as a cushion for households during periods of economic uncertainty. cash does this by establishing a link between households and the central bank. to date, this link has been physical and, for the most part, established via commercial banks. in my view, having a tactile means of payment is important. our evidence suggests that this helps households keep their personal budgets in check. 2 moreover, physical cash | a marked improvement in the deficit in 2006 to 6. 3 % of gdp. in the long run, however, this imbalance needs to be further reduced to a more sustainable level. this can only be achieved to the extent that growth is driven more by export - oriented activities and less by consumption. in view of the large amount of currency in circulation and your interest in ensuring a smooth changeover to the euro, what advice would you give to the public in this regard? as i said earlier, the amount of currency in circulation has been contracting and there is evidence that cash hoards and bank deposits are being converted into euro. we are trying to discourage this premature conversion because portfolio diversification at this stage is expensive and makes little sense. in the case of maltese lira bank deposits, these will be converted automatically, and at no cost, into euro on the changeover date. as for cash conversions, people who are buying euro currency notes from banks and other financial institutions are having to pay exchange commissions ; those who obtain euro notes outside the banking system are being offered an even more unfavourable exchange rate, besides running the risk of receiving counterfeit notes. these early conversions, moreover, constitute a drain on the bank β s reserves. we are, therefore, encouraging the public to deposit maltese lira cash holdings into the banking system and retain them in maltese lira denominated deposits, thereby earning interest. in this regard, some of the domestic banks have launched special deposit schemes to attract such funds. those who already hold lira deposits, bonds and similar assets do not need to do anything. such assets will be automatically converted into euro when the changeover takes place, and free of any charges. for those who own maltese lira and euro assets that represent income previously not declared for income tax purposes, the recently launched special registration scheme represents a timely opportunity for such persons to regularize their holdings in terms of the law. in summary, therefore, i would say that there is no advantage to be gained by converting maltese lira assets into euro before the changeover date. from that date onwards, there will be an ample supply of euro notes and coin to satisfy the needs of the public. more importantly, euro currency will be provided at the official conversion rate without any changes or commissions. still on the euro, do you think that people are as worried about inflation as they were? according to the eurobarometer poll taken in september 2006, some 70 % of maltese respondents said | 0 |
set timeline. in other words, the key pillars and objectives of the programme must not be put into doubt. it is thus significant that the greek prime minister said to the parliament last week that he intends to implement the bail - out agreement with no delays and to conclude the review successfully. the greek government should show that it has taken ownership of the various programme deliverables and is determined to achieve them. with the benefit of hindsight, how close were we to a β grexit β? is this scenario now off the table for good? you know, i have been asked this question so many times, in press conferences, in the eurogroup and in the european council. my answer has invariably been that the ecb has bis central bankers β speeches always acted on the assumption that the current members of the european monetary union will stay members, greece being one of them. it is not for the ecb to decide which country can be a member of the euro area. the ecb has acted and will continue to act on that basis. is it completely off the table though? as far as the ecb is concerned, it was never on the table. i think we have demonstrated that consistently in the past, no matter what others have said or were said to have been saying. is debt relief important for greece and, if so, when should it come? well, i believe that two elements will be important in the coming months. the first is the one that i have just mentioned : strong ownership of the programme and determination in its implementation. the second one is debt sustainability. we have expressed concerns about current debt sustainability. in our view, there will have to be an element of debt relief. however, debt relief would not be credible if it is not accompanied by the first element. it is crucial that the government, as well as the people, identify with the objectives of the programme, which are to bring back growth, fiscal and financial stability and social fairness to the greek economy. for the government to present itself as being forced to do something by external powers would be self - defeating, as the people of greece who are supposed to make some of the short - term sacrifices will then ask their government β why? β β β why should we do this, if you yourself are not convinced? β incidentally, this has been a long - standing challenge regarding programmes that have been designed and negotiated with international institutions. so, i would like to reiterate that ownership is important | review. greek banks currently seem to be operating like β zombies β. do you think this will change after the recapitalisation? the key aim of the recapitalisation is to enable these banks to function normally and to be in a position to support the economic recovery in greece by providing credit and other financial services. robust capital and liquidity positions are necessary conditions for achieving this objective, which is why the process of bank recapitalisation and its smooth implementation are so important. given that the upcoming recapitalisation will involve significant amounts of public money, it is critical that banks are controlled by highly professional boards complying with state - of - the - art governance standards. this will also ensure that the state funds used for recapitalising banks can be recouped via privatisation. having said this, further measures are needed for banks to remain sustainable in the longer term. in particular, banks will have to intensify their efforts to resolve the high levels of bad or so - called non - performing loans and the relevant authorities will need to remove the remaining obstacles hampering progress in this area. naturally, some other conditions are also important, for example, the lifting of capital controls and the country β s renewed access to international financial markets. we are talking about a series of positive steps, including structural reforms, which are required for greece to resume a path of sustainable growth and higher employment. is a bail - in of depositors completely off the table? the ecb insisted that a bail - in of depositors should be excluded, as it deemed any such measure to be counterproductive for the economic recovery and harmful for the greek economy. it would have had a very negative impact on the private sector. the eurogroup accepted our viewpoint. it is essential that the greek authorities move ahead swiftly with the implementation of the agreed financial sector measures so that the recapitalisation exercise can still be finalised this year. its completion will be an important step in the effort to restore depositor and market confidence in greek banks. the prime minister, and also some ministers, have talked of trying to renegotiate part of the programme. is there any scope for this or is this a move that could backfire? the memorandum, which was supported by the greek parliament, was agreed with the authorities in august. i believe it is in the interest of everyone that the focus should now be on quickly implementing the measures that were jointly agreed, in line with the | 1 |
capital requirements would be unacceptable : for example, a 75 % output floor would affect half of international banks. it would de facto result in creating a β basel iv β framework based on the standardised approach. the output floor is to serve as a backstop, not as the primary driver of capital requirements : yes to basel iii, no to basel iv. having said that, the main issue now is no longer the solvency of banks, but the liquidity of non - banks. therefore the bulk of the regulatory efforts must now be focused on the shadow banking system, which has risen from usd 73 trillion of assets in 2007 to usd 92 trillion in 2015ii β i. e. 150 % of total gdp β in the jurisdictions monitored by the financial stability board. and those parts of shadow banking that may pose financial stability risks represent usd 34 trillion ; two - thirds of which is composed of collective investment vehicles ( civs ) with features that make them susceptible to runs. it is thus of key importance that authorities develop and use system - wide liquidity stress - testing tools, in order to address the risks of a β funds - run β in adverse market conditions. the fsb decided on this ; it has to be implemented with a strong commitment by iosco and national regulators. the third main area of work is the regulatory framework for central counterparties ( ccps ). the clearing obligation of otc derivatives has fortunately reduced otc transactions, but as a result ccps have also become more and more systemic and concentrated. the fsb guidance on a recovery and resolution framework, which is currently being transposed into eu legislation, is a good step forward. faced with brexit, europe has the additional imperative of not letting sources of systemic risk for the eu grow outside the eu. in this regard, the proposal recently made by the eu commission is a step in the right direction, but it should be streamlined and strengthened to make sure that euro - denominated clearing activities are supervised and so located in the european union when they exceed certain thresholds. one additional word about cyber - risks : as we have been reminded by the two viral attacks carried out in the last two months, we are at the same stage that medicine was at before pasteur and vaccinations. the challenge is to take swift and decisive actions to enhance cyber resilience in the financial system, building notably on the g7 recommendations : the g7 is, at this stage, the key forum to act. | paris europlace international financial forum β paris, wednesday 12th july 2017 roundtable 3 : capitalizing on the new g20 regulatory steps introductory remarks by francois villeroy de galhau, governor of the banque de france ladies and gentlemen, it is a pleasure to be with you today to introduce this roundtable, which could not be more topical, just a few days after the leaders of the g20 met in hamburg. from london in 2009 to hamburg last week, there is only 450 miles as the crow flies ; but there has been considerable progress in terms of financial regulation. thanks to international cooperation between the 20 major economies, the resilience of the global financial system has significantly improved in eight years, without impeding the financing of the economy or global economic growth. we can all be proud of these achievements, but there is no room for complacency today. let me elaborate on what i see as the three priorities for further work, and the two requirements to consolidate what we have achieved so far. * * 1. three priority areas where further work is needed. first, we have to finalise the basel iii framework, β without further significantly increasing overall capital requirements across the banking sector, while promoting a level playing field β. i wish to stress that this commitment was reaffirmed in hamburg a few days ago by the whole g20, including the united states β and this is important as we need to preserve, in the words of the g20 leaders β declaration, β an open and resilient financial system, grounded in agreed international standards β i. regarding basel iii, i sincerely hope that we can reach a balanced agreement among basel committee members by next autumn. the vast majority of the basel iii framework has indeed already been agreed and is now largely implemented, notably in europe since 2014 with the crd iv package. the main outstanding point of discussion is, as you know, the so - called β output floor β which would apply to banks using internal models. the objective of basel iii is to lay the foundations for a strong, balanced and risk - sensitive international regulation, while reducing the undue variability of risk - weighted assets ( rwas ). so we need a prudent but a reasonable level of the output floor, combined with strengthened supervision of banks β internal models β and europeans made sensible proposals to achieve this. but should the output floor be set at too high a level, the consequences in terms of the reduction of risk sensitivity and the increase in | 1 |
as opposed to a stabilizer of shocks and capital flows, especially in ems with strong external positions that are considered as safe haven like thailand. while capital flows in and out of ems might be small relative to global financial activities, they could have real and significant impacts on the em economies through the exchange rate channel. concerning volatile exchange rate movements that could undermine financial stability, capital flows could affect ems β monetary policy stance. for example, in the low - for - long interest rate environment, ems may need to follow aes in delaying or reversing normalization of monetary policy to avoid appreciation of their currencies. because of spillovers, monetary policy of ems could be distracted from their core domestic policy mandates. the delayed normalization in the low - for - long or negative - for - long interest rate environment further exacerbates financial stability risks. debts β both household and corporate β are now reaching historic highs. emerging nations, often with nonbank financial activities outside the regulatory perimeter, are more susceptible to risk buildups. financial spillovers need to be addressed at multiple levels. on a domestic - level, financial stability will have to play a more prominent role in monetary policy decisions. this is especially true in the current environment where inflationary pressure is subdued. for ems that still have a lot of ground to cover in regulating non - bank financial activities, financial stability cannot be addressed by macroprudential measures alone. ems also need to equip themselves with policy tools to deal with rapidly changing capital flows ; these tools encompass macroprudential measures, microprudential measures, capital flow management measures, and at times foreign exchange intervention. on an international level, we need to recognize the changing landscape and the impact of the financial spillovers on small open economies, advanced economies and ems alike. first, the burden of adjustment needs to be proportionately shared by both the source and recipient countries of capital flows. at present, ems as recipients of flows are often restricted and reproached in their response to capital flows, while source countries have full flexibility in their conduct of monetary policy. in this regard, we very much welcome imfs β work on the integrated policy framework which will allow small open countries to respond to spillovers more effectively taking into account each country β s specific context and circumstances. we would very much hope that source countries of capital flows take into account spillover and spillback effects in their policy deliberation. second, assessments of global imbalances and | tarisa watanagase : issues important to small and open emerging market economies speech by dr tarisa watanagase, governor of the bank of thailand, at the panel discussion on financial globalisation, capital flows, and challenges for central banks, at the 77th annual general meeting of the bank for international settlements, basel, 24 june 2007. * * * my discussion will focus on the issues important to small and open emerging market economies. the first is regards to whether the present situation of sustained inflows into emerging markets is really sustainable. what do these seemingly sustained inflows tell us, particularly in terms of investors β assessment of riskiness of the region? or from another angle, have risks in the region declined? i will discuss this in the context of financial innovations in risk management, and conclude with a few remarks on how these developments affect central banks across the globe. my first question, therefore, arises from the observable reduction of risk premia for financial assets in the region. on the surface, this low risk premia implies lower risks. but does, it, really? we all realize that the international financial system is currently in an environment with low risk premia across a broad set of asset classes, combined with low volatility in the prices of these assets. furthermore, this low risk premia has been sustained despite the various episodes of risk aversion in the recent past. this raises concerns about whether prices β and consequently the risk premia themselves β accurately reflect actual risks. of course, it is arguable that the search for yield in riskier assets is due in part, no doubt, to the historically low interest rates and abundant global liquidity, partly a result of recent expansionary monetary policy around the world. this has encouraged greater risk - taking, resulting in a substantial reduction in risk and liquidity premia over the entire maturity spectrum. on the other hand, however, low risk premia could also reflect changing risk appetite. more importantly, it is unclear whether this change in risk appetite has arisen from permanent or transitory factors. i make this distinction because permanent factors would imply that this reduction in risk premia is here to stay. transitory factors, on the other hand, imply that the risk premia would rise once these factors reversed. let me try to identify some of the permanent factors that have resulted in the shift in risk appetite and preferences. these include, firstly, changing demographics. the aging population has led | 0.5 |
