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security standards are being implemented in the banking system. ladies and gentlemen! the world is now more inter - connected ; this offers not only benefits but also poses risks for our banking and payment systems. due to rapid technological innovations, consumers are now especially demanding instant funds transfer facilities, both at domestic and cross border levels. we need to understand these changing consumer preferences and find ways to address them. this is vital, not only for the growth of domestic and regional trade and commerce, but for facilitating home remittance transfers by overseas nationals as well. at the same time, we cannot afford to ignore the risks related to anti money laundering and counter financing of terrorism ( aml / cft ) that are increasingly being faced by financial institutions in today β s world. you are all aware that correspondent banking is the contractual relationship between banks that provide payment services for each other. however, as identified by international stakeholders like bis and the world bank, correspondent banking relationships are weakening due to various factors, such as higher costs and increased kyc requirements, especially for firms operating in risky jurisdictions. as a result, smaller banks in weak jurisdictions have suffered the most. bis central bankers β speeches to address these weaknesses, central banks of the saarc region must work together and support banks in their respective countries in addressing these challenges. this can be done through policy development that supports mutual coordination and communication with regards to sharing of customer due diligence information and effective compliance with aml / cft regulations, as recommended by international bodies. the regulators can, therefore, focus on the following broader areas : first, a risk - based approach needs to be adopted to identify, assess and understand money laundering and terrorist financing risks in the area of correspondent banking, and the corresponding aml / cft measures that are largely implemented but still needs more reinforcement. banks also need to be more proactive in their customer due diligence by gathering and sharing sufficient information among themselves, in a timely manner. second, as highlighted by the financial stability board ( fsb ), the reduction of correspondent banking relationships or what is now commonly called derisking has implications for financial inclusion in general and for the remittance transfer business in particular. this is important because financial inclusion has lately emerged as a priority policy objective for many central banks in developing countries across the world. therefore, regulators need to take steps to address this issue. and finally, the importance of modern and robust domestic payment systems in strengthening and complimenting correspondent banking in a particular | announced by president musharraf in december 1999 consisted of four key elements : ( a ) restoration of macroeconomic stability and pakistan β s relationship with the international financial institutions. ( b ) structural reforms to remove distortions. ( c ) improving economic governance and reviving key institutions. ( d ) poverty alleviation through targeted interventions and social safety nets. the interconnection between economic growth, poverty reduction, structural reforms and improved governance is fairly strong in the case of pakistan. macroeconomic stability and the consequent rapid economic growth help reduce poverty in conjunction with investment in social sectors, targeted interventions and social safety nets. structural reforms are needed to strengthen the underpinning of macroeconomic policies and to remove microeconomic distortions affecting key sectors of the economy thus paving the way for accelerating economic growth. improved governance affects the quality of growth by allowing realization of higher returns on investment and is also conducive to poverty reduction through better delivery of social services to the poor. poverty reduction, as we know by now, can be achieved with rapid economic growth, structural reforms and improved governance. 2. 1. macroeconomic stability macroeconomic stability has been achieved through reduction in fiscal deficit, acquiring a surplus on the current account balance of payments, lowering of inflation, and a transformation of external debt profile. these have been brought about partially through the support of international financial institutions and the paris club bilateral creditors which significantly eased the external payments position that had been a major and consistent risk to the economy since 1998. fiscal deficit was reduced by pursuing a combination of four sets of policy measures ( i ) mobilizing additional tax revenues ( ii ) reducing subsidies to public enterprises and corporations and ( iii ) bringing about a significant decline in debt servicing payments and ( iv ) containing defence expenditures. monetary policy was kept reasonably tight during the first two years with money supply growth at about 9 percent. expansion in private sector credit, in the subsequent years, did not put much pressure as the government borrowing was limited to a manageable level. as the monetary conditions improved, the interest rate came down gradually to a single digit and demand for credit by private businesses picked up resulting in higher capacity utilization in manufacturing and increased industrial production. however, with the mounting of inflationary pressures in recent months, the state bank is taking measures to tighten its monetary policy ; the interest rates are expected to go up gradually in the coming months so as not to hurt the growth of the economy. external debt management focused on ( a ) rep | 0.5 |
##lif. the fide programme has become a standard bearer for exceptional directors β education with its deep dive into the nuts and bolts of practical governance, its link to supervisory expectations, and a delivery approach that effectively combines the use of exceptional faculty and the rich experience, knowledge and insights of the participants. to date, more than 600 directors from financial institutions, including directors from the regional offices of both foreign and domestic financial institutions, have attended the fide programme. this has had a visible impact that in bringing about important positive changes in how boards function and interact with senior management. both fide forum and iclif are uniquely positioned to advance corporate governance in the financial sector. after all, they bring together those who represent the ultimate governing body of financial institutions, with great responsibilities and accountability. such an opportunity must be capitalised and not wasted. fide forum and iclif should therefore complement each other and avoid duplication. there are significant benefits to be gained from an effective partnership where resources can be channelled to increase the collective impact of programmes and initiatives by the two organisations. in my own engagements with the industry, over the years, coordination and cooperation among financial institutions can become game changers for the industry. in this respect, we should fully appreciate the distinctive purpose of iclif and the fide forum and how they coordinate with each other within the space of directors β development. with close coordination and cooperation we can avoid the redundancies and wastage and realise the synergistic benefits from the alliance between the two organisation. being a director of a financial institution will demand a lot from the individual. it is a position of trust where integrity is the norm. it should be, given the critical role of financial institutions in any economy. bis central bankers β speeches as a network of financial institution directors, fide forum provides a valuable resource for directors as they navigate the heavy responsibilities that come with the position. fide forum should continuously raise the bar on director performance by advocating best practices and providing support to its members in helping solve real problems confronting boards today. it should be a respected voice on important issues of corporate governance, an epitome of best practices of corporate malaysia. most importantly, it should build an enduring legacy for future leaders of financial institutions by representing within its collective membership the highest standards of integrity, professional conduct and intellectual integrity. indeed, fide forum β s success must surely be measured not only by how well it serves its current membership, but also by how it expands its reach and influence to attract | are a few things that we could do for the smes. first, we can lower the financing cost for smes which obtain guaranteed financing under cgc. on the average, smes are being charged between 10 to 12 percent. this is about blr plus 5 to 6 percent. the rate imposed is much too high. it seems that pricing mechanism doesn β t price properly the guarantees given by cgc. we ought to work on this. on the part of cgc, we need to response quickly to the banks when guarantees are being called upon. an ideal situation is akin to an irrevocable undertaking where once a guarantee is called upon, it will be made good immediately. second, to intensify promotion and awareness program on cgc products and services. cgc needs to work closely with the trade associations and generate more media exposures through radios and tvs. make cgc a household name among the smes. third, expand further advisory services, its reach and contents. not all smes require financing, some might need more β hand holding β, and rather than access to financing above. lastly, come up with new and specific guarantee products for new growth area, start - ups and young entrepreneurs. existing guarantee products might not be suitable to meet the needs of these groups. cgc should embark a study on this matter and come up with an action plan. before i end my speech, i would like to express my heartfelt congratulations and appreciation to the board, management and staff of cgc for 40 years of service to the malaysian smes. it is our greatest wish that cgc will continue to walk and grow alongside our smes in our effort to make our country prosperous. bis central bankers β speeches | 0.5 |
overall population at large. protection of the value of your savings is our constant commitment. allow me to briefly treat some issues i mentioned above : 1. lending to economy last week i had a meeting with the banking sector directors, where we discussed about developments and perspectives of lending to economy. it was agreed by all that there is much space in this direction, while banks requested more specific information in terms of economy sectors, where investment is made and is projected to be made. of course, this information would assist banks in the process of dealing with the requirements and at the same time would assist them even in projecting the future of their business. viewed from the above context, i would strongly encourage you to address banks more and more so to absorb their financial funds. but, at the same time, more transparency, more clarity is needed in the relationships you have and will have with the banking business for being successful. 1 / 3 2. credit information bureau the establishment of credit information bureau is a program initiated by albanian bank association, for the accomplishment of which much work and institutional coordination is needed between actors of interest, such as business, banks, public institutions and the bank of albania. the credit information bureau is expected to facilitate not only the information problems existing between banks and businesses, but also the interbank information that is so much important from the viewpoint of using the scale economies. the bank of albania will facilitate the conditions for the accomplishment of this project. 3. automated electronic clearing house system after the successful implementation of the real time gross settlement system, the bank of albania has recently inaugurated the initiation for implementing a very important project related to the automated electronic clearing house system. the operation of this new system will lead to a significant acceleration of payments for the banks β customers, and due to the absence of this element businesses remained away from banks. i would like to use this opportunity to make businesses aware of the advantages the operation of this system provides, since both the systems will contribute, among others, in reaching international standards of atm and pos per number of population. the challenge for the banking system and businesses, as well as for the bank of albania, remains the public encouragement in using them. 4. cash reduction in the economy some of the above - mentioned steps imply and contribute directly and indirectly in the reduction of cash economy. but the bank of albania plans to undertake further steps in this respect, in collaboration with other important institutions like the ministry of finance, ministry of economy. in this context, first step | also as stations for the gathering of information on the economic and financial activity of the district, preceding the analyses and studies that will serve not only to the design of a clear macroeconomic policy but also to the modernization of elements for the transmission of this policy from the higher authority to the lower authority and vice versa. on the other hand, do not forget that you will have in exchange the opportunity to conduct professional analyses regarding the branch where you perform your activity, with accurate expectations about markets, businesses and consumer demand. therefore, even with your credit provider, the banking business will be more confident in making decisions and finding potential clients. i would like to emphasize that the invitation i address to you today is very sincere, real, away from propagandistic clishes. to sum up, i would like to confirm that these communication relations which i appeal for today would resist the time only if they would rely on sincerity, confidence and reciprocity. i do guarantee that. 3 / 3 | 1 |