are being exacerbated. in this context, deep - dives analysis and research are key to understanding and managing these new complexities. awareness and clarity are fundamental for both operators and clients to be able to face these challenges, as we are seeing with crypto - assets, and 1 / 3 bis - central bankers'speeches yesterday's panel offered useful insights here. policy and regulatory attention in the crypto ecosystem has increased in the past year. we have felt the need to provide some useful references for consumers, intermediaries, providers and operators of digital infrastructures, with a dedicated communication in june 2022. now at european level, we can also rely on micar, which introduces a clear set of rules to deal with crypto - assets. it is part of the eu's digital finance strategy, together with the eu's digital operational resilience act and the dlt pilot regime. micar represents a significant step forward in this field but, as supervisors, we have to continuously monitor the rapidly changing ecosystem. the speed of innovation is a new complexity, requiring an acceleration and a change in the regulation, which, in the new paradigm, should not only follow innovation, but also address it, by adopting a dynamic and modular approach. it is extremely important that operators, supervisors and regulators acquire suitable competencies to understand the risks ( it, operational, reputational, but also in terms of strategic / business model risk ) that may arise, to deal with the increasing complexity, to guarantee sustainability and to exploit the opportunities that innovation technologies offer. we need to improve knowledge and awareness of the new ecosystem. the dialogue among regulators, academia, industry players and technology providers is fundamental for steering the potential of innovation in a positive direction, in order to take advantage of the opportunities while at the same time navigating the related risks. dialogue is vital : encouraging best practices, i. e. defining common standards and principles in order to encourage the development of sound operating models, also with regard to the economic, social and environmental impact, to ensure an adequate level of interoperability between various technological solutions and their overall sustainability, and not only in terms of esg factors, as the last session highlighted. by leveraging on a constant and constructive dialogue with all the stakeholders involved in the fintech ecosystem, the bank of italy is implementing a clear strategy to support financial institutions and promote the development of sustainable, sound and responsible innovation, thereby ensuring financial stability, financial inclusion and | welcome address by paolo angelini deputy governor of the bank of italy 7th bank of italy - cepr workshop on labour market policies and institutions rome, 19 september 2024 ladies and gentlemen, it is with great pleasure that i welcome you today to the seventh edition of the workshop on labour market policies and institutions, co - organized with the cepr. the labour market is a key component of our economies, providing the foundation for individual livelihoods and societal well - being. the covid - 19 pandemic and its aftermath have accelerated long - term trends that are reshaping our labour markets : technology adoption and rising inequalities. these two issues are receiving much attention, and rightly so, in my view. they run through the papers that will be presented over the next two days, and will be addressed by our keynote speakers. in my remarks today, i would like to share some thoughts on these two related themes. first, the pandemic accelerated the digitalization of our societies. as a result, the demand for workers with digital skills has risen sharply. while this transformation has created new job opportunities, it has also deepened existing wage inequalities, as it mostly benefited high - paid and highly educated workers. 1 automation and generative ai are an important part of this process. these innovations can potentially improve labour productivity and the quality of work, but they also risk displacing some types of jobs, this time also at the top of the earnings distribution. while the ultimate impact of the new technologies on welfare and inequality is still uncertain, it is clear that it can be potentially large. therefore, careful monitoring and analysis will be required to guide policy design in areas such as social protection, welfare and education. it is a privilege to have professor david autor as our keynote speaker on a. adams - prassl, t. boneva, m. golin and c. rauh, β inequality in the impact of the coronavirus shock : evidence from real time surveys β, journal of public economics, 2020 ; o. aspachs, r. durante, a. graziano, j. mestres, j. g. montalvo and m. reynal - querol, β real - time inequality and the welfare state in motion : evidence from covid - 19 in spain β, economic policy, 2022. f. carta and m. de philippis, β the impact of the covid - 19 shock on | 0.5 |
axel a weber : what imbalances after the crisis? speech by professor axel a weber, president of the deutsche bundesbank, at the international symposium of the banque de france : regulation in the face of global imbalances, paris, 4 march 2011. * 1. * * introduction ladies and gentlemen, over the past several decades, the economies of the world have become increasingly integrated. with the removal of barriers to the worldwide flow of ideas, services, goods and capital, a global economy emerged. this has brought about a large increase in welfare and still harbours huge potential for further economic growth and prosperity. during the past years, growth in the world economy has become increasingly unbalanced, however. a visible expression of these imbalances are divergences in current account positions. although these imbalances were not the ultimate cause of the financial crisis, they did play a role in the build - up of unsustainable structures. this sparked public debate regarding the options to rebalance the world economy and secure sustainable long - term growth. let us first take a look at recent developments with regard to global imbalances and then discuss some policy options to address these imbalances. 2. global rebalancing : recent trends and perspectives over the past two and a half years we have witnessed a partial correction of current account imbalances which was mainly driven by external adjustments in deficit countries and by lower surpluses in commodity exporting countries. however, the imf forecasts a renewed divergence of current account positions. while the current account of the euro area as a whole will remain broadly in balance, future trends in global imbalances will be determined mainly by the united states on the deficit side and by emerging asia and oil - exporting countries on the surplus side. according to these forecasts, the current account deficit of the united states will increase slightly until 2015, while the chinese current account surplus is expected to increase more sharply. the medium - term outlook, however, is uncertain as the chinese government has outlined a new plan to raise domestic demand. current account surpluses in oil - exporting countries have not returned to pre - crisis levels, but given the recent hike in oil prices the surpluses might increase faster than initially expected. to sum up, current developments suggest that global imbalances will grow again and remain uncomfortably large over the coming years, albeit at below pre - crisis levels. thus, there is good reason to further discuss policy options | new york. caballero rj ( 2010 ), β crisis and reform : managing systemic risk β, xi angelo costa lecture, rome, 23 march. see caballero ( 2010 ). cagliarini a and a heath ( 2000 ), monetary policy in the presence of knightian uncertainty, rba research discussion paper 2000 - 10. cohan wd ( 2009 ), house of cards : how wall street β s gamblers broke capitalism, allen lane, great britain. das s ( 2006 ), traders guns & money : knowns and unknowns in the dazzling world of derivatives, prentice hall, great britain. haldane ag ( 2009a ), β small lessons from a big crisis β, remarks at the federal reserve bank of chicago 45th annual conference β reforming financial regulation β, 8 may. haldane ag ( 2009b ), β why banks failed the stress test β, speech given at the marcusevans conference on stress - testing, 13 february. lewis m ( 2010 ), the big short : inside the doomsday machine, w. w. norton & company, inc, new york. patterson s ( 2010 ), the quants : how a new breed of maths whizzes conquered wall street and nearly destroyed it, crown business, new york. reinhart cm and k rogoff ( 2009 ), this time is different : eight centuries of financial folly, princeton university press, princeton. skidelsky rja ( 2009 ), keynes : the return of the master, allen lane, united kingdom. taleb nn ( 2007 ), the black swan : the impact of the highly improbable, random house, new york. | 0 |
to 2017. unlike monetary policies, there has been far limited literature on how macroprudential measures should be calibrated with respect to changes in asset price levels. the complex dynamics underlying the property market in hong kong has made it very difficult, if at all possible, to develop an ex ante framework governing how the hkma should operate its macroprudential policies. so, what we have done is to tread extremely carefully in each round of adjustment. the hkma has established a cross - departmental committee to regularly review whether the prevailing macroprudential measures would need to be adjusted, taking into account a host of factors including the property price trend, transaction volumes, domestic economic fundamentals and the external environment. the committee is chaired by the chief executive of the hkma and comprises members coming from multiple functions including monetary management, banking supervision, research and macro surveillance. 1 / 3 bis central bankers'speeches 6. some commentators have criticised the hkma β s macroprudential measures as being ineffective because they have not been able to arrest the rising trend of property prices. this is a misunderstanding of the objective of the hkma β s macroprudential measures. the objective of the hkma β s measures is not to tame property prices. instead, they are aimed at strengthening the risk management of banks and thus safeguarding long - term banking stability. in this regard, it is worth noting that the average ltv ratio of new residential mortgage loans has been consistently lower than 60 % while the average debt servicing ratio of new mortgages has been consistently lower than 40 %, suggesting that the banking system has built in buffer to safeguard its resilience. 7. competition dynamics : mortgage products in hong kong are homogeneous, in the sense that from the mortgagor β s perspective it makes little difference which bank is offering the mortgage facility. there is therefore a strong tendency for banks to compete for market share by lowering their underwriting standards. with the macroprudential measures in place, however, banks can compete for mortgage business only in terms of pricing ( e. g. mortgage rate ). against a backdrop of rising property prices and a consistently low delinquency rate of mortgage loans, many banks tried to outcompete their peers by pushing down the mortgage rate to record low levels. we were concerned that the low mortgage rates banks charge might not be adequate to cover the potential credit loss if property prices were to correct sharply in the future. the hkma has | arthur yuen : remarks discussantΒ΄s remarks by mr arthur yuen, deputy chief executive of the hong kong monetary authority, at the ampf 2021 and mas - bis conference on macro - financial stability policy, 28 may 2021. * * * opening 1. it gives me great pleasure to share my views on hong kong β s experience in the use of macroprudential measures to safeguard financial stability. i am grateful to mr ( robert ) mccauley and professor ( catherine ) schenk for their research efforts, and their recognition of the effectiveness of the macroprudential measures implemented by the hong kong monetary authority ( hkma ) since the 1990s. the importance of macroprudential policies 2. today β s discussion on macroprudential policies is timely considering recent market developments. the accommodative monetary policies adopted by major economies in response to the covid - 19 health crisis have provided renewed impetus to rising property and asset prices in many markets. how to rein in asset price inflation and prevent it from endangering financial stability in the event of an abrupt price adjustment is a topical issue within the central banking community. 3. as mentioned in robert and catherine β s joint paper, the hkma β s macroprudential measures on mortgage lending were first introduced in 1991. they have helped hong kong weather several crises including the asian financial crisis, during which property prices plunged by as much as 70 % between 1997 and 2003. being an early adopter, we are encouraged to see that macroprudential measures have gained wider international acceptance after the global financial crisis ( gfc ). many jurisdictions have implemented macroprudential measures similar to those in hong kong, including loan - to - value ratio ( ltv ) caps and stress testing on the mortgagor β s ability to cope with interest rate rises in terms of their repayment ability. challenges and mitigation : calibration of macroprudential policies 4. i would like to take this opportunity to share our experience gained since the gfc in operating our macroprudential measures on mortgage lending. my remarks would focus on what i call the β 4cs β. 5. calibration : driven by the low interest rate environment and limited housing supply, residential property prices in hong kong continue to grow since the gfc. this has posed increasing risks to financial stability in hong kong. in response, the hkma implemented 8 rounds of tightening of the macroprudential measures from 2009 | 1 |
ben s bernanke : the importance of financial education and the national jump $ tart coalition survey speech 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, federal reserve board, washington dc, 9 april 2008. * * * good morning. it is my pleasure to welcome you to today's briefing on the results of the jump $ tart coalition's biennial financial literacy survey of america's high school seniors. the financial preparedness of our nation's youth is essential to their well - being and of vital importance to our economic future. in light of the problems that have arisen in the subprime mortgage market, we are reminded of how critically important it is for individuals to become financially literate at an early age so that they are better prepared to make decisions and navigate an increasingly complex financial marketplace. choosing a credit card, saving for retirement or for a child's education, or buying a home now requires more financial savvy than ever before. financial literacy and consumer education β coupled with robust consumer protection β makes the financial marketplace effective and efficient, and better equips consumers to make tough yet smart financial decisions. today, only eight states across the u. s. require personal finance before middle or high school graduation. i believe more states should consider making personal finance a requirement for all students who seek a high school diploma. i am personally convinced that improving education is vital to the future of our economy and all its citizens, and i strongly believe 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 β the results of which you will hear about shortly β jump $ tart has brought increased attention to the need for greater financial literacy among the youth of our nation. during the jump $ tart survey's 12 - year history, the data gathered have served as the basis for useful measures of what young adults do and don't understand about finances. undoubtedly, we will soon learn that there is plenty of work to be done and that our students have much to learn. the federal reserve is strongly committed to jump $ tart's mission | ##ve customers over the years and measures were required to be taken by the banks to protect the customers. while it is good to know that banks have played their roles in investing in robust security systems, they must also ensure that customers play their part in protecting their own assets and savings. the reminder and greater awareness from the banks through this campaign is timely. it will not only reinforce the need for constant vigilance from all parties, but also help create an environment where everyone is risk conscious and responsible in protecting the interests of each other. these initiatives would not achieve the desired outcomes without effective bis central bankers β speeches communication, and the media has a critical role to play in conveying the message from the banks. we have always acknowledged the importance of the media and i would like to record bank negara malaysia β s appreciation for the assistance rendered by the media in creating awareness of this issue in the past. we hope that with the support of the media on this occasion too, this campaign will be a success, and the public will have heightened levels of understanding and vigilance over this issue. on behalf of bank negara malaysia, i would like to thank all the banks for taking this initiative to undertake this joint e - banking awareness campaign. our thanks also to cyber security and the police force for your ongoing efforts to collaborate with the banking industry. i wish all of you the best and assure you that bank negara malaysia will continuously support you in this noble effort. bis central bankers β speeches | 0 |
panayotis thomopoulos : the greek economy and its outlook speech by mr panayotis thomopoulos, deputy governor of the bank of greece, at the covered bonds conference, organised by barclays international, athens, 1 september 2006. * * * ladies and gentlemen, i am delighted to address this meeting devoted to an issue of growing importance to the financial community. experts will speak on the subject of this conference as for me i shall try to introduce the subject of greece. it is two years since the successful conclusion of the athens olympics and i am glad to observe that the greek economic performance since then has vindicated those of us who have remained optimists all through the last decade. while two years ago many feared that the greek economy would slide into a protracted period of slow growth or even recession when the spending for the olympics ended, and cited spain as a precedent, we now see that the greek economy remains one of the strongest in the eu. this performance, achieved in the context of a very significant domestic fiscal adjustment and the eurozone β s slow growth until recently, indicates that greece has a dynamism that reflects important changes on the supply side. in the rest of my speech i will highlight the main strengths of the greek economy, the risks facing us and the necessary policy measures needed to avoid those risks and maximize the benefits from our strengths. as i alluded to before, many feared that the demand - led expansion in the run - up to the olympics would be followed by a significant slowdown and some even predicted that greece risked falling back into a vicious circle of stagflation. indeed, between 1980 and 1994, economic performance was abysmal : gdp grew only at 0. 7 % annually and inflation averaged 16 % combined with a rising fiscal deficit, culminating at 13 % of gdp in 1993. considering the significant initial disequilibria it is not surprising that in the 1990s few believed that greece would satisfy the strict criteria for euro area membership, and even after joining the euro area in 2001 many doubted that it would be able to sustain for long the high rate of gdp growth of 4 % p. a. experienced in the 9 years to 2004, compared with only 1. 9 % for the euro area as a whole. indeed, the fears increased as the deterioration of the fiscal situation, associated with the olympic games β overruns partly due to sizeable additional expenditure for security as well as the budgetary relaxation called for a substantial fiscal adjustment, | emphasis in the future should be placed on the risks and vulnerabilities of the rapidly expanding non - bank financial sector5. in addition, further steps to enhance data quality and availability are necessary, including by harmonising data definitions and promoting greater standardisation at global level ( e. g. financial and real estate transactions data ). issues related to greece let me now turn to a few key domestic issues. throughout the crisis, the bank of greece has been the guardian of financial stability, fully protecting all deposits and supporting the economy and serving the public interest. the bank focused on two major fronts : ensuring adequate provision of liquidity, and managing and assisting recapitalisation, resolution and restructuring of the banking sector. with respect to liquidity provision, the bank has been critical in ensuring continuous liquidity provision to banks in its role as the lender of last resort. on various occasions, the bank of greece has provided ela to the banking system. this has helped preserve financial stability and contributed to the avoidance of a banking crisis. with respect to managing and assisting recapitalisation, resolution and restructuring, the bank, in the context of the adjustment programmes, aimed to strengthen viable institutions and resolve non - viable ones, whilst safeguarding financial stability. to this end, viability assessments and 3 / 5 bis central bankers'speeches capital needs assessments were undertaken. those banks deemed non - viable were resolved and absorbed by systemic banks. with 14 such resolutions having successfully taken place since 2011, this process has also facilitated the considerable consolidation of the banking sector. following three rounds of recapitalisation, greek banks now have among the highest capital ratios of banks in the euro area and maintain buffers sufficient to absorb additional credit losses, as the recently completed pan - european stress test indicated. they have also markedly improved their liquidity position, reducing their reliance on central bank funding, regaining access to the interbank market and issuing covered bonds. concurrently, customer deposits have been gradually increasing. however, the ratio of non - performing exposures ( npes ) to total exposures remains quite elevated and constitutes the most significant challenge for the greek banking sector. banks have set operational targets to significantly reduce the stock of npes by end - 2019. at the same time, significant reforms have been implemented, aimed at removing administrative, legal and judicial impediments to npe resolution, as well as establishing a secondary market for npl servicing and sales. these efforts have started to bear fruit : according to | 0.5 |
economic prospects, the basic questions surrounding capital and regulatory reform have now been answered. we anticipate that some firms with high capital levels that have been retaining solid earnings for several quarters will be interested in increasing or resuming dividends. in response to these anticipated requests, we will soon be issuing supervisory guidelines applicable to such requests from the largest holding companies for the first quarter of next year. although the details of these guidelines are still being finalized, i can say that our approach to considering such requests will be a conservative one. we will expect firms to submit convincing capital plans that demonstrate their ability to absorb losses over the next two years under an adverse economic scenario that we will specify, and still remain amply capitalized. we also expect that firms will have a sound estimate of any significant risks that may not be captured by the stress testing, such as potential mortgage putback exposures, and the capacity to absorb any consequent losses. the firms will also be asked to show how, even with their proposed capital distributions, they will readily and comfortably meet the basel iii requirements as they come into effect, as well as to accommodate any business model changes that might be necessitated by dodd - frank. conclusion the final set of major dodd - frank regulations will not be completed until early 2012. a year from now we will be in the midst of a regulatory process implementing basel iii, and there will likely be an active debate over the future of the government - sponsored enterprises. so i see little risk that the third annual conference on financial regulatory reform at george washington law school will be entitled β the end of the road. β maybe, just maybe, i have given you a title for the fourth. then again, maybe not. | the sum of the minimum and buffer requirements. however, restrictions on capital distributions will result, which will become progressively more stringent as the common equity ratio drops closer to the 4. 5 % minimum. the buffer is thus designed to forestall banks from continuing to pay dividends even as they come under stress, a practice observed in some institutions during the financial crisis. realistically, both regulators and markets will expect firms generally to maintain their common equity ratios above 7 %. third, basel iii makes extensive changes to the risk weights assigned to a financial institution β s traded assets and counterparty exposures. as i mentioned earlier, the marketrisk requirements of the pre - crisis capital regime were woefully inadequate. in many instances, they simply did not reflect the actual risk assumed by an institution. they also created an invitation to arbitrage credit risks by turning them into traded assets with lower risk weights. it is also noteworthy that the changes in risk weights incorporate some elements of a macroprudential perspective as, for example, in higher capital requirements on equity investments in other financial firms and credit exposures to large financial firms. fourth, basel iii provides for a minimum leverage ratio, roughly similar to requirements already applicable under national law in the united states and canada. while the terms of this leverage requirement have been agreed to, there will be a supervisory monitoring period and then a parallel run to assess its impact, particularly in countries with no history of such a requirement, and to provide for adjustments if warranted. finally, basel iii has a rather lengthy and complicated transition period, with the new requirements to be phased in between january 1, 2013, and january 1, 2019. we favored a significant transition period, so as to allow firms flexibility in adjusting to the new regime through such means as running off higher risk - weighted assets, adjusting their business models gradually, or using retained earnings to add any new capital that might be required under the new rules. to be honest, however, we did not think the transition period needed to stretch over eight years. in fact, it appears that most u. s. banking entities expect to meet the new requirements considerably sooner. however, the lengthy transition period was an important inducement for some countries to agree to the new, much stronger standards. with the agreements reached in july and september at meetings of the governors and heads of supervision ( ghos ) in basel, the structure and basic elements of basel iii are clear. details are still being worked out by | 1 |
the housing sector. private payrolls have continued to contract, and the declines in employment, together with earlier increases in food and energy prices, have eroded the purchasing power of households. this sluggishness of real incomes, together with tighter credit and declining household wealth, is now showing through more clearly to consumer spending. indeed, since may, real consumer outlays have contracted significantly. meanwhile, in the business sector, worsening sales prospects and a heightened sense of uncertainty have begun to weigh more heavily on investment spending as well. the intensification of financial turmoil and the further impairment of the functioning of credit markets seem likely to increase the restraint on economic activity in the period ahead. even households with good credit histories are now facing difficulties obtaining mortgage loans or home equity lines of credit. banks are also reducing credit card limits, and denial rates on automobile loan applications reportedly are rising. businesses, too, are confronting diminished access to credit. for example, disruptions in the commercial paper market and tightening of bank lending standards have made it more difficult for businesses to obtain the working capital they need to meet everyday operating expenses such as payrolls and inventories. all told, economic activity is likely to be subdued during the remainder of this year and into next year. the heightened financial turmoil that we have experienced of late may well lengthen the period of weak economic performance and further increase the risks to growth. to support growth and reduce the downside risks, continued efforts to stabilize the financial markets are essential. the federal reserve will continue to use the tools at its disposal to improve market functioning and liquidity. inflation has been elevated, reflecting the steep increases in the prices of oil, other commodities, and imports that occurred earlier this year, as well as some pass - through by firms to consumers of their higher costs of production. however, more recently, the prices of oil and other commodities, while remaining quite volatile, have fallen from their peaks, and prices of imports show signs of decelerating. in addition, expected inflation, as measured by consumer surveys and inflation - indexed treasury securities, has held steady or eased. these recent developments, together with economic activity that is likely to fall short of potential for a time, should lead to rates of inflation more consistent with price stability. still, the inflation outlook remains highly uncertain, in part because of the extraordinary volatility of commodity prices. we will need to continue to monitor price developments closely. overall, the combination of the incoming data and recent financial developments | , including putting in place a temporary lending facility that provides financing for banks to purchase high - quality asset - backed commercial paper from money market funds. the fed has also significantly increased the quantity of funds it auctions to banks and has accommodated heightened demands for funding from banks and primary dealers ; as of last wednesday, our various lending facilities, including our securities lending program, were providing more than $ 800 billion of liquidity to the financial system. to address dollar funding pressures worldwide, we have significantly expanded reciprocal currency arrangements ( so - called swap agreements ) with foreign central banks. these agreements enable the foreign central banks to provide dollar funding to financial institutions in their jurisdictions, which helps to improve the functioning of dollar funding markets globally. in addition, this morning the federal reserve announced a new facility that will help provide liquidity to term funding markets by purchasing three - month commercial paper and asset - backed commercial paper directly from eligible issuers. the expansion of federal reserve lending is helping financial firms cope with reduced access to their usual sources of funding. recently, however, our liquidity provision had begun to run ahead of our ability to absorb excess reserves held by the banking system, leading the effective funds rate, on many days, to fall below the target set by the federal open market committee. this problem has largely been addressed by a provision of the legislation the congress passed last week, which gives the federal reserve the authority to pay interest on balances that depository institutions hold in their accounts at the federal reserve banks. the federal reserve announced yesterday that it will pay interest on required reserve balances at 10 basis points below the target federal funds rate, and pay interest on excess reserves, initially at 75 basis points below the target. paying interest on reserves should allow us to better control the federal funds rate, as banks are unlikely to lend overnight balances at a rate lower than they can receive from the fed ; thus, the payment of interest on reserves should set a floor for the funds rate over the day. with this step, our lending facilities may be more easily expanded as necessary. so long as financial conditions warrant, we will continue to look for ways to reduce funding pressures in key markets. economic activity had shown signs of decelerating even before the recent upsurge in financial - market tensions. as has been the case for some time, the housing market continues to be a primary source of weakness in the real economy as well as in the financial markets. however, the slowdown in economic activity has spread outside | 1 |
bank has been formally confirmed, accompanied by a clear mandate. the floating exchange rate regime and the explicit target for price stability have worked well. several segments of the swedish economy have been deregulated, though less has been done in this way in the labour market than in markets for goods and services. but the labour market organisations have been working on their own account to improve the system for wage formation. as a result of all this, the swedish economy is doing better than we have seen for a long time. the economic upswing has now continued for more than six years, during which annual gdp growth has averaged around 3 %. and notwithstanding the strong growth of demand, inflation has been lower than one would expect from earlier relationships. everything suggests, moreover, that the economy will continue to impress. last year, gdp growth was 3. 8 % and the increase in employment was the highest in the past twenty - five years. another indication of the good circle in which the swedish economy is developing at present is that forward - looking gdp assessments have also been revised upwards, whereas forecasts of inflation have not been adjusted upwards to the same degree. financial market pricing is also a tribute to the present credibility of swedish economic policy. who would have believed a decade ago that the swedish economy would achieve such a favourable path? the successful combination of relatively high gdp growth and low inflation can in principle be attributed to a number of factors. one may be the plentiful supply of unutilised resources after the crisis in the early 1990s. a change in pricing behaviour may have contributed once the rate of inflation had been brought down to a low and stable level. increased competition in connection with, for example, deregulations, globalisation and it commerce may also have played a part. but it may also have to do as well with an upward shift in trend productivity, so that more goods and services can be produced without an increase in prices, in other words, a higher rate of potential growth. it can be argued that all these factors have in fact contributed to the favourable development. when the upswing started there were plenty of unutilised resources. it is highly likely that pricing behaviour in a low inflation regime differs from that when inflation is high. another circumstance worth mentioning is that both external and domestic competitive pressure have increased and led in many cases to downward price adjustments or just a slow increase. the most recent figures for inflation are one of several illustrations of this phenomenon. while this is strictly speaking | the financial sector was deregulated in the mid - 1980s, the problems with stabilisation became even more difficult to manage. meanwhile, the structural weaknesses were being concealed by an overheated economy. activity looked strong but the potential growth rate in the swedish economy had weakened some time before. as the 1980s drew to a close, however, there was a growing awareness that something would have to be done. the structural problems, high inflation and speculative behaviour all warranted a realignment of economic policy. in time, the necessity of a change was supported more and more widely. the tax system was reformed and so were certain segments of the transfers system. sweden also applied for membership of the european union. our currency was pegged to the ecu and during the wave of international exchange rate speculation in the autumn of 1992 the krona was defended to the bitter end in order to demonstrate the determination to re - establish a credible low inflation regime. the economic policy realignment coincided, however, with the setback that followed the bursting of the bubble from the late - 1980s and the swedish economy descended into a profound crisis. whether this dramatic downturn could have been managed somewhat differently is a question that will no doubt be analysed in the future. some things could certainly have been done differently in the late 1980s, as well as in the throes of the crisis. however, i believe that the main lesson to draw is that the roots of the deep crisis ran quite a long way back. a realignment of economic policy was essential. the fact that there had been no credible stability oriented policy regime in sweden for almost twenty years had had far - reaching repercussions that ultimately affected our material prosperity. it was high time to establish a new anchor for monetary and exchange rate policy, wage formation and economic policy in general. structural reforms were also needed to correct earlier structural mistakes and restore our economic vitality. whether the measures that have been taken up to the present are sufficient is a debatable issue ; but the point i want to make is that a change of direction and some political action had already been initiated in the 1980s. the work has continued since then and been undertaken by governments of diverse political hues and personalities. in other words, something happened to swedish economic policy in a wide sense in the late 1980s. when the immediate crisis had been managed in the early 1990s it was clear that the weak government finances would have to be tackled. moreover, the independent status of our central | 1 |