, and runs the risk of just adding noise or sowing confusion. hence an explanation for the low volatility could be the assumption of a stable macro environment together with an understanding of central bank reaction function, rather than the 7 / 14 bis central bankers'speeches effect of forward guidance per se. the low level of implied volatility could also reflect greater investor willingness to take on financial market risk. this is consistent with measures that suggest demand for derivatives which protect against uncertainty has declined. it is also consistent with other indicators of increased investor appetite for financial risks, such as the narrowing of credit spreads. this increased risk appetite may in part reflect the low yield environment of recent years ; protection against uncertainty is not costless, and so detracts from already low returns. there has also been an increased interest in the selling of volatility - linked derivatives by investors to generate additional returns in the low yield environment in recent years. effectively, some market participants were selling insurance against volatility. they earned the premium income from those buying the insurance whilever volatility remains lower than expected, but they have to pay out when volatility rises. in recent years, there was a steady stream of premium income to be had. ( this is even more so if i were a risk neutral seller of insurance to a risk - averse buyer, in which case, the expected value of the insurance should be positive. ) but the payout, when it came, was large. i will come back to this shortly in discussing recent developments. this reduced demand for volatility insurance combined with increased supply saw the price fall. such an extended period of low volatility is not unprecedented, although the recent episode was among the longest in several decades ( graph 6 ). prolonged periods of low volatility have sometimes been followed by sudden increases in volatility β although generally not to especially high levels β and a repricing of financial assets. a rise in volatility could be associated with a reassessment of economic conditions and expected policy settings, in which case, one might not expect the rise to last that long. in contrast, a structural shift higher in volatility requires an 8 / 14 bis central bankers'speeches increase in uncertainty about future outcomes, rather than simply a reassessment of them. but just as i find it puzzling that term premia in fixed income markets have been so low for so long, i similarly find it puzzling that | glenn stevens : interesting times address by mr glenn stevens, governor of the reserve bank of australia, to the australian business economists annual dinner, sydney, 9 december 2008. * * * it is a pleasure once again to address the australian business economists. it was to this group that i gave my first speech as governor, in october 2006. tonight is my 23rd speech since then. between the two occasions, quite a lot has changed, globally and domestically ( though i doubt the speeches have become any more exciting ). many people have said to me recently that the times are β interesting β. my response has been that they are, perhaps, a little too interesting. i need not remind this audience of the international financial turmoil through which we have lived over the past almost year and a half, nor of the intensity of the events since mid september this year, in particular. i do not know anyone who predicted this course of events. this should give us cause to reflect on how hard a job it is to make genuinely useful forecasts. what we have seen is truly a β tail β outcome β the kind of outcome that the routine forecasting process never predicts. but it has occurred, it has implications, and so we must reflect on it. in that spirit, i shall set out a few features of this episode that make it β interesting β. the most obvious one is the prominence of financial events and particularly financial sector impairment in key countries. there have been other episodes where individual financial institutions or sectors, or even the whole banking systems of small countries, have needed recapitalisation. but the scale of capital needed, the number of countries where it is needed and the extent of counterparty risk aversion because of concerns over solvency have been outside the range of experience of the past half century. in the near term, financial stress brings the obvious concern about the ability of the financial system to provide credit to the economies in question. as one measure of this concern, the number of loans approved for housing in the united kingdom in october was 65 per cent lower than a year earlier, and about 50 per cent lower than during the downturn of the early 1990s. the immediate need is to keep ample liquidity, strengthen banks β balance sheets by adding capital and to help confidence, including by lending the strength of the sovereign β s credit rating where necessary. all this has been occurring. what may still be needed internationally is attention to the remaining problem assets, since if their prices continue to decline | 0.5 |
willem f duisenberg : the ecb β s assessment of current economic and monetary developments and prospects for the euro area introductory statement delivered by dr willem f duisenberg, president of the european central bank, at the testimony before the committee on economic and monetary affairs of the european parliament, brussels, on 28 may 2001. * * * it is a pleasure for me again to appear before your committee to report to you on recent decisions by the governing council in the area of monetary policy as well as within its other fields of competence. i shall start with the ecb's assessment of current economic and monetary developments, as well as the prospects for the euro area, and explain our recent monetary policy decisions. i shall then turn to the preparations for the introduction of the euro banknotes and coins. finally, i should like to address the role of central banks in the field of banking supervision. i should like to indicate already at this stage that my opening remarks may slightly exceed the usual time frame. 1. economic and monetary developments since my last appearance before this committee on 5 march 2001, the governing council of the ecb decided to reduce its key interest rates by 25 basis points on 10 may. i would like to explain the reasons for the decision. over the last few months, the governing council has gradually changed its view on the balance of risks to price stability in the euro area, moving from a situation where the risks basically remained on the upside towards a far more balanced situation. starting with the first pillar, we have been witnessing a downward trend in the dynamics of both money and credit growth in the second half of 2000 and early 2001, partly reflecting the increase of 225 basis points in key ecb interest rates, which occurred between november 1999 and october 2000. the three - month average of the annual growth rates of m3 was 4. 8 % in the period from january to march 2001. in addition, some slowdown in credit aggregates had also been visible over the past few months, and m1 continued to grow at a very low pace. moreover, there is now evidence that the monetary growth figures are distorted upwards by non - euro area residents'purchases of negotiable paper included in m3. the vice - president of the ecb already informed this committee on 2 may, in his presentation of the ecb's annual report, that the ecb was working on identifying these distortions precisely and on making the necessary corrections to the data. some of these distortions have recently been | sharon donnery : risks and resilience in uncertain times address by ms sharon donnery, deputy governor of the central bank of ireland, to the institute of international and european affairs, dublin, 8 march 2019. * * * good afternoon, it is a pleasure to address the institute of international and european affairs. the ebbs and flows of a country β s economic and financial fortunes are not always predictable. 1 in ireland, even less so. while, sometimes, there are patterns or regularities for such events β they are not always a perfect indicator of what β s to come. uncertainty always accompanies predictions. when seamus heaney died in 2013, the economist magazine published an obituary remembering him, with the by - line β a shy soul β. they noted that β during his years studying to be a schoolteacher in the 1960s, he used the pen - name β incertus β, meaning β uncertain β. β¦. yet there is little that is hesitant in his poems. β there are plenty who may think there β s no poetry in economics, but economics, like any field, can learn from the greats in others. 2 a central theme of my remarks today is uncertainty. ireland today faces considerable uncertainty. put simply, the irish macrofinancial environment could change significantly over the short and medium term. the uk leaving the eu is not the only risk. the international economic environment has deteriorated, yet the domestic economy is currently robust. so, we find ourselves in the interesting position of assessing a potential slowdown in the external international environment, the uk departing the eu, while also worrying about potential overheating from a domestic perspective. plotting a course through such an environment, with the potential for a wide range of future outcomes, is indeed challenging. while we can state with certainty that we have greatly expanded and strengthened our toolkit to deal with various risks, it is important that we maintain a sense of humility about what we can forecast and, more to the point, what we can control. yet like heaney, despite the uncertainty we face β we cannot be shy, hesitant or complacent in our words, not least in our actions and policies. today, i would like to discuss the economic outlook, both for ireland and critically, the international environment. then, i will elaborate on some of the risks that ireland faces. i will finish by giving some thoughts on what policy can do when facing these very different risks. the economic environment | 0 |
shyamala gopinath : technology in banks β responding to the emerging challenges inaugural address by ms shyamala gopinath, deputy governor of the reserve bank of india, at the cii β s banking tech summit 2009, mumbai, 23 march 2009. assistance provided by mr ganesh kumar and mr sujit k. arvind in preparation of the address is gratefully acknowledged. * * * ladies and gentlemen, a very good morning. a central banker addressing an impressive gathering of technology experts on a topic which is their very own β to say the least, is a formidable task. in the current global financial context, though, i may not be surprised if many central banks, as regulators of banking and other financial institutions get more engaged with the technology aspects of the regulated institutions β operations. it is not hard to miss the role played by greater technological integration in transforming the image of banking as model centric blackboxes, unrecognizable from the traditional brick - and mortar systems. not surprisingly, the internal audit and financial reporting systems within the banks were not given similar focus probably because effective, real time data analytics requires huge data crunching that involves cost. it may be something to ponder that while a lot of focus is given to using technology to manage client and customer accounts at banks and the trading systems, the same level of sophistication does not extend to internal auditing, accounting and financial reports. in india, the situation of the banks is quite different from the banks overseas particularly in developed markets. indian banks are not facing huge write downs or losses and are still quite well capitalized. there may be a slowdown in credit but that is more a reflection of the broader economic slowdown - the impact of the real sector on the financial sector. in this context, for india the theme of the seminar, which refers to β sustaining the growth momentum β is quite apt. globally, the it spends of financial institutions are expected to go down drastically in 2009 - 10. in india, however, this could be an opportune moment for banks to focus on the internal processes and consolidate their it platforms across functionalities to use technology as an effective strategic tool. it is also an opportunity for the technology companies to gear up to meet the demands of the domestic market for new technology as well as expanding existing technologies. the use of technology in india has undergone rapid transformation. the last two decades have witnessed a sea change in the nature of services offered by not only | board's role to provide oversight, asking the right questions and holding the management accountable for executing the bank's strategy within the agreed risk appetite. in this context, it is imperative that the views of the board are clearly articulated and documented in the minutes of the meetings of the board and its various subcommittees. it is said that the'palest ink is better than the best memory '. proper documentation serves as a vital record of the board's deliberations, decisions, and rationale behind those decisions, ensuring transparency and accountability in governance. clear minutes not only provide a historical account of the board's discussions but also serve as a reference for future decision - making, helping to maintain continuity and clarity in governance practices. boards should prioritise proper succession planning for top management. having just one whole time director ( wtd ) can create potential vulnerabilities, especially in times of transition or unforeseen circumstances. without a well - thought - out succession plan, 2 / 5 bis - central bankers'speeches the bank may face leadership gaps that could disrupt operations and affect strategic decision - making. a broader pool of experienced leaders also contributes to better governance and more resilient management structures. we observe that while the sfbs are strengthening their boards by bringing in new directors, some sfbs are yet to ensure the presence of at least two whole time directors. i would request these banks to expeditiously consider appointing more wtds. empowering assurance functions boards should accord due importance to assurance functions, namely, risk management, compliance and internal audit. these functions play a critical role in identifying and mitigating risks, ensuring compliance with laws and regulations as well as safeguarding the organisation's integrity. boards should ensure that heads of assurance functions are positioned appropriately within the organisational hierarchy and granted direct access to the board. dual - hatting, or combining assurance responsibilities with operational or management duties, undermines the independence and objectivity of assurance functions by creating conflicts of interest. therefore, any dual hatting of assurance functions, should be avoided. key risks to reflect upon small finance banks have demonstrated strong growth since their inception, now accounting for 1. 18 percent of total banking assets ( as of march 2024 ). this is a substantial rise from 0. 44 percent in march 2018. the deposit base has grown at a 32 per cent compounded annual growth rate ( cagr ) over the last five years whereas net advances recorded a cagr | 0.5 |