, and physical risks are generally underappreciated. the longer that persists, the greater the risk of a sharp repricing, with the potential for substantial losses for financial institutions. at a minimum, this would impair the ability of the financial system to support the real economy and could even threaten the stability of our financial system. the efficiency and stability of our financial system in the face of climate change are closely linked and mutually reinforcing. by accelerating climate - smart capital flows, the financial system can reduce the risk of an abrupt and destabilizing adjustment. and by identifying, measuring and managing physical and transition risks, the financial system will improve the allocation of capital. information and disclosure are essential for the financial system to be able to do its job. companies need to assess, price and manage their climate risks, and they need to disclose these risks for markets to function well. this means companies must have reliable, consistent 1 / 3 bis central bankers'speeches and comparable ways to measure and state their exposures. financial institutions, too, must understand and be transparent about their own exposures. nothing i β ve said is particularly new, but these issues are taking on increased urgency. severe weather events are happening more often and with greater intensity, damaging real estate and infrastructure. more alarming still, scientists have high confidence that temperatures continue to warm rapidly, and this will contribute to more heat waves and an increased frequency of heavy rainfall. if we are going to overcome the threat posed by climate change, we β the world β need to move faster. there is also another reason for urgency here in canada. how well we address climate change is becoming a competitiveness issue for canadian businesses. consumers, workers and investors increasingly care about the environmental footprint of the products they buy, of the companies they work for and of the businesses they invest in. as a result, climate change is becoming an immediate bottom line business issue. a decade ago, in the wake of the global financial crisis, climate - change issues faded into the background. by contrast, today β s pandemic seems to have focused the public β s attention on extreme global risks and the value of resilience. in financial markets, global issuance of environmental, social and governance ( esg ) bonds has exploded in recent years and has not missed a beat so far through the pandemic. the flow of money into esg funds this year is roughly double that of last year, which was itself about triple | more than 3 million people found themselves working less than half of their normal hours. businesses closed shop in record numbers. inflation fell sharply, even dropping into negative numbers. we were staring down another great depression and the possibility of deflation. deflation happens when prices across the economy actually fall. while this might not sound bad, the truth is that persistent deflation is dangerous. when unemployment rises rapidly and overall prices begin to fall, households may reduce spending if they think that goods and services will become even cheaper in the future. but putting off spending results in less demand, leading to more job losses and more business closures. and this puts more downward pressure not only on prices but also on wages. both can spiral downward, as they did in canada during the great depression. deflation also makes repaying debt more expensive β which could have been a severe problem for a country like canada, with high levels of household debt. 1 / 3 bis central bankers'speeches so when the pandemic began and we were facing economic calamity, we took extraordinary actions. we lowered our policy interest rate as low as we could. we promised not to raise interest rates until slack in the economy was fully absorbed, and we reinforced this commitment using quantitative easing. taken together, these actions kept borrowing rates low to stimulate spending and instilled much - needed confidence in the economy so that businesses and households could recover. thanks to the resilience of canadians, effective vaccines, exceptional fiscal policy and the bank β s actions, canada avoided deflation and our economy has recovered. canadians are anxious but i recognize that this reassurance may not reflect how many are feeling. even before the pandemic, many canadians were worried about how they were faring economically. not everyone was experiencing the benefits of a growing economy and a healthy labour market. the pandemic intensified people β s concerns, layering worries about their health and that of their loved ones on top of uncertainty about jobs and businesses, the value of their savings and their prospects for retirement. reopening the economy has brought new complications, leading to higher inflation around the world and here at home. the covid - 19 virus continues to circulate and mutate. we are seeing social upheaval here in canada and in other countries. and in the last week, shocking developments have unfolded in ukraine at great human cost. the unprovoked russian invasion is also creating volatility and uncertainty in the global economy. we | 0.5 |
i would go further. it seems to me that those rules should contemplate a private sector contribution only to the extent needed, so that countries can quickly regain access to private financial markets. in a recent article in financial times, martin wolf, commenting on emerging market economies, ended with these words that deserve our attention : β optimists are not wrong : we do know how to make emerging market economies more seaworthy than they have been. but pessimists are also right : the turbulent global capital markets remain dangerous for the unprepared. those managing emerging market economies should be aware of the risks. they must understand, too, that they will receive only modest help from outside. the price of safety remains careful preparation and eternal vigilance. β thank you very much for your attention. | β normal β or β natural β levels after a long period of exceptionally easy monetary policy. the reliance on β measured β policy moves, and the care taken to communicate the fed β s policy intentions, attests to the delicate situation in which the authorities now find themselves. heavy debt accumulation by households and increased leverage by financial firms raise the prospect of a different response to policy tightening than might earlier have been expected. growing suspicions as to the continued reliability of domestic measures of inflationary pressures ( β gaps β ) in an increasingly globalised real economy only add to the uncertainty. in the light of the globalisation process in the financial industry, a number of commentators have suggested the need for an international super - regulator. see eatwell and taylor ( 1998 ) and currie ( 1999 ). political realities, particularly but not exclusively in the united states, make this a non - starter for the foreseeable future. there are particular impediments to prudential authorities behaving as suggested above. first, and perhaps most important, they do not have a macroprudential culture. it is a big leap for supervisors, in large part lawyers and accountants by training, and used to evaluating the health of single institutions, to think systemically. shocking systems of simultaneous equations to see the effects on market clearing conditions is not their natural pastime. moreover, it is an even bigger leap for prudential authorities to be convinced that action is needed when the financial system seems healthy, and only the corporate and household sectors seem overextended. surely, they would argue, this is someone else β s responsibility. a second very practical concern is that, in most jurisdictions, the prudential authorities do not have the power to use prudential instruments in the way recommended. acquiring such rights would probably involve a long and difficult political process. consider, for example, the strong opposition already being mounted by the accounting profession and the tax authorities to the idea of forward - looking provisioning for expected losses. how the use of such instruments, effectively imposed from outside, might be reconciled with the current trend to relying more on financial firms β internal assessments of the risks they are bearing is a closely related question. third, there is the fallacy of composition problem referred to above. how could the prudential authorities convince individuals to behave in ways that seemed to conflict with their own best interests? they would have to be persuaded both that it was in the common good of all to do so, | 0.5 |
bank of botswana 2020 media economic briefing - welcome remarks by moses d pelaelo governor july 14, 2020 at 09 : 00 hrs good morning. distinguished, ladies and gentlemen of the media, once again, it is my pleasure, on behalf of the board, management and staff of the bank of botswana, to welcome you to this economic briefing marking the launch and dissemination of the 2019 bank of botswana annual report, in fulfilment of the bank β s accountability to its key stakeholders, in this instance, members of the fourth estate, media practitioners. i also want to take this opportunity to recognise and appreciate your continuing coverage of the bank β s events, including joining us this morning for this economic briefing, notwithstanding the covid - 19 pandemic constraints and related challenges. communication is increasingly becoming key in our policy β tool - kit β, being a means to meet public expectations of a transparent and accountable central bank as well as anchoring policy credibility. the bank continues to explore ways and means to increase channels for sharing information with the public, on various aspects of its operations. therefore, in addition to the revamping of the bank β s website in 2019, other platforms, such as social media, are under consideration. to recap, distinguished members of the media, the annual report is published in compliance with the bank of botswana act and, as a statutory requirement, contains a report on the bank β s operations and audited financial statements ; therefore, the annual report is the primary vehicle for accountability to the nation on the operations and financial performance of the bank. also, as a statutory requirement, the bank publishes a monthly statement of financial position in the government gazette and submits an annual banking supervision report to the minster of finance and economic development by june 30, each year. i am happy to confirm that these statutory requirements have been consistently adhered to throughout the existence of the bank. the economic briefing this morning has three parts. first, chief financial officer, mr daniel loeto, will provide highlights of the bank β s financial performance and operations in 2019 and updates, where relevant. second, it is a tradition that the annual report also includes a review of economic developments and outlook. the review provides an analytical context and explanations for economic developments and prospects, as well as background to policy conduct and operations by the bank. tshokologo alex this will be presented by dr kganetsano, director, research and financial stability department. dr kganetsano | 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 |
real economy. 5 as recognised by the single supervisory mechanism, β [ b ] anks can and should exit the market if they are managed in a risky and unsound manner, or if they are structurally incapable of maintaining their competitiveness based on a sound business model. β 6 in such cases, the authority entrusted with ensuring financial stability should be equipped with the necessary instruments to safeguard confidence and ensure the financing of the economy is not 1 / 4 bis central bankers'speeches disrupted. post - global financial crisis, this has been achieved through the establishment of resolution frameworks whereby the usage of public funds is minimised. new powers and tools have been created and entrusted β in many cases to central banks β to ensure that critical operations of banks can continue and value is preserved while losses are mostly absorbed by shareholders and creditors with the aim of preserving financial stability. new institutions have also been created. the creation of the european systemic risk board ( esrb ), nine years ago, was a milestone in this respect. in sum, first, financial stability is inherent to the mandate of central banks ; second, microprudential supervision is essential but not sufficient to safeguard financial stability. macroprudential supervision is also needed and it should be entrusted to the entities that are better placed to assess systemic risks, i. e., the central banks ; third, in order to conduct macroprudential supervision and succeed in their mandate central banks need adequate instruments ; fourth, financial stability is not about preventing bank failures, it is about safeguarding depositors β confidence and preserving the regular financing of the economy. adequate resolution and liquidation frameworks, including access to public funds, are thus an indispensable part of the crisis management toolkit. it should also be noted that the low interest rate environment of recent years may require a more active stance of the macroprudential authorities as it contributed to a build - up of vulnerabilities and risks to financial stability. let me now turn briefly to today β s programme. since its inception, macroprudential policy has gradually been implemented in europe against a unique financial and economic background, establishing itself as an autonomous economic policy area while interacting with other policy domains. this is a topic that will be addressed at this conference, in particular at the roundtable where the interaction between macroprudential and microprudential policies will be dealt with. this environment, characterised by crisis legacies, led, unsurprisingly, some macro | carlos da silva costa : overview of economic and financial challenges for portugal address by mr carlos da silva costa, governor of the bank of portugal, at the centenary of credito agricola mutuo, lisbon, 25 may 2011. * * * the celebration of the centenary of credito agricola mutuo ( mutual agricultural credit ) is an appropriate timing : 1. to highlight the relevance of banking activity in modern economies ; 2. to stress the crucial role of trust in the development of this activity ; and 3. to make a brief presentation of the key measures included in the adjustment programme in the field of financial stability β one of the three capstones underlying the adjustment programme and the new growth model of the portuguese economy. 1st β the relevance of banking activity in modern economies credit institutions play an important intermediation role between savers and investors, centralising the resources of the former and channelling them to the funding of investment. this financial intermediation between savings and investment leads to : 1. maturity transformation β deposits with typically short maturities are transformed into longer - term credits ; and 2. liquidity transformation β deposits, liquid, are transformed into credits, more illiquid. through financial intermediation, benefits may be reaped of a scale effect when mobilising savings : multiple low - value individual deposits are transformed into large credit amounts, allowing for the financing of large - scale investments. finally, savings obtained in a given region ( or country ) may be channelled to finance investments in other regions ( or countries ). through this intermediation, the banking activity benefits from economies of scale, making it possible to ensure risk diversification and the implementation of procedures for effective risk management and control. this translates into a reduction of risk for a given remuneration, or, alternatively, a better remuneration of savings for the same level of risk appetite. hence, the banking sector plays a key role in the efficient allocation of resources in a given economy, as well as in the provision of essential services for making payments, thus decisively contributing to sustained economic growth. banking activity can be said to be the β circulatory system β of the economy. a healthy β productive and competitive β economy necessarily requires a dynamic and efficient banking sector. 2nd β the crucial importance of trust and the role of regulation and supervision this crucial function of financial intermediation of the banking sector requires a relationship of trust between banking institutions and their customers. it also requires | 0.5 |
potential growth as before for a while. could europe experience what japan has experienced? i don β t think so. the development in wages will be always different from japan. there is more rigidity in wages in a recession ( in europe ) and that is an important factor and that is why i never really feared we would have actual deflation in europe. wages will not be as flexible down as they were in japan. most of euro area gdp comes from services and inflation in services is basically about wage developments. it is very difficult to go to a situation of deflation in europe. that β s a difference with japan. will divergence continue in the euro zone? no. we saw an initial phase of catching up and convergence. then came the crisis. if you look to the development of the economy in the u. s. and europe, the recoveries are very similar until 2011. then europe had a double dip because of the recessionary adjustment. after painful adjustment and many reforms, ireland, spain, portugal, slovenia and cyprus grew faster than the euro area average in the first half of this year. the only exception is italy which is growing slightly less than the average. we have growth again. we need to strengthen the confidence in peripheral countries. that has to be achieved by deepening integration. the greek turmoil raised doubts. these doubts have to be now closed by additional institutional reforms. what doubts were raised about the euro? it raised doubts for the markets that countries like greece could cope with the challenges of monetary union. there was never any doubt among the majority of member countries. we maintain that the euro is irreversible. legally, no country can be expelled. the actual prospect of that happening was never for real. do you fear that some people in europe may lose faith in its institutions? at the ecb, we are doing the utmost within our mandate. we are aware that there are excessive expectations about what central banks can do. unemployment is destabilizing the continent. european values are being eroded in several countries as a result of the fear that unemployment creates. it is for other policy makers to do their job. does a change in the stance of the federal reserve have implications and has market volatility become a permanent feature? we don β t know what the reaction of markets will be. monetary policy is not about fine tuning volatility in financial markets. we have medium term objectives and that helps to stabilize expectations. central banks should be independent from financial | scope, if the necessity is there. if the price of oil does not continue to go down ( it cannot go down indefinitely ), we will see a jump in inflation in the last quarter of this year. but we may have before that some months of negative inflation. until now we have not seen a reason to doubt that the programme will work. the staff projections are recent, predicated on the completion of the whole programme and foresee inflation at 1. 7 % by 2017. but we are prepared for any contingency. what can monetary policy do for growth and potential growth? monetary policy affects growth via financial conditions, which affect expenditure decisions, investment and the aggregate demand. what is more difficult for monetary policy is to affect potential growth. that depends very much on the growth of labour supply, technological progress, increasing productivity, organization of production. that β s the supply side. the effects of monetary policy on that are very indirect. europe has a big problem of low potential bis central bankers β speeches growth. it starts with demography : the working population is decreasing, so productivity has to be increased even more to compensate for it. potential growth is very low and in present conditions, we fear that this will be a protracted period of low growth. this prospect of protracted low growth is shared by all advanced economies. so europe has to do more in terms of supply side reforms, investment, productivity growth to get out of this situation. is embracing immigration important for europe? in general yes. but there are two dimensions to this : one is the medium to long term issue of immigration and demographic developments, and the other is the short term crisis of refugees that raises a lot of logistical issues, among others. to me, it β s clear that immigration is one of the things that can improve the demographic potential of europe, which is necessary, if europeans think and care about the welfare of future generations. the size of the working age population of the euro area is declining 0. 6 percent a year until the 2030s. that β s huge. to change the demographic trends, promoting birth is not enough, is also has to be done through immigration, if this is to be corrected. if not, we β re creating a great difficulty to growth and to the welfare of future generations. this is a very acute problem because for years europe has been doing the sort of collective demographic suicide and no one is thinking about this. in the short term, the backlash against immigration has been dramatic | 1 |
this important area and do not want to lecture the federal and state governments on this issue, which i know is already absorbing a lot of their attention. this process of slowing demand and expanding capacity has been going on for several years, but it has not prevented some general upward pressure on producer and consumer prices. this was brought home to the public with the publication of the june quarter cpi. the increase of 4 per cent over the year to the june quarter made headlines, even though many observers were quick to point out that more than half of the june quarter increase was due to petrol and bananas, the latter influence giving the cartoonists of australia great opportunities for mirth. they were correct to downplay these two influences which, in all probability, will either reverse or revert to zero in the coming quarters. but there is also a danger in simply taking out the two fastest growing components and looking at the rest of the cpi basket. at the bank, we tackle the problem of lumpy, and possibly one - off, price movements by looking at various measures of underlying inflation. our preferred measures show that underlying inflation is running slightly below 3 per cent per annum. this has picked up moderately since the start of the year, after a period when it had been fairly stable at around 2Β½ per cent. the bank's mandate is to keep inflation averaging 2 to 3 per cent over the medium term. this does not mean that it is never to exceed 3 per cent or fall below 2 per cent β it clearly has done both during the inflation targeting period. we need to be confident, however, that it will return to the 2 to 3 per cent range. viewing all of the available evidence that has accrued over the six months since we last appeared before this committee, the board came to the view that inflation was likely to exceed earlier forecasts and that corrective action was therefore needed. as you know, the cash rate was raised by 25 basis points in may and again by the same amount earlier this month. in making these decisions, the board was conscious that the global economy remains very strong, with output expanding at an above - average pace for the fourth year in a row. it also noted that global inflationary pressures have been rising. this is in part the consequence of the very accommodative monetary policies that the major countries ran over 2003 and 2004. while the english - speaking countries have generally returned interest rates to more normal levels, the continuing low level of interest rates in asia | . the second risk that i mentioned earlier was a boom and bust in asset prices. i do not think this is a serious risk at the moment, although it was not that long ago that it posed a threat. in 2003, we had both household borrowing and house prices growing at over 20 per cent, and that was on top of several earlier years of strong rises. if 2004 had produced another year of 20 per cent growth, then we would have had the makings of a serious boom and bust situation. as it was, 2004 was a very good year in this respect as borrowing slowed and house prices retreated for most of the year. growth in borrowing seems to have now settled for the time being at a rate of about 13 per cent per annum, and house prices may have risen in the december quarter of 2004. it is too early yet to know where either borrowing or house prices are headed. the third risk i mentioned was the balance of payments, where the current account deficit is estimated to be 6ΒΎ per cent of gdp. this is not very different to the level reached on a number of occasions over the past two decades, but it is disappointing given that it has occurred against the background of a reasonably buoyant world economy and a strong rise in the terms of trade. strong domestic demand pushing up imports is part of the story, but the bigger part is the failure of the volume of exports to rise sufficiently to take advantage of the strong world demand. we have recently analysed this at some length, and presented our conclusions in our quarterly statement. i will be happy to talk about this later in more detail. but while the balance of payments result is disappointing, it is not of itself a reason for a monetary policy response. at this point, i usually look back at the forecasts i gave the committee last time to see how the outlook has changed. i also make a couple of new forecasts. on economic growth, last year was one of the few examples where the growth rate we now expect will be well below what we had forecast. in the middle of last year we were forecasting 3ΒΎ per cent growth for the year to the december quarter 2004 ; now we think that when we receive the december quarter national accounts next month, they will show a growth rate of not much more than 2 per cent. how do we explain the difference? one explanation would emphasise that the national accounts are showing a picture of the economy which is considerably weaker than that shown by most other | 0.5 |
stephen s poloz : summary of the latest monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 23 october 2013. * * * good morning. tiff and i are pleased to be here with you today to discuss the october monetary policy report, which the bank published this morning. β’ the global economy is expected to expand modestly in 2013. however, its nearterm dynamic has changed and the composition of growth is now slightly less favourable for canada. β’ the u. s. economy is softer than expected. but as fiscal headwinds dissipate and household deleveraging ends, growth should accelerate through 2014 and 2015. β’ overall, the global economy is projected to grow by 2. 8 per cent in 2013 and accelerate to 3. 4 per cent in 2014 and 3. 6 per cent in 2015. β’ in canada, uncertain global and domestic economic conditions are delaying the pick - up in exports and business investment. this leaves the level of economic activity lower than the bank had been expecting. β’ while household spending remains solid, slower growth of household credit and higher mortgage interest rates point to a gradual unwinding of household imbalances. β’ the bank expects that a better balance between domestic and foreign demand will be achieved over time and that growth will become more self - sustaining. but this will take longer than previously projected. β’ real gdp growth is projected to increase from 1. 6 per cent this year to 2. 3 per cent next year and 2. 6 per cent in 2015. the bank expects that the economy will return gradually to full production capacity, around the end of 2015. β’ inflation in canada has remained low in recent months, reflecting the significant slack in the economy, heightened competition in the retail sector, and other sectorspecific factors. β’ with larger and more persistent excess supply in the economy, both total cpi and core inflation are expected to return more gradually to 2 per cent, around the end of 2015. β’ the outlook for inflation is subject to several risks emanating from both the external important that we are not just aware of these risks, but that we also take them on board as we consider the appropriate course for monetary policy. β’ we have identified two important external risks. an upside risk to inflation in canada that emanates from the external environment is the risk of more - robust economic growth than projected in the | prasarn trairatvorakul : financing tomorrow β the greater mekong subregion keynote address by dr prasarn trairatvorakul, governor of the bank of thailand, at the euromoney greater mekong subregion investment forum, bangkok, 13 june 2013. * * * excellencies, honorable speakers, distinguished guests, ladies and gentlemen, 1. it is a great pleasure to be here at the euromoney greater mekong subregion ( gms ) investment forum once again and an honour to give some remarks on the topic of β financing tomorrow : the gms β. a year ago, i had the opportunity to talk about this topic once. at that time, i shared my thoughts on the roles of thai financial intermediaries as a β connector β bridging between global financial players and small local institutions. 2. this year, we are gathered during a time when the gms is undergoing tremendous economic reforms. member countries are transitioning towards higher degrees of openness and are integrating with the global economic mainstreams. the gms economies have grown at some of the fastest rates in the world since the early 1990s, averaging close to 8 %, despite the gloom of the recent global financial crisis. this transformation has contributed to economic convergence and narrowed the development divide within the region. the gap of income differences between the gms and the rest of asian countries in their neighbourhood has been reduced continuously. 3. with the promising economic potentials ahead of us, i would like to reemphasize our shared vision of β what we shall expect to see for the future of the greater mekong subregion β and β how we can achieve such prosperity. β 4. i picture the greater mekong subregion ( gms ) in the next twenty years as a much more connected and integrated region : a region where we are not only connected solely by a river, but by various modes of transportation, where one can travel conveniently, where trade and investment can flow across efficiently, and where prosperity can be widely enjoyed even by those in the rural areas. although we are not yet there, i strongly believe that this vision can come true. 5. we always hear the saying β rome was not built in a day β. thus, we have to start working together towards our shared vision starting today. there is a great deal of preparatory work to be done ; but in my view, some of the most crucial tasks are infrastructure development and businesses access | 0 |
the normative effect of the first agreements remains uncertain. among other circumstances, it will depend on the level of coordination of negotiations between employers and employees. another problem was that teknikforetagen, an employers β organisation in the engineering industry, revoked the industrial agreement last year. the industrial agreement is an important reason that wage formation has worked so well since the mid - 1990s. the revocation of this agreement by one of the signatories meant that the future of the agreement became uncertain. this has been sorted out now, with a new proposed industrial agreement having been accepted by all parties except the swedish paper workers β union. i view the new industrial agreement as a success. it cements the principle that the parts of the business sector that are exposed to international competition should play a normative role in wage bargaining and gives the impartial chairmen a stronger role in the coordination within the manufacturing sector. it is thus positive that there is a new industrial agreement. but there is reason to remind ourselves of our experiences from the wage bargaining rounds in 1995. the coordination of the demands from the swedish trade union confederation failed in these wage bargaining rounds. the swedish paper workers β union and the employers β federation of swedish forest industries were first out then, and concluded a relatively high agreement that set the level for a large part of the labour market. the result of this was wage increases of over 5 per cent in the years 1996 and 1997, levels which were altogether too high in relation to the inflation target and the weak employment situation. the economic conditions for wage formation in the years ahead i will now briefly present the riksbank β s assessment of economic development in recent years. i will refer to the most recently published forecast from april. of course, quite a lot has happened since then, but, at the same time, two months later you don β t normally know a great deal more about developments two to three years ahead. in any event, we will be publishing an updated assessment in the monetary policy report in july. the international recovery is proceeding at a good rate for the world as a whole, we expect to see a gdp growth of over 4 per cent per year for the next three years. this is a high growth rate from an historical perspective ( see figure 4 ). but bis central bankers β speeches developments across the world are divided, with weaker growth taking place in the developed economies and stronger growth in emerging economies. the recovery of the united states and europe is continuing at a fairly | measure of inflationary pressures at present is provided by cpif inflation. the wage growth rate influences inflation, unemployment and interest rates in the riksbank β s most recent forecast, we estimate that hourly wages will increase by about 3. 5 per cent per year in 2012 and 2013, and that this corresponds with underlying cpif inflation of close to 2 per cent towards the end of the forecast period. at the same time, unemployment will only fall to just above 6 per cent at the end of the forecast period. the national institute of economic research β s most recent report of wage formation, from may of this year, presents calculations of the impact of the size of wage increases on inflation and employment. these indicate that wage increases would have to be limited to about 3 per cent per year in 2012 β 2014 for unemployment to be sustainably decreased to 5 per cent, in accordance with the government β s ambitions. i assume that we will be hearing more about this later today. the riksbank has made similar calculations that also indicate a connection between wage trends, inflation and unemployment. the basic mechanism in these calculations is that higher wage increases lead to increased costs for companies. if companies wish to retain profitability, they have to choose between raising their prices or decreasing their personnel costs by reducing employee numbers. the most likely scenario is that a combination of these measures will be adopted. inflation will increase and employment will decrease. to meet the when interpreting the figure, it may be useful to know that prospera β s wage expectations systematically underestimate wage trends by around 0. 5 percentage points. bis central bankers β speeches inflation target in such a situation, the riksbank would have to raise the repo rate more rapidly. this would further dampen employment. however, the result also depends on the reason for the higher wage increases. if these are due to the stronger development of productivity, costs will not increase and the intensifying effects on inflation and unemployment will not be experienced. my assessment is still that if wage increases were to be slightly lower than the approximately 3. 5 per cent per year in 2012 and 2013 that the riksbank estimated in its april forecast, not only inflation and unemployment, but also interest rates, could be lower. this would be preferable from the wider perspective of welfare. it would also reduce the risk that increasing energy and commodity prices or rising inflation and wage expectations will push up inflation beyond our expectations. conclusion the riksbank is not a party in the | 1 |