amando m tetangco, jr : the central bank of the philippines in 2008 β one dynamic team new year β s message by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), to bspers, at the bsp flag raising ceremony, bsp complex, malate, manila, 7 january 2008. * * * magandang umaga at maligayang bagong taon sa inyong lahat! fellow central bankers. i am very pleased that i am the first speaker this year for our traditional weekly flag - raising ceremony. alam po ninyo, gusto ko pong magpasalamat muli sa inyong lahat dahil talagang maganda ang naging resulta ng 2007 para sa atin sa bangko sentral ng pilipinas. we were able to keep inflation at low and stable rates, our banking system is stronger, we have record high international reserves, record high balance of payments surplus, and our peso is the best performing currency in asia. for this, let us give ourselves a well - deserved round of applause! if you recall, the monetary board improved our salary scheme and incentives program in 2007 in recognition of our good performance. kaya ba nating ulitin ito?!!! kaya!!! i agree with you ; especially if we resolve individually and collectively to find even better ways of doing things in our respective sectors. while we have been performing well in terms of our mandate, you and i know there is always room for improving our performance. it can be as simple as using recycled paper for our draft reports, completing our assignments well ahead of time, conserving water and electricity, finding more cost - effective ways of doing our work, setting higher standards for the quality of work we do, and contributing to the overall effort to transform the bangko sentral ng pilipinas into a world - class monetary authority. fellow bspers. the months and years ahead hold a lot of challenges that demand new and better ways of doing things. our operating environment continues to evolve and change. therefore, it is not feasible to remain static and continue to depend on old systems and procedures. thus, while we have become good inflation targeters, we still continue to seek third party expert evaluation of the tools we use to craft and implement responsive monetary policies. 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! | 1 |
as experience has shown in the last few years, they are far from immune, and europe has made the right step by adopting the mica regulation. failing to regulate crypto - assets and non - banks today would merely sow the seeds for tomorrow's financial crisis. beyond these regulatory issues, it has become more and more apparent that we currently lack the anchor provided by central bank money, which drastically reduces counterparty and liquidity risks, and crucially ensures the finality of payments. a wholesale central bank digital currency would ensure convertibility between tokenised assets, exactly as central banks currently ensure convertibility between commercial bank monies, allowing for delivery - versus - payment and payment - versus - payment. in short, tokenised central bank money would provide a " safety pivot ", and serve as a reliable basis of trust on which these new technologies could realise their full potential. ii. a step further with the interlinking of fast - payment systems and a european shared ledger to meet the challenges of transition and growth central banks must therefore keep up with these developments, iv in order to explore the potential of dlt and foster innovation while preserving the anchoring role of central bank money. building among others on the banque de france's pioneering experiments between 2020 and 2023, v the eurosystem conducted a series of new experiments on wholesale cbdc between april and november 2024, vi with the active involvement of the banque de france, banca d'italia and bundesbank as solution providers. we witnessed active industry participation in the eurosystem experiments, 2 / 4 bis - central bankers'speeches and i would like to take the opportunity to pay tribute to your strong commitment β which, i believe, also reflects the growing awareness of the need for a safe settlement asset. together, we successfully tested numerous and very diverse use cases, ranging from primary issues to cross - currency payments, repos, margin calls and asset management, to give a few examples. actual settlement was even tested for the lifecycle management of securities and secondary market transactions. with this ambitious programme, we have further delivered on our learning - by - doing approach, which is of the essence. as announced, the eurosystem will draw lessons from the exploratory work, including on how to facilitate the provision of central bank money settlement for wholesale asset transactions on dlt platforms. clearly, it is in the interest of both european commercial banks and the public sector to work together towards a | ##vier, vol. 88 ( 2 ), pages 252 β 265. 3 gourinchas, p. o. and m. obstfeld ( 2012 ). stories of the twentieth century for the twenty - first, american economic journal : macroeconomics, american economic association, vol. 4 ( 1 ), pages 226 β 265. 4 / 5 bis central bankers'speeches 4 obstfeld, m., and k. rogoff ( 2001 ). the six major puzzles in international macroeconomics : is there a common cause? in nber macroeconomics annual 2000, ed. by ben s. bernanke and kenneth rogoff, vol. 15, nber chapters, national bureau of economic research, inc. : mit press, pp. 339 β 412. obstfeld, m. and k. rogoff ( 2005 ). global current account imbalances and exchange rate adjustments, brookings papers on economic activity, vol. 36, no. 2005 β 1, pp. 67 β 146. obstfeld, m. and k. rogoff ( 2007 ). the unsustainable u. s. current account position revisited. in : g7 current account imbalances : sustainability and adjustment, in nber chapters, national bureau of economic research, inc., pp. 339 β 376 5 berthou, a. Β« a strong euro is less harmful to the most productive exporters Β», eco notepad ( bloc - notes eco ), banque de france, december 2017. see also : exchange rate movements, firm - level exports and heterogeneity, banque de france wp # 660 6 obstfeld, m. ( 2012 ). does the current account still matter?, american economic review, american economic association, vol. 102 ( 3 ), pages 1 - 23. 7 bussiere, m., j. schmidt & n. valla ( 2016 ). international financial flows in the new normal : key patterns ( and why we should care ), cepii policy brief 2016 β 10, 2016, cepii. 8 albuquerque, r. ( 2003 ). the composition of international capital flows : risk sharing through foreign direct investment. journal of international economics, 61 ( 2 ), 353 β 383. 9 fahri, e., g. gopinath and o. itskhoki ( 2014 ). fiscal devaluations, review | 0.5 |
##imated initially and because demand was weaker, partly as a result of the riksbank β s interest rate hikes. another explanation was the krona β s marked appreciation towards the end of 1995. in 1998 the krona weakened again in connection with the russian crisis. on a 12 - month basis the depreciation amounted at most to about 10 per cent. even so, import prices did not rise ; on the contrary, they actually fell a good way into 1999. this largely reflected the factor that triggered the crisis : one of the largest price falls in modern times in commodity markets, including a barrel price of oil down towards usd 10. the result was markedly decreased international export prices - the equivalent of our import prices. a factor that may have contributed to the exchange rate pass - through to consumer prices being smaller after the asian and russian crises is that importers turned away from traditional trading partners in the united states, for instance, in favour of countries whose currencies have not appreciated against the krona. our imports from eastern europe and southeast asia, for example, have increased markedly since 1995. it is conceivable that the krona β s depreciation at the time of the asian and russian crises has been exaggerated because the tcw index measures the exchange rate against the most important industrialised countries and uses weights based on export and import shares from 1989 - 90. in order to throw light on this, we have constructed a simple, broader preliminary import - weighted index that covers 44 countries. the results again show that the krona was weak in 1998 and 1999 but not as weak as the tcw index indicated. one reason why the exchange rate pass - through to consumer prices became smaller than expected may have to do with changes in the composition of imports. there are, however, also reasons for supposing that the krona β s direct pass - through to inflation has decreased. simple estimations indicate a marked reduction in the early 1990s, followed by some further fall ( fig. 2 ). a variety of factors may have contributed to this. β’ exchange rate movements, upwards or downwards, may now be perceived as a more transient phenomenon, whereas the devaluations under the fixed exchange rate regime were regarded as more permanent. if importers expect a price change to be temporary, they will no doubt be more prone to absorb the exchange rate fluctuations in their profit margins. that this may have been the case is indicated by some preliminary studies. β’ generally increased confidence in | difficult to assess our forecasts and to compare them with those of other forecasters. nor was it easy to implement the assumption of a constant rate in a consistent manner in the forecasting process. these problems would have been aggravated when we extended our forecast horizon. the transition to the new interest rate assumption at the same time meant that the simple policy rule used to explain monetary policy had to be abandoned. this rule was easy to understand and was therefore a good educational tool : if the forecast of a constant repo rate showed inflation close to target the interest rate would be held unchanged. however, it gradually became clear that this rule could sometimes form an obstacle in our communication. it created an exaggerated focus on the current interest rate decision and on the inflation forecast exactly two years ahead. the gradual shift towards more flexible monetary policy led to a greater need to illustrate the fact that it is the entire expected sequence of events for inflation and the real economy a few years ahead that is important to monetary policy decisions, and not merely the levels we foresee two years ahead. and the focus should be on not only current interest rates, but also expectations of future interest rate changes 6. now we instead use an assumption that the policy rate will develop in line with financial market expectations. this means that the monetary policy discussion can now be based on a relatively realistic development of the interest rate throughout the forecast period. this makes it easier to assess our policy, to compare our forecasts with those of other forecasters and it enables clearer communication with regard to future policy. if inflation is expected to be close to target in a two - year perspective, this could indicate that market expectations of interest rate developments are reasonable. however, to determine this we must also take into consideration the expected sequence of events for inflation and the real economy that would result from this interest rate path. in our communications we point out that the assumption that our policy rate will follow implied forward rates is not a commitment from the riksbank that the repo rate will actually develop in this way. each time we make a decision, we take a stance on the interest rate path, on the basis of the information available at the time. our considerations can and should be altered if the economy develops in a see jansson, p., and a. vredin, ( 2004 ), β preparing the monetary policy decision in an inflation targeting central bank : the case of sveriges riksbank β, in the conference volume practical experience with inflation targeting, | 0.5 |
is timely to review our policy frameworks and the role we play in wider society to ensure we remain fit for purpose. over the past year, we have embarked on several review and public consultation processes. these processes β some of which are still underway β have spanned our monetary and financial policy frameworks, as well as the role of physical currency. we are not alone in conducting such reviews. our counterparts in sweden ( riksbank ) and norway ( norges bank ) recently have, or currently are, undertaking reviews of their monetary policy frameworks and legislation. 10 11 the us federal reserve has initiated a review of 8 historically, central banking objectives have evolved with the wider political economy concerns faced by countries. see smith, c, o. aziz ( 2019 ), monetary policy objectives, reserve bank of new zealand bulletin, vol. 82, no. 2 ( forthcoming ). paul tucker argues that β [ a ] central bank regime for all seasons cannot be designed without a good fiscal constitution existing too. setting boundaries to the authority of central banking needs to factor in what is on the other side of the border β, the governance of monetary & financial stability policy, banking perspective, quarter 2 2018 ( http : / / paultucker. me / the - governance - of - monetary - and - financialstability - policy / ) the riksbank β s monetary policy was reviewed by marvin goodfriend and martin king over 2010 β 2015 and a report published in 2016. the review was commissioned by the committee on finance of the riksdag and made several recommendations. following this review the riksbank executive board has made several changes to its framework in may 2017, the rationale for these changes are further explained in a memorandum produced by the executive board, and in the riksbank economic review. in addition, a parliamentary review of the riksbank act has been initiated. the recommendations from the riksbank act review are due no later than 31 may 2019. the norges bank has had two reviews which have translated into changes in the norges bank act, and the regulation on monetary policy. the gjedrem review was an external review conducted by the norwegian law commission and chaired by a previous governor sevin gjedrem. refit ( review of flexible inflation targeting ) was an internal review over 2013 to 2017 and explored possible improvements to the monetary policy framework in norway. see : https : / / www. norgesbank. no / en / about / research | the health and conduct of the sector. the reserve bank β s insurance agenda for the coming year ( or years ) is thus very full. we are committed to openly communicating our development priorities to insurers and the wider public, so that individuals and firms have the opportunity and ability to be an active participant in the policy development. https : / / www. rbnz. govt. nz / news / 2019 / 01 / fma - and - rbnz - report - on - life - insurer - conduct - and - culture ref # 8609867 v1. 2 page 7 of 7 what we ask of you, is that you engage openly and early with us, and that you heed the lessons of the banking and life insurer conduct and culture reviews. we look forward to working with the industry and other interested parties as we embark upon this next phase of our insurance supervision development. thank you for your time today, and in the near - future. ref # 8609867 v1. 2 | 0.5 |