number of complaints submitted to the banco de espana. as you will know, in recent years the problems related to mortgage loans have led to the change in the number of complaints lodged with the banco de espana. this is due in particular to two issues : the above - mentioned floor clauses and mortgage loan arrangement costs, which saw a record number of complaints submitted in 2017. however, mortgage loan complaints made last year fell to levels of a decade ago. we expect this trend to continue. but apart from one - off changes in the time series, i wish to emphasise the fact that the problems behind these complaints stem from operations entered into prior to the enactment of the law in question. in short, i expect the law on real estate lending, along with the new bank culture in respect of customer relations, to provide for an appropriate framework for the development of the mortgage market. it may thus cast off once and for all the legal uncertainty that has been trailing it. i would like to refer to an essential aspect the law addresses : the obligation to evaluate in depth the solvency of the potential borrower, surety or guarantor before entering into a loan agreement. as you may well imagine, i fully share the caveats set out in the regulations. we must never forget that the essential element for consideration in granting a loan is not the value of the collateral, but the ability of the borrower to pay. evidently, when analysis prior to the granting of the exposure is based excessively on the value of the collateral put up, there is no effective, practical restriction on the continuous growth of the loan, at least while the collateral value also continues to rise. the incentive to ease appraisal stringency is greatest when the appraisal value is practically the only parameter justifying the granting of the loan. the law also makes it very clear that the value of the collateral should not be the fundamental factor when it comes to granting financing. this is a factor of protection for the customer since it places all responsibility for analysing ability to pay on the bank. in this respect, the financial crisis painfully reminded us that the worst business that can be done is to extend a mortgage loan to somebody who has little possibility of meeting the payment obligations. it is bad business for the bank, but also for the customer and for society as a whole. particular care is unquestionably needed in granting new loans. but we must assume that, inevitably, the application of strict standards, as the law | 18. 11. 2020 opening address of the conference β consumers and the postcovid mortgage market β adicae margarita delgado deputy governor good afternoon. i would like to thank adicae for kindly inviting me to address you on the opening of this conference on the post - covid mortgage market. allow me a minor comment regarding the conference title : i fear it is still too soon to talk about the mortgage market situation after covid, although there is evidently no lack of will to do so. the latest science news on the progress of the different vaccines gives us hope that we may shortly look to the future without seeing the pandemic on the horizon. let us trust this will be so. in any event, beyond the effects this health crisis may be having in the short term, housing affordability has been a very relevant subject in spanish society for decades. worldwide, we are one of the countries with the highest homeownership percentages, and the mortgage market has unquestionably been a decisive factor in making such housing affordability possible. this conference is directed at consumers, although if you will allow me the technical detail, national accounts treats house purchases as β investment β, not as consumption. this is clearly the case and, almost always, this is the most important investment that we β consumers β make in our lives. given the importance and scale of this purchase, the authorities should watch over individuals β interests. this is particularly important for the common assumption that a mortgage must be arranged at the time of purchase, which means entering into a very longterm payment commitment with a credit institution. something which, as the crisis brought painfully to light, may entail problems in the case of economic or labour market instability. comparatively speaking, mortgage risk performed well during the previous financial crisis, despite the fact this is not always perceived as such. defaults on house purchase mortgage loans at no point exceeded 6 %. however, financing for real estate development and construction reached non - performance levels of over 36 %. this demonstrates that individuals treat their monthly mortgage payments as something that is a priority, whereas the financing of these same houses before their completion and sale evidences much riskier characteristics. yet despite this relatively good performance, the crisis showed that the mortgage market had certain shortcomings that needed correcting. apart from the evident social and economic drama, in the final years of the crisis we experienced a bout of litigiousness and unprecedented legal uncertainty. notably, much of this lit | 1 |
of sound monetary policy making emerged among the ncb β s now forming the monetary union. even so, the ecb governing council is a large body, with a wealth of diverse experiences and views. the strategy must provide a commonly accepted framework within which these experiences and views all contribute to policy decisions. the strategy should also ensure that the relevant information is taken into account fully and orderly. from this point of view, the ultimate test for the success of the strategy are the extent to which it effectively guides the debate within the council and the record of actual policy decisions. i think it is fair to say that most observers agree that the ecb β s record has been, on the whole, very successful in these four and a half years. finally, we carefully considered the performance of the strategy in external communication. this is an area where, according to several observers, including some present here today, the strategy has worked less well. we have examined the full range of views, including those coming from the watchers β meetings and those expressed by market participants, academics, and the press. our announcements regarding the strategy on 8th may, which i am now going to discuss briefly, are aimed primarily at addressing certain misunderstandings that have emerged in our communication with the public. the result of the evaluation i do not need to discuss here all aspects of our review ; the documents in our website provide a complete account of them. the issues we investigated included the choice of the specific index used to define price stability, the preference accorded to headline as opposed to β core β inflation, how to deal with inflation differentials within the area, the stability of the euro area money demand function, and many others. i will limit my remarks to the two most debated aspects : the definition of price stability and the role of money, or the β two - pillar structure β of the strategy. the definition of price stability regarding the definition of price stability, the governing council confirmed the explicit quantitative definition announced already in october 1998, which is based on an objective and transparent measure, as provided by the hicp. we remain convinced that this is an important element of clarity, that contributes positively to both the effectiveness of policy and to the ecb β s accountability. moreover, the council noted that this quantitative definition had been very successful in anchoring market expectations. the direct and indirect measures of expected inflation in the euro area have shown a remarkable stability in the last few years, at a level just below 2 %. this is a | peter praet : interview in bdp revista, staff magazine of bank of portugal interview with mr peter praet, member of the executive board of the european central bank, in bdp revista, staff magazine of bank of portugal, conducted by ms isabel arriaga e cunha on 18 june 2018 and published on 2 november 2018. * * * europe is celebrating the 20th anniversary of the european central bank ( ecb ), and in a few months the 20th anniversary of the euro. what do you think are the main achievements and successes of these 20 years? 20 years ago the responsibility for monetary policy was entrusted to a new european institution with the mandate of maintaining price stability. this was a major step forward in the process of building an ever - closer union among the peoples of europe. we are a european institution that has been capable of deciding and acting in good times as well as in very challenging times. this is a remarkable achievement from an institutional point of view. and we have fulfilled our mandate in very difficult times β despite the financial and economic crises during the last decade. the euro is a stable and safe currency. we see with 74 % in the eurobarometer the highest approval rating for the single currency since 2004. that is quite remarkable, even more so as there are strong political forces challenging european integration. so, you see the ecb as having lived up to its responsibility so far? the ecb has had three presidents over 20 years. there have sometimes been differences. this is quite normal within a decision - making body of today 25 members, but the governing council has always enjoyed a strong sense of collegiality. we are all fully committed to fulfilling our mandate and are always open to debate and each other β s ideas. this is why the ecb has always had the ability and the willingness to act, whenever it was needed and within its mandate. so, back to your question : what are the main successes of these 20 years? the euro was created, because the single currency is a necessary condition for the completion of the single market. this remains true, but you need more than the single currency for the single market to function properly : once you have a single currency with a single market with free mobility of labour, goods and services, you are urged to reach a higher degree of political integration. there is a need for more european integration. this integration can take time, it will not come overnight, but each politician should keep in mind | 0.5 |
one then obtaining. in the economic consequences of mr. churchill, a pamphlet he wrote in 1925, keynes argued that restoring the pre - war parity would generate deflation, with adverse effects on income, a contraction in the volume of business and economic crisis. the only way to avoid these effects was to reduce wages and prices. his warning went unheeded. in the opinion of many scholars, the return of all the major countries to the gold standard with a marked revaluation of their currencies was the underlying cause of the great depression of the 1930s. in italy, mussolini β s β quota 90 β policy for the lira, implemented in an authoritarian fashion in 1926 by the finance minister, giuseppe volpi, despite the misgivings of the governor of the bank of italy, bonaldo stringher, appears to have been influenced by keynes β s suggestions. in order to mitigate the deflationary effects, the revaluation of the lira to 90 against sterling, from a market rate that had reached nearly 150, was accompanied by an overall reduction in wages of 20 per cent. in the 1930s the fascist regime also began a large programme of major public works that supported domestic demand. the great depression and the economic crisis that gripped germany were the main cause, together with the country β s severe institutional difficulties, of the advent of nazism. the hyperinflation of the early 1920s had been the consequence of the impossibility for the german economy to expand again under the heavy burden imposed by the peace treaty. the second world war was not unrelated to the first, partly owing to the serious errors committed in the 1920s in international relations and monetary policies. the problem of unemployment emerged in all its drama. in the united states economic policy reacted with the new deal and with a monetary policy appropriate to the new conditions. economists laboriously rediscovered the problem of effective demand. the polish economist michael kalecki is among those to be recalled in this regard. but it was keynes who fully developed a new paradigm with which to grasp reality and make economic policy prescriptions. in his general theory of employment, interest and money, the classical vision in which supply generates demand in accordance with say β s law is criticized and the causal relationship is reversed : the level of economic activity depends on the demand for consumption and investment. the separation between the units where savings are formed and those where investment is decided, through banking and financial intermediation, renders investment independent of the availability of | agreements. they agreed to establish a monetary order based on fixed exchange rates, together with a process to realign exchange rates in the event of fundamental imbalances. important institutions, such as the international monetary fund, the world bank, and the general agreement on tariffs and trade, were also established. but since the 1970s, many economies have adopted flexible exchange rate regimes. in general, these regimes have been able to coexist with fixed exchange rate regimes, and to do so relatively well in a world of open capital markets. however, the success of this coexistence has depended on countries following " the rules of the game " appropriate to the exchange rate regime they have chosen. what do i mean by " the rules of the game "? for countries with a flexible exchange rate, this means that authorities should actually let their currency float freely. and for countries with a fixed exchange rate, this means that authorities need to run appropriate policies in order for the fixed exchange rate to be sustainable. in particular, countries with a fixed exchange rate and a current account surplus should not " sterilize " the foreign exchange interventions required to fix the value of their currency. by " sterilize, " i mean offsetting the effect of interventions on the domestic money supply. recently, problems have arisen from countries not playing by the rules of the game. certain asian economies have been stifling the inflationary effects of their interventions and, in the process, building up massive amounts of foreign reserves. when countries offset the effects of intervention, they delay domestic economic adjustment. they also delay global adjustment. just as worrying is the fact that such intervention is provoking threats of protectionist measures in certain political quarters. such wrong - headed measures could choke off the growth of international trade that has led to rising incomes worldwide. what is needed today is a renewal of the international monetary order and of the spirit of international co - operation that led to the original agreements. the global economy has changed enormously since the end of world war ii. but the danger posed by global imbalances is a clear reminder that there is still a need for a coherent international monetary order - and a need for countries to play by the rules. in this context, it is also very important that all countries work to protect and enhance the free flow of goods and services by finding a way to break the stalemate at the doha round of trade talks and by strengthening the world trade organization. we all need to support these efforts and | 0 |