other indicators all point towards strong growth of the domestic economy. the rate of growth of industrial production, for example, not only increased in april, but also incorporated an upward revision for the first quarter. industrial and consumer confidence both remain at, or close to, record high levels. at the same time, external developments are continuing to provide a positive stimulus to economic growth in the euro area. reflecting favourable domestic and external conditions for growth, the outlook for euro area growth continues to be positive. there have not been any major changes in bond and foreign exchange markets since the decision of the governing council on 8 june to raise the ecb interest rates. current bond market yields continue to show market expectations of a period of sustained economic growth in the euro area. at the same time, the accumulated depreciation of the exchange rate of the euro remains a cause for concern and has to be taken into account in the assessment of the risks to price stability. as regards consumer price developments, inflation in may 2000, as measured by the harmonised index of consumer prices ( hicp ), remained at 1. 9 %. a lower year - on - year change in services prices offset relatively strong rises in other prices, in particular energy and unprocessed food prices. over the coming months the rate of increase in consumer prices could continue to be affected by lagged effects of the increase in import prices. for the outlook for price stability in the medium term, it is essential that these short - term movements of inflation do not become protracted and translate into second round effects. overall, the outlook for price stability will be affected by several factors, which will need to be monitored carefully. first, strong monetary growth and ample liquidity conditions call for continuous monitoring. in addition, it will be important, in the current phase of strengthening economic growth, for wages to continue, on average, to grow at rates compatible with the objective of price stability. this, together with structural reform in the labour market, will be important to sustain the process of non - inflationary growth and to reduce unemployment in the euro area. developments in import prices, which are influenced by the evolution of the exchange rate of the euro and the price of raw materials, may affect the outlook for prices in the period ahead. finally, i should like to stress that a pro - cyclical loosening of the fiscal policy stance could also add to upward risks to price stability. in this respect, when looking at the euro area as a whole on | european central bank : press conference - introductory statements introductory statements by mr willem f duisenberg, president of the european central bank, and mr christian noyer, vice - president of the european central bank, at the press conference held in frankfurt, on 6 july 2000. * * * ladies and gentlemen, the vice - president and i are here to report on the outcome of today β s meeting of the governing council of the ecb, which was also attended by mr. papademos, governor of the bank of greece, to whom the governing council has extended a standing invitation following the eu council β s decision on greece β s adoption of the euro on 1 january 2001. the governing council conducted its regular examination of recent monetary and economic developments and their implications for the risks to future price stability in the euro area. subsequently, it decided to keep the interest rates on the eurosystem β s monetary policy instruments unchanged. thus the minimum bid rate in the main refinancing operations of the eurosystem was left at 4. 25 %, and the interest rates on the marginal lending facility and the deposit facility were kept unchanged at 5. 25 % and 3. 25 % respectively. allow me to give you an overview of the main elements of our assessment of the latest information on monetary, financial market and other economic developments. in the context of the first pillar of our monetary policy strategy, let me start with the latest monetary developments in the euro area. the three - month average of the annual growth rates of m3, covering the period from march to may 2000, stood at 6. 3 %, which was unchanged from the period from february to april 2000. at 6. 3 %, m3 growth was substantially above the reference value of 4 1 / 2 %. this deviation of m3 growth from the reference value, combined with the strong growth of both m1 and credit to the private sector, indicates that liquidity conditions continued to be ample in the euro area through may. the increase in ecb interest rates on 8 june - in conjunction with the interest rate increases made since november 1999 - exerts a moderating influence on both money and credit growth. turning to the second pillar of our strategy, considering real economic developments, recent data indicate that the euro area economy has continued to grow at a robust pace. the first estimate of real gdp growth in the first quarter of this year was 0. 7 %. although this was slightly below the average observed in the second half of last year, | 1 |
christopher j waller : the economic outlook and a word of caution on inflation speech by mr christopher j waller, member of the board of governors of the federal reserve system, at the 59th annual economic forecast luncheon, phoenix, arizona, 16 november 2022. * * * thank you, dean kadan, and thank you for the opportunity to speak today about the outlook for the u. s. economy and the implications for the federal reserve's ongoing fight to reduce inflation. i will begin with some comments on the overall outlook for economic growth and then try to explain how tighter monetary policy this year is intended to dampen demand and put downward pressure on inflation. one way is by influencing the labor market, so next i will give an update about labor market conditions and how i expect them to evolve. i'll then turn to the outlook for inflation, where we saw moderation in some measures in october, but to a level that remains unacceptably high. i'll finish up with how i expect monetary policy will evolve in the coming months to reduce inflation and return it to the federal open market committee's ( fomc ) 2 percent goal. economic growth in the united states has slowed significantly in 2022, and i expect that slow growth to continue into next year. after shrinking slightly in the first half of this year, real gross domestic product rebounded in the third quarter to a 2. 6 percent annual growth rate. but all indications are that this was a temporary boost, and that weak growth has returned in the last quarter of this year and will persist into 2023. consumer and business spending has softened, amid deteriorating business sentiment in most sectors of the economy and near - record - low readings on surveys of consumer attitudes about the economy. there is no secret about why - inflation is very high, something people are reminded of every day when they see the prices of things they buy go up. on top of that, higher interest rates are raising borrowing costs for businesses and households. at any other time, i would be pretty unhappy about slowing growth, but not now. if you believe, as i do, that supply bottlenecks in the economy have mostly abated and that elevated inflation is primarily a function of high demand, then slowing down economic growth is absolutely necessary to bring inflation down to our 2 percent target. this slowing in activity is a sign that actions taken by the federal reserve this year to reduce inflation are working. let me take a few minutes to | the months ahead as an indicator of the direction of overall inflation. as i discussed in a recent speech, escalating rents have played a large role in driving up inflation this year, and because turnover of leases occurs only periodically, i expect 3 / 6 bis - central bankers'speeches measures of rents and the equivalent for homeowners will continue to increase significantly for at least several more months. 1 but i will be watching for signs of moderation. finally, i will be looking for a slowing in price increases in non - housing services, which have been quite robust in recent months and running at about twice their pre - pandemic level. as i said a moment ago, the inflation outlook for this sector will partly depend on the growth of wages. i will be looking closely for continued slowing in wage growth back to a more sustainable rate. given that medium - and longer - term inflation expectations remain stable, an indication that investors and consumers retain confidence in the fed's commitment and ability to achieve its inflation goal, i believe we can expect wage growth to slow. so, the recent cpi report is a positive development, but i'll need to see further progress. like many others, i hope this report is the beginning of a meaningful and persistent decline in inflation. but policymakers cannot act based on hope. i will not be head - faked by one report and will continue to watch the data between now and the december fomc meeting before deciding on the next step for policy. now let me turn to the implications of this outlook for monetary policy. since my last outlook speech in october, we have gotten some additional data that reinforces my sense that the labor market may be loosening, and that inflation pressure may be easing. but as i said a moment ago, this hasn't been sufficient to significantly alter my outlook or my view of appropriate monetary policy. achieving the fomc's dual mandate of maximum employment and price stability is still a one - sided campaign. with the labor market still strong and extremely tight, the committee does not face a trade - off between employment and inflation. inflation has been running significantly above our objective for more than a year, so monetary policy can and must be used aggressively to reduce it. to pursue that goal, the federal reserve has been aggressive. in nine months, we have raised the target range for the federal funds rate from near zero to 3 - 3 / 4 to 4 percent, a historically rapid pace of increases. in | 1 |
other regulated or unregulated entities managing the platform. examples include marketplaces ( e. g. deposit marketplaces ) or even e - commerce portals distributing financial services, which are ancillary to their core business ; big techs play a significant role in this space. many authorities and stakeholders are addressing this issue, striving to increase their knowledge of this important phenomenon, raising interest from different perspectives. today i want to focus on one perspective : the microprudential one. the eba published a first report4 in september 2021, providing an initial taxonomy of the main business models observed. a crucial finding of this analysis is that regulators and supervisors do not yet have sufficient information on platforms and on their relationships with banks. thus, properly and systematically mapping the use of digital platforms by supervised entities and, more generally, the platformization of the financial ecosystem, are indeed essential. in a business model perspective, platforms can help financial intermediaries, specifically the traditional ones, in providing new products and services to their clients and / or increasing their customer experience, thus representing a way to support the viability and sustainability of business models. 5 in the meantime, the reliance on digital this paradigm is usually associated with the use of the open api, which allows an application to have access to the data of financial intermediaries and which therefore allows the exchange of information between different operators ( financial intermediaries, technical suppliers, other non - financial parties ) the functioning of the ecosystem is even more complex due to the presence of tpps with the freedom to provide services without establishment, located in other jurisdictions than the european union, and of big tech companies that are currently acting as purely technical service providers, but that might decide to have a bigger role in the financial ecosystem. https : / / www. eba. europa. eu / sites / default / documents / files / document _ library / publications / reports / 2021 / 1019865 / eba % 20digital % 20platforms % 20report % 20 - % 20210921. pdf for example, digital platforms facilitate access to financial services, the matching of customer preference ( e. g. in terms of β search for convenience β ), support economies of scale, and leverage on network effects, reducing the need for physical premises. digital platforms also allow innovative business models to be developed that should be monitored and understood by the supervisors. platforms to promote and distribute services introduces strong interdependencies | the case of the communication on crypto - assets published by the bank of italy to which i referred before. let me give you another example. in europe, the co - legislators have recently agreed over the last months on the regulation on markets in crypto - assets ( mica ) and the regulation on a pilot regime for market infrastructures based on distributed ledger technology. these two regulations represent an attempt to design a comprehensive framework for digital assets. indeed, the mica defines a clear set of rules for crypto - issuers, identifies a clear taxonomy for digital assets, and sets up a supervision architecture including a sanctions regime. with the pilot regime, we allow intermediaries to experiment with new technical solutions for trading digital assets. in both regulations, the co - legislators have tried to achieve a delicate balance between sufficiently flexible rules which do not curb innovation but are adequate for mitigating risks. https : / / www. bancaditalia. it / pubblicazioni / mercati - infrastrutture - e - sistemi - di - pagamento / approfondimenti / 2022 - 026 / n. 26 - misp. pdf innovation facilitators in order to answer the challenges posed by technology, the bank of italy is implementing a clear strategy to support financial institutions and promote the development of a sound and responsible innovation ensuring financial stability and consumer protection. in this contest, resilience and adaptability, the two key words of our conference, play a pivotal role. let me explain. our fintech strategy is based on a twofold approach : 1 ) implementing a set of innovation facilitators able to cover the entire β product life β cycle β ; and 2 ) promoting dialogue with all stakeholders in order to share good practices and sound common standards. the set of innovation facilitators is composed of three different initiatives : the fintech channel, milano hub and the regulatory sandbox. the fintech channel is the point of contact through which operators can dialogue easily and informally with the bank of italy. they can present projects in the fields of financial services and payments, based on innovative technology, or propose technological solutions designed for banks and financial intermediaries. since its establishment in 2017, the fintech channel has received over 120 requests for support. these initiatives involve companies in all phases of their life - cycle ( 30 per cent developed and 70 per cent start - ups or projects ), relating to a | 1 |