area real gdp rose, quarter on quarter, by 0. 3 % in the second quarter of 2013, also supported by temporary factors related to unusually adverse weather conditions in some euro area countries earlier this year. developments in industrial production data point to somewhat weaker growth at the beginning of the third quarter, while survey - based confidence indicators up to september have improved further from low levels, overall confirming our previous expectations of a gradual recovery in economic activity. looking ahead, output is expected to recover at a slow pace, in particular owing to a gradual improvement in domestic demand supported by the accommodative monetary policy stance. euro area economic activity should, in addition, benefit from a gradual strengthening of external demand for exports. furthermore, the overall improvements in financial markets seen since last summer appear to be gradually working their way through to the real economy, as should the progress made in fiscal consolidation. in addition, real incomes have benefited recently from generally lower inflation. this being said, unemployment in the euro area remains high, and the necessary balance sheet adjustments in the public and private sectors will continue to weigh on economic activity. the risks surrounding the economic outlook for the euro area continue to be on the downside. developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect economic conditions. other bis central bankers β speeches downside risks include higher commodity prices in the context of renewed geopolitical tensions, weaker than expected global demand and slow or insufficient implementation of structural reforms in euro area countries. according to eurostat β s flash estimate, and broadly in line with expectations, euro area annual hicp inflation decreased in september 2013 to 1. 1 %, from 1. 3 % in august. on the basis of current futures prices for energy, annual inflation rates are expected to remain at such low levels in the coming months. taking the appropriate medium - term perspective, underlying price pressures are expected to remain subdued, reflecting the broad - based weakness in aggregate demand and the modest pace of the recovery. medium to long - term inflation expectations continue to be firmly anchored in line with price stability. the risks to the outlook for price developments are expected to be still broadly balanced over the medium term, with upside risks relating in particular to higher commodity prices as well as stronger than expected increases in administered prices and indirect taxes, and downside risks stemming from weaker than expected economic activity. turning to the monetary analysis, data for august indicate that the underlying growth of broad money ( m3 ) and, in | mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, paris, 2 october 2013. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. i would like to thank governor noyer for his kind hospitality and express our special gratitude to his staff for the excellent organisation of today β s meeting of the governing council. we will now report on the outcome of today β s meeting, which was also attended by the commission vice - president, mr rehn. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. incoming information and analysis have further underpinned our previous assessment. underlying price pressures in the euro area are expected to remain subdued over the medium term. in keeping with this picture, monetary and, in particular, credit dynamics remain subdued. inflation expectations for the euro area continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. at the same time, real gdp growth in the second quarter was positive, after six quarters of negative output growth, and confidence indicators up to september confirm the expected gradual improvement in economic activity from low levels. our monetary policy stance continues to be geared towards maintaining the degree of monetary accommodation warranted by the outlook for price stability and promoting stable money market conditions. it thereby provides support to a gradual recovery in economic activity. looking ahead, our monetary policy stance will remain accommodative for as long as necessary, in line with the forward guidance provided in july. the governing council confirms that it expects the key ecb interest rates to remain at present or lower levels for an extended period of time. this expectation continues to be based on an unchanged overall subdued outlook for inflation extending into the medium term, given the broad - based weakness in the economy and subdued monetary dynamics. in the period ahead, we will monitor all incoming information on economic and monetary developments and assess any impact on the medium - term outlook for price stability. with regard to money market conditions, we will remain particularly attentive to developments which may have implications for the stance of monetary policy and are ready to consider all available instruments. let me now explain our assessment in greater detail, starting with the economic analysis. following six quarters of negative output growth, euro | 1 |
of the recent growth in trade has come as large emerging - market economies, such as china and india, have been integrating into the world economy. with this integration has come a significant increase in the global demand for commodities, as well as rapid growth in the production of manufactured goods in asia. that brings me to the first of the global developments i'd like to mention β a marked rise in the prices of commodities relative to those of manufactured goods. in the past five years, energy prices have risen by about 150 per cent, and non - energy commodity prices have increased by about 80 per cent. over the same time period, the price of nickel β manitoba's biggest commodity export β has risen by about 500 per cent, and the price of copper has increased by more than 300 per cent. at the same time, the prices of many manufactured consumer goods, such as clothing, computers, entertainment equipment, and household appliances have decreased in many countries. in canada, the prices of durable and semi - durable manufactured goods, excluding automobiles, have declined by about 1 to 2 per cent per year, on average, over the past five years ( although more recently, prices for semi - durable goods have strengthened ). given its endowment of natural resources, canada has benefited greatly from strong commodity prices. but, just as clearly, new competition from china and other emerging asian economies is posing some tough challenges for canadian manufacturers. global integration has also been affecting international savings and investment flows. indeed, in the past dozen or so years, what is sometimes called " financial openness " has increased significantly. since 1995, the stock of cross - border investment in advanced countries has grown from about 40 per cent of gdp to more than 120 per cent of gdp, and emerging markets have seen a similar increase, albeit from a lower base. this leads me to the second development i want to highlight. in recent years, desired global saving appears to have increased relative to desired global investment, which has made credit abundant and relatively cheap. federal reserve chairman ben bernanke has called this a global " saving glut. " the international monetary fund has emphasized the weakness of global investment relative to global growth. but whether it's high saving or low investment, the net effect is that large pools of internationally mobile capital have been searching for seemingly scarce investment opportunities, putting downward pressure on long - term interest rates. as investors have searched for higher returns, risk spreads have narrowed, and interest in alternative investments and more innovative investment | so rigid. but achieving our target requires that we take a flexible policy approach, one informed by considered analysis and judgment. that is one reason why transparency β and occasionally guidance β matters. guidance in normal times to help achieve the monetary policy goal in a perfect world, guidance would be unnecessary. the inherent uncertainty in economic outcomes and thus in the policy path would be widely understood. with full information and efficient markets, monetary policy expectations would effectively take care of themselves β knowing a central bank β s inflation objective and its reaction function would be sufficient for markets and the public to form and evolve their expectations, without the need for any direct guidance from the central bank. in the real world, monetary policy guidance can be useful in providing additional information. but this is not assured. how to get guidance right remains a subject of considerable debate. one approach is to provide advance signals to markets, using stock phrases or code words. not surprisingly, this sort of signalling helps market participants predict policy decisions in the near term. 8 but it is not clear that fulfilling promises helps market participants understand why those decisions are taken. 9 without this understanding, market participants may be even less able to form efficient expectations over time, thus increasing their reliance on explicit guidance from the central bank. ultimately, the risk is that markets turn into an echo chamber, to the benefit of no one. some other central banks directly disclose their policy interest rate forecast. β putting it all out there β is, on its face, an appealing approach. it avoids the challenge of trying to perfectly j. boivin, β how people think and how it matters, β a speech delivered to the canadian association for business economics, kingston, ontario, 23 august 2011. note the contrast here to company earnings guidance, where expectations are essentially irrelevant to how the business actually performs, except indirectly through their effect on valuations and, thus, company funding conditions. j. murray β monetary policy decision - making at the bank of canada, β a speech delivered to the mortgage brokers association of b. c., vancouver, british columbia, 7 may 2012. see c. rosa and g. verga, β the impact of central bank announcements on asset prices in real time, β international journal of central banking 4 no. 2 ( june 2008 ) : 175 β 217. c. fay, t. gravelle, β has the inclusion of forward - looking statements in monetary policy communications made the bank of canada more transparent? β bank of canada discussion paper 2010 β | 0.5 |
shortlisted the top 24 students based on their spm results and also on their level of involvement in co - curricular and sports activities. the students then underwent a rigorous evaluation process under the bank β s β kijang academy β which assessed their technical and leadership competencies, as well as their values. we are pleased to award four outstanding students the kijang emas scholarship this year. having just completed their spm, they will be enrolled into the respective pre - university programmes. following their pre - university programmes, imran aspires to be a mechanical engineer, hajar is keen to read chemistry while both ying xin and nur shazlin aspire to be doctors. i am confident that all of you will do your best and will contribute for the future of the nation. bis central bankers β speeches in addition to the kijang emas scholarship award, every year the bank also awards scholarships to 50 high achieving spm students for them to pursue their undergraduate studies abroad with the objective of them being part of the bank β s future talent pool. the bank has put in place a structured, holistic and collaborative scholar β s development programme to support all of our scholars throughout their studies. the programme aims to develop high - quality and well - rounded scholars with leadership qualities as the next generation of young talent who will be the leaders of tomorrow for the bank and our nation. bis central bankers β speeches | about 2Β½ percentage points. fiscal adjustment in the euro area is continuing in 2012, and it is indeed crucial that efforts are maintained to restore sound fiscal positions. at the same time, structural reforms are as essential as fiscal consolidation efforts and the measures to repair the financial sector. some progress bis central bankers β speeches has also been made in this area. for example, unit labour costs and current account developments have started to undergo a correction process in most of the countries strongly affected by the crisis. however, further reform measures need to be implemented swiftly and decisively. product market reforms to foster competitiveness and the creation of efficient and flexible labour markets are preconditions for the unwinding of existing imbalances and the achievement of robust, sustainable growth. it is now crucial that member states implement their country - specific recommendations with determination. we are now at your disposal for questions. bis central bankers β speeches | 0 |
not, there will be a number of possible interest rate paths that might be said to provide a reasonable balance in view of the uncertainty involved. the results of this trade - off are presented in the monetary policy report in the form of a chart that presents central projections for the interest rate, inflation and capacity utilisation in the economy. the formulation of a precise inflation target, our projection for the interest rate 3 - 4 years ahead and our desire to achieve a balance between output and inflation stability may perhaps give an impression of excessive optimism with respect to managing the economy and invite a repeat of earlier attempts to fine - tune the economy. but it is important to bear in mind the lessons drawn from the 1970s and 1980s, i. e. high stabilisation policy ambitions may lead to wide fluctuations in the economy, with high and variable inflation. in our conduct of monetary policy, we must not underestimate the uncertainty surrounding the decisions taken. even if norges bank publishes an interest rate forecast, this does not mean that the interest rate will follow this precise path throughout the projection period. forecasts of inflation, output, the interest rate and other variables are based on an assessment of the current situation and a perception of how the economy functions. disturbances to the economy may result in changes in the forecasts. data revisions imply that the current economic situation is not fully known. our ambition must be to reduce uncertainty with regard to our own response pattern. that actual interest rate developments will deviate somewhat from the bank's forecast will probably be the rule rather than the exception. what norges bank β s executive board actually adopts is a monetary policy strategy that applies until the next report. when monetary policy report 2 / 07 was presented in june, the executive board decided that the key policy rate should be in the interval 4Β½ - 5Β½ per cent in the period to the publication of the next report on 31 october. and even that is conditional on economic developments that are broadly in line with projections. financial market turbulence global economic developments are important for economic developments in norway, and changes in the growth prospects for the world economy may influence our projections. the turbulence in international financial markets in recent weeks has heightened the uncertainty concerning developments ahead. the source of the turbulence can be found in the us housing market and particularly in the subprime mortgage market. this segment of the us credit market has expanded sharply in recent years. the loans often feature an interest - only period and low interest rates in the first years | krone terms for imported consumer goods and services. second, exchange rate changes have an impact on competitiveness in norwegian business and industry and on market opportunities at home and abroad. this affects the level of activity in the economy and, in turn, price and cost developments. in the period between inflation report 3 / 06, presented in november 2006, and monetary policy report 1 / 07, presented in march this year, the krone appreciated more markedly than we had assumed. as a result, monetary policy report 1 / 07 was based on the assumption that the krone would be somewhat stronger throughout the projection period. the exchange rate assumption in inflation report 3 / 06 is shown by the broken blue line in the chart on the left, while the broken red line denotes the exchange rate assumption in monetary policy report 1 / 07. the isolated effect on the interest rate path of a stronger krone is illustrated in a box in monetary policy report 1 / 07. as shown in the chart on the right, the stronger krone pointed to a somewhat lower path for the interest rate. given the inflation target, we will be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. nonetheless, the interest rate path published in monetary policy report 1 / 07 was higher than in inflation report 3 / 06. the reason for this is that the prospect of stronger - than - expected growth in both norway and among our trading partners pointed to a higher interest rate path. on balance, this had a greater impact on the interest rate path than a stronger krone. over time, however, the nominal exchange rate is not the main force. the most important influence on competitiveness in norwegian business and industry and the purchasing power of the norwegian krone is changes in the real exchange rate. the real exchange rate can be measured in a number of ways, for example by consumer prices or labour costs in norway relative to our trading partners measured in a common currency. the real exchange rate has fluctuated widely over time and has deviated over longer periods considerably from the average level since 1970. the real exchange rate has nonetheless shown a tendency to revert to this level. over time, the exchange rate acts as a buffer in the global economy. when economic activity is high in one country, an appreciation of the country β s exchange rate will have a dampening effect. conversely, when there is a need to stimulate the economy, a weaker exchange rate will boost growth. over the past few years | 1 |