ardian fullani : economy and key interest rate in albania speech by mr ardian fullani, governor of the bank of albania, at the press conference on the monetary policy decision - making of the supervisory council of the bank of albania, tirana, 28 july 2010. * * * in its meeting of 28 july 2010, the supervisory council of the bank of albania analyzed and approved the monetary policy report of the second quarter of 2010. after scrutinizing the latest economic and financial developments at home, the future outlook and the expected risk balances, at the end of discussions, the supervisory council of the bank of albania decided to cut the key interest rate by 0. 25 percentage points. following this decision, the interest rate on the repurchase agreements of oneweek maturity term is 5 %. * * * economic and monetary developments of the first two quarters of 2010 were by and large in line with bank of albania β s forecasts. economic activity posted positive growth though at decelerated rates. the inflationary pressures have been downward and the external balances of the albanian economy have recovered. the financial markets were provided a breathing space and featured : lower risk premia, improved liquidity figures, downward interest rates, and relative exchange rate tranquillity. the upcoming period is expected to feature similar characteristics. the performance of the albanian economy may be considered as positive, particularly when put in the context of the developments in global economy and the regional countries, and considering the challenges faced over this period. the latter represented a tough test for the sustainability of the albanian economy, both at a macro and micro level, and in terms of the institutional and political capacities of economic management. however, when viewed elaborately, economic and monetary developments in the first half of the present year provide numerous shadings for their interpretation. the albanian economy still suffers the low domestic demand and activity financing - related concerns. economic growth and economic development are not balanced yet for all the sectors of the economy. they have mainly relied on foreign demand rather than domestic demand and they attest to a more dynamic performance of industry and services and slower performance of agriculture and construction. in addition, economic growth has been coupled with slower labour market and employment figures, hence increasing the non - utilized human and capital capacities of the albanian economy. on the other hand, economic performance has confirmed the importance that the preservation of macroeconomic balances has to our country β s stable and long - term development, as well as the need for the | and at wellsuited maturity terms, in order to boost activity in the financial markets and lending to the economy. in response to this policy, the interest rates in the interbank market were stable, reflecting largely the stable liquidity position in the system, while long - term interest rates maintained a downward trend as a result of lower risk premia. in the primary market, government security yields of all maturity terms continued to decline in the second quarter. in addition, this period featured further growth of banking system deposits and their time - related shift to time deposits. once household savings placed in the system increased, the interest rates on deposits showed a downward tendency. on the other hand, private sector credit continues to post low growth rates despite the improved liquidity figures and the lower activity financing costs. the annual growth of private sector credit averaged 9 % in the second quarter of 2010. the credit market continues to feature volatile interest rates and tight lending conditions. however, the latest months β developments show positive signals, particularly in terms of the rather higher credit growth rates, its greater orientation towards supporting investments and the recovery of foreign currency lending to economic units that enjoy natural hedge against exchange rate risk. the bank of albania has been promoting this performance and will continue to do so, and encourages the banking system and borrowers to work harder in finding effective forms, instruments and practices that fuel credit. * * * today β s decision - making of the bank of albania reflects a comprehensive analysis of : the economic and financial developments that have been characterizing the albanian economy in the latest months, the developments in the region and broader, the balance of risks, and future forecast and expectations. the bank of albania believes that the banking system will transmit this decision to the economy timely and at the right intensity. the growth in deposits, the banking system β s liquidity position and the downward government demand provide real room for greater orientation of funds to private sector lending. the bank of albania will also pay due attention to foreign currency intermediation by the banking system. the performance of foreign currency - denominated deposits and a wide array of other developments provide a safe ground for their channelling into the economy at a lower cost. this will be followed up closely in the remaining of 2010 and beyond. the bank of albania considers that the monetary conditions and the demand - supply ratios in the major markets are well - suited to maintain price stability in the medium run. our monetary policy will continue to be prudent in view of meeting the | 1 |
not always clear where the risk exposures ultimately lie ; and third, rapid re - leveraging in some parts of the euro area corporate sector, partly induced by a surge in leverage buy - out activity, makes a turn in the credit cycle increasingly probable. the global financial market turbulence of late - february and early - march of this year vividly highlighted the existence of some of these market vulnerabilities. it seems to have reflected an abrupt reappraisal and re - pricing of risks in response to a combination of triggering events, especially a rising concern about rapidly deteriorating credit quality in the us sub - prime mortgage market and, more generally, increased uncertainty about the macroeconomic outlook in the united states. this temporary increase in financial market volatility served to illustrate how an abrupt decline in risk appetite, when asset prices may have departed from intrinsic values, can result in very sharp changes in asset valuations, even when changes in the economic fundamentals are relatively small. looking ahead, in this context of what we have called β pricing for perfection β β in the sense that some asset valuations appear to be based on highly optimistic expectations about future economic outcomes and very low risk premia β some markets could continue to prove vulnerable to adverse disturbances and changing market sentiment. added to this, there is uncertainty about how markets for innovative and complex financial instruments ( in particular, structured credit derivatives ) will perform and how lightly regulated and highly leveraged financial institutions will behave in a more challenging macrofinancial environment. that said, financial innovation and the growth of alternative investment vehicles, such as hedge funds, have had, in our assessment, an overall positive effect on financial markets in europe, contributing significantly to enhanced market liquidity and greater pricing efficiency, portfolio diversification and a better distribution of risks within the financial system. however, hedge funds β activities are also associated with potential operational and systemic risks. moreover, the monitoring and management of these risks by their counterparties and investors have become more complex. an appropriate level of transparency is therefore important for effective market discipline and for the assessment and management of risk by the counterparties of such institutions and by investors. a final point i would like to stress with regard to the activities of the eurosystem in the field of financial stability concerns its ability to cope with a possible financial crisis affecting the euro area. to this end, the eurosystem carried out a comprehensive financial crisis simulation exercise in may 2006 which confirmed its preparedness to deal with potentially systemic events that | . for central banks and supervisors, this means taking climate and nature into account in the pursuit of their monetary policy and supervisory objectives. if they failed to do so, they would be failing on their mandate. the work that we are doing individually and collectively proves that we will not allow this to happen. thank you for your attention. 1 emambakhsh, t. et al. ( 2023 ), " the road to paris : stress testing the transition towards a net - zero economy ", occasional paper series, no 328, ecb. 2 basel committee on banking supervision ( 2021 ), climate - related risk drivers and their transmission channels, april. 3 boldrini, s. et al. ( 2023 ), " living in a world of disappearing nature : physical risk and the implications for financial stability ", occasional paper series, no 333, ecb. 4 / 4 bis - central bankers'speeches | 0 |
could produce the win - win outcome of improving the attainment of both goals. for that reason, in its consideration of its communications strategies, the federal open market committee has been discussing whether mechanisms could be put in place that could better anchor inflation expectations in a manner consistent with the institutional framework of our dual mandate. the second of david's open issues β whether central banks should lean against possible asset price bubbles β was the key topic in my discussion here eighteen months ago, at otmar's festschrift. my answer then is my answer now. a central bank should focus on the outlook for the macroeconomy and generally relegate asset prices to the subordinate role of inputs to the forecast process. i view this as the simple application of humility that david and i find so admirable. although economic theory provides no settled answers to any topic, its predictions are especially imprecise with regard to asset pricing, which has two implications for central bankers. first, little confidence can be attached to the determination that an asset bubble exists except in the most extreme of circumstances. second, even less confidence can be attached to predictions of the effects of policy on asset prices, and in particular on any speculative element in those prices. moreover, monetary policy actions addressed at a perceived bubble in one sector may have undesirable effects on other asset prices and the economy more generally. as a result, my preferred policy framework remains three pronged : first, assign the single instrument of monetary policy to its macroeconomic objective ; second, rely on regulation to erect a resilient financial structure ; and, third, in the event that market judgments prove to be wrong and financial prices adjust sharply, apply the tool of monetary policy to the macroeconomic task at hand. that task is not always easily captured by simple statistical regularities. relationships between financial markets and economic results are complex and nonlinear, especially when markets are not behaving normally. when investors are ebullient, their expectations of outsized capital gains can feed on themselves and back on the economy. on the way down, investors'loss of confidence, a reduction in credit availability, and a tightening of terms and conditions for credit have the potential to have pronounced effects on activity and inflation. the world is, no doubt, different than when we gathered here eighteen months ago. however, it is far too soon to pass judgment on what went wrong in the u. s. housing market and why. i suspect that, when studies | is in trouble. i think it would be a serious mistake, as some have suggested, to go beyond the limitations on the federal reserve β s emergency lending authority that are set out in the dodd - frank act. bis central bankers β speeches | 0.5 |
communication between users and providers of banking products and services. therefore, we extend our warm welcome to the initiative of procredit bank and the brochure β how to talk to banks β, which will doubtless make rights and obligations arising from the use of specific financial products and services more easily comprehensible to customers. this brochure shall certainly also contribute to better compliance with good business practices and improve the level of proficiency and expertise of members of staff of financial institutions. as the world around us is becoming increasingly complex, financial services are also evolving. more tailored to the needs of clients, financial services are at times very complex and difficult to understand, let alone put into practice. instead of being angry with banks and the central bank, this and other brochures should be made good use of all the way from here to frankfurt. β lucky are those who know the limits of their knowledge and wish to broaden their horizons β for they are the ones who will make the best use of this brochure. | banking. for those who do not know, since the formation of the public oversight board, which is in charge of overseeing audit firms in serbia, the nbs has made a key contribution to the development of this type of supervision through its participation, first as a member of the board, and later by chairing it, bringing its experience as a supervisor of financial institutions. what is particularly important for our meeting today is the fact that communication has become one of the important instruments of the nbs monetary policy, in the form of truthful, timely and transparent dissemination of information to the broader and expert public. such manner of communication also significantly contributed to the anchoring of inflation expectations, and thus to the easing of inflationary pressures. one of the most important channels of communication between the nbs and the public is its website, which contains numerous services and daily information important for the economy and citizens in the fields of all the numerous competences of the nbs. the section " it's good to know " was added to the nbs website, where comprehensive responses to the media are published, which has significantly improved the accurate and complete transmission of information. in addition, as one of the producers of official statistics, the nbs significantly contributes to the further development of the work of the professional public and the improvement of standards through the publication of professional reports and analyses. this is part of what we have worked on together β the nbs, banks, insurance companies in serbia... you will speak on the panels about the balance sheet amounts, other indicators, such as capital adequacy, and you can also obtain information on our website. i felt the need to present these results as the ones we achieved together because i really feel uncomfortable when in front of foreign guests i need to encapsulate in one sentence that " the banking sector in serbia is highly liquid, capitalised and stable ". behind that one sentence there is so much effort, so much daily work, and i can say without modesty that the nbs is not encouraged by others to lead development in the field of financial services, but it does so on its own, and in many segments ahead of the ecb practice. but i must say that our commercial banks, all twenty of them, are keeping up with our joint efforts to make the life of citizens in serbia easier, better, more certain and as safe as possible. and to conclude with that opening sentence β he who does good is expected to do even | 0.5 |
alessandra perrazzelli : financial technology, financial inclusion and competition policy - legal and economic approaches speech by ms alessandra perrazzelli, deputy governor of the bank of italy, at the collegio carlo alberto, university of turin, turin, 2 december 2022. * * * fintech is shaping the global financial system, leading to profound changes in demand and supply for financial products and services. innovation technology, alongside important opportunities, poses considerable challenges for traditional intermediaries and for regulatory and supervisory authorities. there is no doubt that technologies, such as artificial intelligence, cloud storage and computing, robotics, platforms and distributed ledgers technologies ( dlts ), are one of the main drivers of evolution in the industry ; the operators are increasingly using them to reduce costs and offer new services. the spread of internet connections and mobile devices, the greater availability of information about users and the lower cost of automatic data processing are opening up the financial sector to innovative business models. newcomers β such as fintech companies, start β ups and big techs β have arrived in the financial sector, changing relationships with clients and offering tailoredmade products. technological innovation allows financial institutions to be part of a broader and more interconnected ecosystem, based on the interaction and sharing of projects and information with multiple innovative companies. in this respect, players may set up several forms of relationships : from direct competition β with the consequent general reduction in traditional sources of income for incumbents β to forms of more or less advanced cooperation, based on the choices of each intermediary. the ultimate aim is to reach customers through new and diversified channels, with innovative services becoming faster, easier, cheaper and more accessible. the outlook for intermediaries in this context, intermediaries need to keep up with the increased competition and with the risks, such as cyber and operational risks, associated with the digitalization of financial services. i am also thinking about governance, profitability, capital adequacy, resilience and compliance in a broader perspective. innovation is changing banking value chains. indeed, new technologies make it possible to entirely digitalize financial processes from end to end, reduce costs and increase efficiency. in particular, we observe that newcomers are usually well positioned to leverage data and advanced technologies in order to increase their footprint in the financial landscape. at the same time, we observe that many strategic plans of the main italian banks have digitalization as one of their pillars. through different technologies ( mainly based on | by the credibility of the eurosystem and the progress made in the reform of european governance. fears of euro reversibility are linked in the first place to those concerning the sustainability of public debts and the competitiveness of member countries. for this reason the activation of omts and their continuation are subject to specific undertakings regarding public finances and structural reforms as part of assistance programmes. the financing of the programmes with esm resources is an incentive to further strengthen the governance of the union, which is essential to achieve a permanent reduction in the european component of the differentials. monetary policy can guarantee stability only if the euro - area β s economic fundamentals and institutional architecture are consistent with it. every country must do its part. the announcement of omts produced immediate benefits : medium and long - term yields in the countries under pressure decreased and the fragmentation of markets along national borders was attenuated. albeit with fluctuations linked to the remaining, pronounced uncertainty about the determination of all the member states to proceed with the strengthening of the union, the yield spreads between euro - area government securities remained on a downward trend. that between ten - year btps and bunds is about 250 basis points today. on 19 july a group of economists of various nationalities and affiliations published a manifesto in support of outright monetary transactions ( a call for support for the european central bank β s omt programme ), arguing that β the success of the omt announcement proves that the omt is primarily a monetary policy instrument β¦ it is the responsibility of a bis central bankers β speeches central bank and a defining feature of a lender of last resort to assume liquidity risk, including through the purchase of financial assets when necessary ( a step that has also been used by the bundesbank itself in the past ). β there are different standpoints ; it is understandable that some should question the compatibility of outright monetary transactions with the constitutions of some euro - area countries, but the doubts about the possibility of making effective use of esm resources must be dispelled quickly in order to preserve the progress made, safeguard the rights and not thwart the efforts of those who have helped to develop the instruments of financial support. the omt announcement prevented a financial collapse with potentially devastating consequences for the european economy : all the member countries benefited, not just those at the centre of the sovereign debt crisis. more than anything else, however, a shared determination to advance towards a full european union is essential. the ecb and the national | 0.5 |
14 august 2015, the snb announced that it would begin issuing the new swiss banknote series in april 2016. the first denomination to be released will be the 50 - franc note. today, we can announce the exact issue date. the new 50 - franc note will be presented to the public for the first time at a news conference on 6 april 2016, and will first be issued on tuesday, 12 april 2016. the new notes will be put into circulation continuously from that date onwards. a largescale information campaign will inform the general public about the new note and on ways to check its authenticity. the remaining banknotes in the series will be issued subsequently at half - yearly or yearly intervals. the snb will announce each new issue date well in advance. the current eighth banknote series will continue to be legal tender until further notice. the date on which the current series is to be withdrawn from circulation will also be announced well in advance. bis central bankers β speeches | rates are back to their pre - referendum levels. markets also responded strongly to the us election result, with both breakeven inflation and real yields rising. alongside those market developments, uk indicators suggest continued solid growth, and the pace of fiscal consolidation is now expected to be slower. the mpc will assess these and other developments at its meeting next week as it plots the monetary course ahead. whatever economic developments and prospects, the mpc will always set monetary policy to maintain price stability and promote the good of the people of the united kingdom. as it did when it was the only game in town after the global financial crisis ; and as it will going forward, in better balance with fiscal and structural policies. monetary policy will continue its good work as the uk economy adjusts to new opportunities with europe and the rest of the world. in the end, monetary policy isn β t a spectre but a friendly ghost. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx i monetarism is the view that the dynamics of money have a temporary influence on demand and, via the celebrated β quantity equation β, a major influence of prices. here i am using the term in a broader sense, to describe the view that monetary policy is the only tool necessary to stabilise the economy. friedman advocated the control of money as superior to fiscal measures for stabilising the economy. in friedman ( 1948 ) he argued that financing variations in the government deficit or surplus with monetary expansions or contractions would be stabilising. later, in friedman ( 1960 ), he advocated a constant growth rate of the money stock as a means to stabilise the economy effectively. following the experiences of the 1980s, there is today great scepticism that the velocity of money circulation exhibits the kind of stability necessary to make the quantity equation operative as a means of inflation control, although money may still have useful information content as an indicator. as gerry bouey said, β we didn β t abandon the monetary aggregates, they abandoned us. β see friedman, m. 1948. a monetary and fiscal framework for economic stability. american economic review 38, 256 β 64 ; and friedman, m. 1960. a program for monetary stability. new york : fordham university press. ii growth in india and china in particular has contributed to a marked fall in the global gini coefficient, from 0. 74 in 1975 to | 0 |
also been conducting joint seminars such as this one to share experiences and learn from one another. this workshop therefore comes at such an opportune moment to assist our central banks to achieve the internal and regional objectives. the workshop offers various opportunities to all of us in a number of ways : β’ first, this is an opportunity to jointly re - assess and evaluate our performance in the areas of business continuity management and risk management over the period. β’ secondly, it provides us with an opportunity to learn from organisations that have run risk management and business continuity programs for many years. β’ third, this is an opportunity for each of our central banks with programs in their infancy to lay the correct foundation to implement sound and resilient risk management and business continuity programs. β’ fourth, this is an opportunity to obtain uniform training for each of the key players in their respective roles. with a common foundation, the objective of harmonisation in the region will draw closer to reality. bank of uganda would greatly benefit if the following areas are specifically addressed within this workshop : β’ performance measurement : what are the key indicators that central bank management should use to know that their business continuity and / or risk management programs are giving them the intended benefits? β’ evaluation : how does the central bank evaluate performance over time and which tools are recommended? β’ reporting : what should be reported about risk and business continuity at the different levels of the organisation including the board? β’ incident reporting and monitoring : how does the central bank ensure that all risk incidents are systematically reported and monitored? β’ culture change : what are the different approaches to organisational culture change towards risk and business continuity? i would like to conclude by again thanking you all for coming to this workshop and to thank the centre for central bank studies and the centre for technical central bank cooperation for the technical support. bank of uganda is greatly indebted to them. i wish you fruitful deliberations. it is now my pleasure to declare this workshop officially opened. | ##ing operations over the life of the respective tltro. for banks whose eligible net lending exceeds a benchmark, the rate applied in tltro iii operations will be lower, and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation. the maturity of the operations will be extended from two to three years. fifth, in order to support the bank - based transmission of monetary policy the governing council decided to introduce a two - tier system for reserve remuneration in which part of banks β holdings of excess liquidity will be exempt from the negative deposit facility rate. separate press releases with further details of the measures taken by the governing council will be published this afternoon at 15 : 30 cet. the governing council reiterated the need for a highly accommodative stance of monetary policy for a prolonged period of time and continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. 