, again, the recent proposals of the potential german coalition partners are promising. the creation of a european monetary fund seems to go in the direction that we, the bundesbank, have been advising for quite some time. 3 / 5 bis central bankers'speeches formally, the eu has a set of fiscal rules that restrict public borrowing β the stability and growth pact. yet these were regularly violated before the financial crisis, without any meaningful consequences. in response, the eu reformed the stability and growth pact in 2005, but the outcome was to expand the discretionary scope even further. the european commission, despite its role as guardian of the stability and growth pact, has already exploited its scope on several occasions and interpreted the rules rather generously in doing so. indeed, some euro area countries have been breaching the rules for nine years now. what is needed to strengthen the fiscal rules is a simple and transparent design and implementation of the rules. 2 the transfer of responsibility for fiscal surveillance from the european commission to an independent institution would be a big step towards a less political approach. one promising measure would be to strengthen the role of the european stability mechanism, esm for short. thus far, the esm has been tasked with providing financial assistance to euro area countries experiencing or threatened by severe financing problems. however, if member states retain their fiscal autonomy, the sustainability of public finances will need further safeguards beyond rules alone. it is therefore essential that the binding force of the rules be additionally shored up by the disciplining effect of the market. in other words, interest rate levels and, therefore, financing costs have to be realigned more closely with the risks in government budgets. the only way to achieve that, however, is to restore the credibility of the no bail - out clause in the maastricht treaty. investors have to perceive a more credible threat of losing money if they buy bonds from governments that have unsound public finances. one proposal put forward by the bundesbank envisages changing the contractual terms for sovereign bonds in the euro area by introducing an automatic maturity extension for them as soon as the issuing government applies for an esm programme. up to now, a large part of the assistance loans have ended up being used to pay off the original creditors. this means that the original creditors, such as banks, are then let off the hook β at the taxpayers β expense. in contrast, extending maturities would leave the original creditors on the hook, and they could | need to rest with the fsa. but norges bank can make strong recommendations on how these instruments shall be used for macroprudential purposes. we shall seek very close cooperation with the financial supervisory authority to implement our macro prudential agenda. the nordic region is currently close to being a separate banking market, where non - nordic banks have small market shares. but branches with parents in other nordic countries have substantial market shares in all national markets. there is scope for fruitful cooperation between the nordic supervisory authorities. the countercyclical buffer proposal from the basel committee includes a prescription to that effect. it stipulates that the time - varying capital buffer targets shall be applicable to all banks operating in a jurisdiction, including branches of foreign banks. the home supervisor shall impose the buffer decision of the host supervisor. this is a step in the right direction, but differences in risk modeling will remain. there is hardly any good reason for different risk weightings on similar loans given by a domestic bank and a branch of a foreign bank. with these thoughts on central banks and macroprudential policies, i would remind you that we organize this conference hoping that we shall be able to take something useful away for our further work on financial stability. i would like to thank the program committee for putting together what looks like an engaging program. i wish all of you good luck and hope you shall have fruitful discussions in the next two days. | 0 |
; and many have begun to address their efficiency and profitability problems. but clearly, they are not yet up for a marathon with a good finishing time. there remains a lot to be done. reorienting business models and optimising organisational efficiency will be one part of the fitness regime. another will be structural reorganisation in the sector. mergers & acquisitions will continue to play an important role here, too. but only the link - up of healthy players is likely to lead to stronger teams β although, even this cannot be taken for granted. putting weak athletes together will certainly not lead to high performance. i now look forward to a fruitful discussion. thank you very much for your attention. 1 t phillippon ( 2015 ) : has the us finance industry become less efficient? on the theory and measurement of financial intermediation. american economic review 105 ( 4 ) : 1408 β 1438. 2 ar dombret ( 2016 ) : gibt es zu viele banken? der sektor nach der finanzkrise. vortrag bei der generalversammlung der osterreichischen bankwissenschaftlichen gesellschaft in wien. 3 e. g. a behr & f heid ( 2011 ) : the success of bank mergers revisited. an assessment based on a matching strategy. journal of empirical finance 18 : 117 β 135. 5 / 5 bis central bankers'speeches | andreas dombret : under pressure β is consolidation the solution for europe's banking sector? speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the conference " doing m & a deals around the world ", frankfurt am main, 13 october 2016. * * * 1 introduction ladies and gentlemen about a week ago, the nobel prize in medicine was awarded for work that is of indirect interest to the banking industry. japan β s yoshinori oshumi was honoured for exploring how human cells not only break down but also recycle cell trash that results, for example, from fighting diseases. oshumi found that when this process, called autophagy, is disturbed, for example through ageing, this has serious repercussions on our health. i think it is fair to say that this sort of mechanism was truly needed after the financial crisis revealed the damaging cell material within banks. eight years later, the question is whether the organisms of banks were capable of, and successful in, disposing of or recycling financial waste. today, i will examine this question from a european angle. and i will also ask whether mergers & acquisitions may well be one of the healing mechanisms of the european banking system. 2 in bad shape? the status quo of europe β s banks in the last few months, concerns about european banks spun out of control. while there was no panic, sometimes the media discussion made us almost feel as if there was. now, let β s take a sober and realistic look at the facts. over the course of this year, european banking stocks had to weather strong headwinds. while the overall european stock market, as represented by the euro stoxx 50 index, remained more or less unchanged, the euro stoxx banks index dropped by more than 30 %. at the same time, volatility of the bank stocks remains high, although that seems to be heavily related to post - brexit jitters. such market movements suggest some sort of doomsday scenario. is that justified? clearly not. current concerns about the european banking sector are overstated. yes, the sector is not yet ready to be successful in the new post - crisis environment. and market sentiment reflects just that. but β and that β s where exaggeration comes in β the sharp movements do not take into consideration that the solvency of the sector in europe is not in doubt. in other words, while | 1 |
help to further this approach. i thank the open university for having invited me to give this talk, and i look forward very much to your questions and comments. | kong to handle financial and other economic transactions denominated in the renminbi. thirdly, as the mobility of money, investors, borrowers, financial instruments and financial intermediaries between the two financial systems grows, there will be rapid growth of financial traffic between the mainland and hong kong. consequently there is a need for robust links between the financial infrastructures of the two financial systems. this then is our strategy. in terms of actual measures β something that antony also wants me to talk about β i would refer you to the eighty recommendations in the report of the focus group on financial services published in january 2007 as hong kong's response to the eleventh fiveyear plan of the country published in 2006 and as hong kong's input to the national finance working meeting in 2007. as you may be aware, the implementation of our overall strategy and many of the detailed recommendations involve the relaxation of controls in the financial systems on the mainland. while the benefits of financial liberalisation are clear, so are the risks to financial stability, as the asian financial crisis of 1997 - 98 and the current turmoil in the developed financial markets demonstrate so vividly. here there should be a strong emphasis, to quote the premier again, on gradualism, controllability and the ability to take initiatives at the right time. and in the context of pursuing the complementary, mutually - assisting and interactive relationship between the two financial systems, financial liberalisation should not be seen as helping hong kong. we welcome support from the mainland in discharging our legal responsibility in maintaining the status of hong kong as an international financial centre, but i hope i have convinced you that in developing our strategy and our recommendations, we very much have the national interest foremost in our minds. as to antony's question on whether shanghai is a threat to hong kong's status as an international financial centre, i hope my description of our strategy will bring you around to the view implicit in that strategy that we see a complementary, mutually - assisting and interactive relationship, where relative strengths are exploited, relative weaknesses are addressed and synergies maximised ; and not a relationship characterised by cut - throat competition, as some may have portrayed it. | 0.5 |
another current source of anxiety in financial markets β the striking weakness of international trade. after all, international trade is the lifeblood of the global economy. firms, consumers and investors alike all rely on it to keep the economy growing, create and sustain jobs and deliver investment returns. the exchange of goods and services has been happening as long as people have been able to produce more than they needed to survive, leaving them free to follow other pursuits. expanding exchange into the international arena is the next logical step, and that is exactly how global history has unfolded. trade is a grand facilitator that permits people and firms to specialize and innovate. the resulting improvement in living standards continues until trade reaches a balance point in the economy where all advantages have been exploited. that balance holds until circumstances change and people react to new opportunities. given the central importance of trade, it β s not surprising that investors are worried about what the data show. for roughly 20 years before the financial crisis, global trade had been bis central bankers β speeches expanding by more than 7 per cent a year β about twice as fast as the world economy. trade collapsed in the wake of the crisis, but rebounded sharply in 2010. since then, though, trade growth has again slowed dramatically, trailing even the tepid pace of global gdp growth. what is behind this slump in trade? has the link between trade and economic growth changed? is the trade slowdown a warning of another global recession? and, if trade is central to the productivity and efficiency of companies, what does the slowdown in trade mean for productivity growth? i hope to shed some light on these issues today, and help everyone better understand the forces that are at work. explaining slow trade growth let β s dig into the data a little. the post - crisis slump in international trade was initially concentrated among advanced economies, particularly in europe. more recently, the trade slowdown has been centred in the emerging markets of asia, including china. this has led many investors to link weak trade to the slowdown in china, and therefore in the global economy. recent work at the bank of canada and elsewhere shows that about half of the slowdown in trade growth among advanced economies in the post - crisis period can be explained by weak economic activity, especially sluggish business investment. throughout this period, companies have been dealing with high levels of uncertainty about the prospects for the global economy, in some cases because of aggressive deleveraging. this has held back investment | and, in turn, contributed to soft trade. investment spending involves capital equipment, with inputs from many countries, and therefore is very trade - intensive. so when economic growth slows because of weak investment, trade slows disproportionately. while advanced economies were dealing with the worst of the crisis, china β s economy continued to expand. this supported demand for commodities, thereby keeping a portion of international trade flows moving. higher prices for commodities also prompted commodity producers to make big investments and ramp up supply. ultimately, though, growth in china began to moderate to a more sustainable pace. more importantly, the chinese economy has begun to shift away from investment - driven growth toward consumption, especially of services. quite simply, this has meant less international trade. even so, china β s imports of many commodities continue to grow at double - digit rates. so, we have reason to expect global trade to grow more slowly than in the past : first, because global investment spending is in a lull, and second, because china β s economy is restructuring toward more domestic consumption and less trade. we can certainly expect global trade to pick up when the world economy gets back onto a self - sustaining growth track, with stronger business investment. still, as i just noted, cyclical factors can explain only about half of the trade slowdown, so we have more explaining to do. indeed, i think we need to step back and consider the possibility that the rapid pace of trade growth that prevailed for the two decades before the crisis was the exception, and not the rule. why would i say that? what we saw during the 1990s and 2000s was the result of the natural incentive to use trade to increase specialization, in reaction to reduced trade barriers and major advances in communication and transportation technology. during those years, countries formed regional trading blocs through arrangements such as the north american free trade agreement and the european union. previously closed economies, such as china, became more engaged by joining the world trade organization ( wto ). this combination of elements gave the natural incentive to trade a great deal more room to grow. it paved the way for companies to build global supply chains β the β integrative trade model. β a factory that made a product no longer needed to be next door to the product β s bis central bankers β speeches designers. firms could now exploit their comparative advantage by specializing, not just in one particular good or service, but in one part of a good or service. the result | 1 |
from the early 1970s up until 2007 marked another watershed. financial liberalisation took hold in successive waves. since then, finance has comfortably outpaced growth in the non - financial economy, by around 1. 5 percentage points per year. if anything, this trend accelerated from the early 1980s onwards. measured real value added of the financial intermediation sector more than trebled between 1980 and 2008, while whole economy output doubled over the same period. in 2007, financial intermediation accounted for more than 8 % of total gva, compared with 5 % in 1970. the gross operating surpluses of financial intermediaries show an even more dramatic trend. between 1948 and 1978, intermediation accounted on average for around 1. 5 % of whole economy profits. by 2008, that ratio had risen tenfold to about 15 % ( chart 2 ). internationally, a broadly similar pattern is evident. in the us, following a major decline during the great depression, the value added of the financial sector has risen steadily since the end of the second world war. as a fraction of whole economy gva, it has quadrupled over the period, from about 2 % of total gdp in the 1950s to about 8 % today ( chart 3 ). similar trends are evident in europe and asia. according to data from the banker, the largest 1000 banks in the world reported aggregate pre - tax profits of almost $ 800 billion in fiscal year 2007 / 08 ( chart 4 ), almost 150 % higher than in 2000 / 01. this equates to annualised returns to banking of almost 15 %. some of these trends in the value added and profits of the financial sector, and in particular their explosive growth recently, are also discernible in the market valuations of financial firms relative to non - financial firms. total returns to holders of major banks β equity in the uk, us and euro area rose a cumulative 150 % between 2002 and 2007 ( chart 5 ). this comfortably exceeded the returns to the non - financial economy and even to some of the more riskseeking parts of the financial sector, such as hedge funds. to illustrate this rather starkly, consider a hedged bet placed back in 1900, which involved going long by Β£100 in financial sector equities and short in non - financial equities by the same amount. chart 6 shows cumulative returns to following this hedged strategy. from 1900 up until the end of the 1970s, this bet yielded pretty much nothing, with financial | john gieve : sovereign wealth funds and global imbalances speech by sir john gieve, deputy governor of the bank of england, to the sovereign wealth management conference, london, 14 march 2008. * * * introduction much of the debate on sovereign wealth funds ( swfs ) has focused on political questions : do they reintroduce the failings of public ownership into market economies by the back door, will swfs use their ownership rights to pursue political ends, and will resistance to foreign ownership lead to a new wave of protectionism. i want to concentrate today on some economic issues : why have they become so prominent recently, how does that relate to imbalances in the world economy, how are they affecting financial markets and what are the policy implications of their growth. background but first let me set out some of the background. there is no off the shelf definition of an swf. what i have in mind is a government investment vehicle that manages foreign assets with a higher risk tolerance and higher expected returns than for central bank foreign currency reserves. 1 the size of such funds is hard to measure, but may be in the $ 2 - 3 trillion range. origins of swfs investments by swfs are one type of capital flow between countries so they have always been closely related to global imbalances in trade. when countries run surpluses on their current account, they generate equal and opposite net capital outflows of one sort or another and those capital flows produce an investment income. that has been the story of the uk economy over the last 150 years. we ran continuous surpluses in the 50 years before the first world war ( chart 1 ) and built up a large stock of foreign assets. partly as a result of that, we benefited from a surplus on our investment account for most of the period since the 1870s. there are two key differences between that period of the uk β s investment abroad and the situation today. 100 years ago the developed countries were investing in emerging markets ( at the time in the americas and australia ) which had abundant land and natural resources but scarce capital and so the returns were high. currently, capital is flowing β uphill β from emerging to mature economies. secondly, the investors before were mainly in the private sector and were seeking out the best returns on capital. today the investors are mainly eme central banks and governments and the build up of foreign assets reflects their policy choices. there is some fuzziness at the edges of this definition. central bank reserves in | 0.5 |
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