1 / 3 bis central bankers'speeches today β s decisions were taken in response to the continued shortfall of inflation with respect to our aim. in fact, incoming information since the last governing council meeting indicates a more protracted weakness of the euro area economy, the persistence of prominent downside risks and muted inflationary pressures. this is reflected in the new staff projections, which show a further downgrade of the inflation outlook. at the same time, robust employment growth and increasing wages continue to underpin the resilience of the euro area economy. with today β s comprehensive package of monetary policy decisions, we are providing substantial monetary stimulus to ensure that financial conditions remain very favourable and support the euro area expansion, the ongoing build - up of domestic price pressures and, thus, the sustained convergence of inflation to our medium - term inflation aim. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp increased by 0. 2 %, quarter on quarter, in the second quarter of 2019, following a rise of 0. 4 % in the previous quarter. incoming economic data and survey information continue to point to moderate but positive growth in the third quarter of this year. this slowdown in growth mainly reflects the prevailing weakness of international trade in an environment of prolonged global uncertainties, which are particularly affecting the euro area manufacturing sector. at the same time, the services and construction sectors show ongoing resilience and the euro | 0 |
, the euro area and the eu as a whole have demonstrated their ability to act decisively and promptly in difficult circumstances. national measures have been coordinated in a pragmatic manner with a view to enhancing their effectiveness through mutual reinforcement. i am therefore surprised to hear voices here and there arguing that policy - makers in the euro area were β or still are β β behind the curve β, have done too little, too late, and ought to have learnt more in terms of responsiveness from their colleagues in other parts of the world. i do not want to talk about this issue in any detail. as a matter of fact, the epicentre of the current crisis lies outside the euro area, and the euro area has not had to deal with the failure of a major financial institution or a bank run. let me begin with the response of the eurosystem, which has fully respected β in terms of the allocation of responsibilities β the distinction between monetary policy and fiscal policy. since the very start of the tensions in the euro area money market almost two years ago, the ecb has taken forceful, timely and pre - emptive policy action to counter the adverse effects of the financial crisis. against the backdrop of rapidly receding inflationary pressures and without compromising on our mandate to maintain price stability over the medium term, we have cut the interest rate on our main refinancing operations by 325 basis points since last october. that interest rate now stands at 1. 0 %, the lowest level since the launch of the euro. in addition to these extraordinary rate cuts, the ecb has adopted a number of non - standard measures allowing it to provide banks with substantial amounts of liquidity and thereby support the flow of credit to the real economy. i would just like to remind you that in terms of financing, the banking system plays a more important role in the euro area than in other major economies. the non - standard measures we have chosen are therefore directed mainly at banks. this means that the eurosystem β s response to the crisis cannot be compared directly with those of other major central banks. we have our own approach. more specifically, we have provided the banking system with unlimited amounts of liquidity at the main refinancing rate against an expanded list of eligible collateral. coupled with the fact that more or less all financially sound euro area credit institutions are able to participate in the eurosystem β s refinancing operations, this has significantly eased banks β balance sheet constraints, | providing us with a rich and interesting database. however, insights of that kind will be of more use to us in the long - run. what is most important at present is to observe the functioning of the credit lending and interest rate channels. that is, to what extent and under what conditions banks lend to non - financial institutions and whether they pass on the enhanced terms of financing which they have been given by a looser monetary policy. credit channel when we try to detect changes in the lending behaviour of banks using the available data on credit contracts, we are confronted with the technical problem of separating credit supply from credit demand. in this respect, the eurosystem β s bank lending survey ( bls ), which was introduced six years ago, is a very helpful tool because it provides qualitative information on the lending behaviour of the surveyed banks. it has proved to be very valuable in the current financial crisis because it supplies us with some information that can be used to judge whether the euro area economy is facing a credit crunch or not. the results of the bls for germany show that credit standards for loans to enterprises and, to a lesser extent, also loans to households, have been tightened on average by the surveyed institutions since the outbreak of the financial crisis in summer 2007. there was a marked tightening in the credit standard for loans to enterprises, however, in the third quarter of 2008, after the collapse of lehman brothers. according to the surveyed institutions, refinancing costs and balance sheet constraints have been playing a major role in developments in credit standards since the beginning of the financial crisis. however, in the two most recent survey rounds, in which there was a very marked tightening of credit standards, additional factors were in play : the impact of the deterioration in the general economic situation and the increasing importance of industry or firm - specific developments. interest rate channel in order to examine the extent to which financial institutions have passed on their lower short - term refinancing costs in the current situation, the deutsche bundesbank has analysed financial institutions β short - term interest rates for corporate and housing loans. 4 the reason for focusing solely on the short - term interest rate is that the longer - term refinancing behaviour of financial institutions may have changed markedly in the course of the financial crisis. consequently, conventional measures for long - term refinancing conditions that have been used in the past may no longer be suitable. comparing the development in the three - month money market rate | 0 |
changing public sentiments, and new laws to govern carbon emission can cause a shift in economic activity towards greener projects. as a result, the value of carbon - intensive assets might drop as investors β risk perception and preferences change. sectors like oil, gas, coal and utilities are particularly vulnerable in the long run as transition risk might devalue their assets and displace their workforce. central bank of kuwait - public ΨΉΨ§Ω
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Ψ±ΩΨ²Ω international energy agency ( iea ) estimates that achieving paris agreement target on climate change would require, by 2050, about 80 % decrease in the co2 intensity of the building sector, 95 % of world energy supply to be of low carbon and 70 % of new cars to be electric. this will cause significant, even if slower, shift in the structure of our economies with strong bearing on the financial sector. that is why the ngfs, the central banks and supervisors network for greening the financial system, has argued that β climate related risks are a source of financial risk and therefore fall squarely within the mandate of central banks and supervisors to ensure that financial system is resilient to these risks β. regulators need to determine how best to incorporate and operationalize climate related risks in their prudential policy settings. it would require expanding the risk matrix to formally include climate related risks and enhancing the analytical tools to assess financial sector exposures to extreme weather events. bank of england has announced that in 2021, it will start stress - testing banks on different climate pathways. ultimately, the key is to retool the regulatory regime to factor in risks to climate change in a holistic fashion, instead of adding on an additional item in the risk matrix. conclusion let me conclude. while we have managed to fix the fault lines exposed by the gfc, our understanding and ability to respond to some of the emerging risks remain limited. this is true for both cyber threats and climate change. a feature common to these risks is their wider impact through multiple entry points. hence, the key to address both lies in sharing information and strengthening cooperation. if we are grappling with risks that transcend sectoral and national boundaries, so should our response. thank you for your attention. 11 / 12 / 2019 central bank of kuwait - public ΨΉΨ§Ω
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Ψ±ΩΨ²Ω the role of effective supervision is also critical because not every risk can be pre - defined in a rulebook. while overseeing the dynamic world of finance, supervisors must be agile enough to suitably correct course in line with the constantly changing nature of the banking industry or the emergence of new risks. in the second part of my speech, i would like to touch upon two such emerging concerns ; cyber threats and climate change. addressing emerging concerns ensuring resilience against cyber threats first, consider the issue of cyber threats. growing footprint of technology is influencing every facet of the banking business, transforming banks β internal processes as well as their engagements with customers. as the role of technology deepens from a mere support function to a platform central to everything that banks do, the likelihood of new risks emanating from ubiquitous and connected technologies loom large. materialization of such risks will not only disrupt vital financial services but will also undermine the security and confidence in the financial system. in fact, the scale and sophistication of cyber - attacks is already on the rise. examples include data breach at target of 70 million credit card users, a cyber - attack on equifax compromising data of 143 million customers, and the hacking of over 100 million customers β data at capital one bank. no wonder, cyber risk features as a key concern in different industry surveys. for instance, respondents to the bank of england β s systemic risk survey of 2h - 2018 quoted the risk of a β cyber attack β as the second major threat to the system, only behind the brexit induced political risk. the growing threats of cyber risk need to be reflected in banks β operational risk capital charge. incidentally, the basel committee has revised its operational risk methodology by replacing the existing three techniques with a simplified standardized measurement approach and expects that its implementation, due by january 2022, will increase capital risk charge for operational risk by 18 % for a group of banks currently using standardized approach of the old regime. while it is not clear how much of the increase in operational risk charge is driven by the recognition of growing cyber threats, greater capital allocation for operational risk is a step in the right direction, given the increasing significance of such low probability but high impact risks. however, reliance on capital alone will not suffice. supervisors must ensure that banks | 1 |
also a concern if the market is driven by animal spirits β if investors start to price in a strong recovery, albeit one that is still subject to considerable uncertainty β or if rates increase as a result of global spillover effects. such price dynamics risk increasing volatility and uncertainty and could result in vital policy support being withdrawn prematurely. 4 / 6 bis central bankers'speeches preserving favourable financing conditions therefore puts the drivers of changes in financing conditions, and their speed of adjustment, into the focus of our assessment. in this assessment, cross - asset price correlations can help identify and interpret potential changes in real interest rates. for example, if stock markets increase and credit spreads tighten in response to a rise in real interest rates, markets are likely to price in a stronger growth outlook that could leave financing conditions favourable. in addition, changes in market - based financing conditions have to be assessed jointly with the likely future trajectory of the economy, in particular the inflation outlook. the governing council meetings in which we discuss the quarterly ecb / eurosystem staff projections have an important role here. but it is important to note that this does not limit our flexibility to adjust purchase volumes in the period between meetings. if market conditions require, the pace and composition of purchases can be flexibly adjusted in both directions at any time. assessing recent market developments between the december decision and our most recent governing council monetary policy meeting on 11 march, we saw a rapid increase in global and euro area nominal interest rates. how should these changes in financing conditions be assessed? the factors that have caused a rise in risk - free interest rates have been largely benign in the euro area. at the time of our meeting, nominal ten - year overnight index swap ( ois ) rates were up by about 30 basis points, entirely reflecting a rise in the inflation component ( left chart, slide 9 ). these movements should not be seen as reflecting a genuine reappraisal of the expected future path of inflation. term structure models suggest that much of the recent rise in nominal ten - year ois rates reflects an increase in term premia which, in turn, likely reflects a rise in the inflation risk premium ( right chart, slide 9 ). in other words, markets have started to revise the balance of risks around the medium - term inflation outlook. after a long period in which inflation persistently and repeatedly surprised to the downside, markets no longer exclude the risk that inflation may rise more strongly than previously expected. there are a number of | is subject to exceptionally high implementation risks. the debt exchange operation has been successful, official financing has been scaled up. this has improved debt sustainability prospects : the estimated debt - to - gdp ratio could be brought to about 116Β½ % in 2020. but this all depends on one key condition, namely that greece fully implements the programme. debt dynamics are extremely sensitive to implementation slippages. delayed fiscal consolidation, lower privatisation proceeds or slower structural reforms : such scenarios would translate into weaker economic growth and worsen again debt sustainability. without a regime - change in policy implementation and a much broader political consensus in favour of painful, but necessary reforms, there is a high risk that the programme derails. therefore, political courage is more needed than ever. bis central bankers β speeches let me now comment in some more detail on three key areas : fiscal adjustment, competitiveness gains and financial sector issues. fiscal adjustment the greek authorities and the greek people deserve recognition for the significant fiscal adjustment they have achieved over the last two years : despite the deep recession, the general government deficit was reduced by around 6Β½ % of gdp since 2009 ( from 15ΒΎ % to 9ΒΌ % ). this broadly corresponds to the deficit reduction that was initially envisaged under the programme, i. e. before the 2009 deficit outcome was revised upwards ( by 2. 2 % of gdp ). this is a remarkable achievement. nevertheless, the size of the government is still too large compared to greece β s capacity to generate and collect fiscal revenues. moreover, the quality of the fiscal adjustment was mixed. on the one hand, important reforms have started to address greece β s high level of public wages and employment and the previously unsustainable pension system. on the other hand, fiscal adjustment has so far excessively relied on an increase in tax rates and across - the - board expenditure cuts. looking ahead, further progress in fiscal consolidation requires the implementation of difficult structural fiscal reforms. closing the large fiscal gap for 2013 β 14 ( 5Β½ % of gdp ) will be a litmus test for the government β s commitment to the programme : without the government β s willingness and ability to design and implement the difficult structural fiscal reforms, such a large adjustment cannot be achieved. i call on greece β s political class to push through these difficult reforms by confronting vested interests. otherwise the critical mass of structural fiscal reforms necessary to close the medium - term fiscal gap may not be reached. finally, how can we make sure that the | 0.5 |
. i will come back to this point later on. the elimination of currency risk within the euro area has also had far - reaching effects on the equity markets. this is crystal clear when observing volatility patterns and portfolio allocation methods. as regards volatility patterns, recent developments seem consistent with the predictions of economic theory, where stock prices should reflect expectations of future dividends, interest rates and risk premia. it follows that the introduction of the euro should be associated with a reduction in differences in volatility across markets. indeed, a recent empirical study demonstrates that those countries whose stock exchanges had a structural high or medium volatility regime, converged towards those with a low volatility regime. from the point of view of the european stock market as a whole, this shows an improvement in global efficiency. as regards investment patterns, sector - diversification strategies have been defined as an alternative to country diversification. before emu, it was common practice for institutional investors to make geographical diversification their first priority, and, secondly, to select securities in accordance with a sectoral diversification pattern. there is some evidence that the β home bias β has weakened since the introduction of the euro. for instance, assets held by pan - european investment funds represented 25 % of total assets at the end of 2000, up from 12 % in 1998. the development of a genuine paneuropean approach is also illustrated by the introduction of various european stock indexes. the turnover on options based on these indexes - for instance, the volume of options traded on the eurostoxx50 contract - now matches the turnover of options based on well - established domestic indexes such as the cac in france. this provides evidence that large investors are looking for - and actually have recourse to - hedging products that are suited to a cross - border oriented strategy. however, this evidence of a strong impetus towards integration does not necessarily support the argument that a brand new asset allocation is overwhelmingly dominant. let me emphasise two aspects. first, pan - european sectoral strategies have also embraced non - euro area stocks in order to reach an appropriate level of diversification. this is the case in sectors such as pharmaceuticals, or telecom equipment, with stocks listed in non - euro area countries such as switzerland, the united kingdom and sweden. this is in line with some theoretical assumptions, which are stating that currency risk is outweighed by the risk - return parameters, as far as investing in e | , at least in terms of its causes, non - financial in nature. this is notably the result of the regulations that we have implemented and reinforced over the last ten years. and it is what now gives us greater leeway to ease certain capital requirements, such as the counter - cyclical buffer, and to push back the entry into force of the basel iii accords by one year to 2023. all these measures should be considered in light of the β often heated β discussions on the degree of financial solidarity in europe. arguably, europe could perhaps do more, but let β s not forget that it is already doing a great deal, thanks to major efforts from the eurosystem or the easing β agreed quickly and unanimously β of the stability and growth pact, which gives natural priority to national action. if we consider a possible role for the european solidarity mechanism ( esm ), the amounts involved β around eur 410 billion β would certainly be significant. however, the support provided by the ecb alone represents eur 1, 050 billion on the markets and up to eur 3, 000 billion in bank liquidity. furthermore, the monetary union allows italy and spain to borrow at a far lower interest rate than before the euro. the truth is that questions of european financial solidarity will mainly come in the post - crisis period, which i shall now address. 2. 2 initial strategic thinking on the post - crisis environment beyond the present emergency and consensus, we must start to consider β postcrisis β. it raises some very open questions, some of which are premature. let me begin, very simply, with what we know and what we do not know : page 5 of 8 we know that growth will be strongly negative in 2020, then positive in 2021. however, we do not know the numbers involved : they depend on the peak lockdown period β 1. 5 % of gdp is lost with every two weeks β, our ability to bounce back afterwards, and the chain of events with regard to public health and the economy in the rest of the world. we now know that despite our initial hopes, we will not suddenly go from the current phase of general lockdown to a final phase of complete freedom of movement. between, there will be a phase 2 of relative lockdown, which will gradually be wound down, potentially over a long period of time. however, we do not yet know how : this is where the interaction between the battle for public health and the battle for the | 0.5 |
, this has not led to a significant rise in inflation. challenges to monetary policy the government has defined an inflation target for monetary policy in norway. norges bank β s conduct of monetary policy shall be oriented towards low and stable inflation, with annual consumer price inflation of close to 2. 5 per cent over time. norges bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. since summer 2003, the norwegian economy has experienced a marked upturn. while it took some time for employment to pick up, this is occurring now. employment is moving up and unemployment is falling rapidly. although inflation has increased somewhat, it is still low, even 2Β½ years after the cyclical change. the trend in prices for consumer goods over the past two or three years is a result of a favourable supply shock to the norwegian and global economies. low inflation is being accompanied by real income growth and a rise in production. since last summer, monetary policy in norway has been oriented towards a gradual increase in the interest rate β in small, not too frequent steps β towards a more normal level. on the basis of current information, this interest rate path provides a reasonable balance between the objectives to be given weight by norges bank in its conduct of monetary policy : β’ on the one hand, the objective of bringing inflation up to the target and anchoring inflation expectations suggests in isolation that interest rates should be kept at a low level until there are clear signs of higher inflation. β’ on the other hand, the norwegian economy is growing at a solid pace. capacity utilisation is slightly above the normal level and increasing, and house prices and household debt are rising sharply. in isolation this would call for a tightening of monetary policy. norges bank has decided to use some time to bring inflation back to target and has chosen to gradually shift to a less expansionary stance. the assessments of economic developments ahead will determine how gradual the interest rate increase will be. our current assessment implies an interest rate path where the interest rate is raised by about 1 percentage point this year. this is also in line with expectations in the money and foreign exchange markets. the interest rate was last raised in march. in line with the forecast in the march inflation report, there are prospects of another interest rate increase in the second quarter β at the monetary policy meeting in may or june β and a further increase thereafter. conclusion increased globalisation and the ensuing terms of trade improvements have exposed the | in circumstances and considerations is equally important and necessary. i have observed over the years that the implementation of islamic finance varies from one jurisdiction to another. rightly so, this reflects the different stages of development and diversity in local customs, market conventions and cultural norms. i believe through frequent and constructive dialogue, shariah boards and advisory authorities will become more appreciative of the many differences in business and economic environment β that lead to different shariah interpretations. concerted efforts to cultivate greater understanding of the variations in fiqh interpretations and approaches to islamic finance development are positive steps towards harmonisation that can deliver certainty of shariah implementation in the global islamic financial system. this roundtable meeting organised today is just a starting point of a long journey. it is my hope that this meeting offers a productive networking opportunity for all of us to identify common issues ; explore mutually beneficial opportunities ; and implement positive changes in our financial systems. it is not too far - fetched β to envisage the generation of breakthrough thinking for future research collaboration that is solution - driven ; practical ; and innovative in future meetings of this forum. ibnu taymiyyah once said : β surely among the main thrusts in a religion is the union of hearts, the unison of views and easing of disputes conducted in good way. β i implore all of us to begin today β s dialogue with an open mind and candid sharing of experiences that can benefit us all. it is through collaboration and cooperation that the intended values and impact of islamic finance can be realised for the betterment of the ummah. on that note, i wish you a productive and engaging discussion. 2 / 2 bis central bankers'speeches | 0 |
2. in the right β hand chart, figures are those for real imports. the figure for 2020 / q3 is that for july. sources : imf ; cpb netherlands bureau for economic policy analysis, etc. chart 2 gdp and real exports real gdp real exports contribution ratio, s. a., ann., q / q % chg. s. a., 2013 / q1 = 100 real exports - 5 - 10 - 15 private demand - 20 public demand - 25 net exports real gdp - 30 - 35 cy2011 19 20 note : in the right β hand chart, figures are based on staff calculations. sources : ministry of finance ; bank of japan. cy201 3 chart 3 private consumption contribution ratio, s. a., y / y % chg. β 5 β 10 durable goods < 9. 4 > nondurable goods < 39. 1 > services < 51. 5 > β 15 consumption activity index β 20 cy 2 0 0 7 0 8 note : figures in angle brackets show the share in the consumption activity index. nondurable goods include goods classified as " semi β durable goods " in the sna. sources : cabinet office ; ministry of economy, trade and industry ; ministry of internal affairs and communications ; bank of japan, etc. chart 4 business fixed investment developments in business fixed investment plans vintage ( equipment age ) years cy 1992 notes : 1. in the left β hand chart, figures are based on the tankan. all industries, including financial institutions. including software and research and development ( r & d ) investment and excluding land purchasing expenses ( r & d investment is excluded through the december 2016 survey ). 2. in the right β hand chart, figures are for all enterprises. fixed assets excluding land ( including construction in progress ). current year vintage = { ( prior year vintage + 0. 25 year ) x ( prior year β end balance β current year retired ) + 0. 25 year x new construction } / current year β end assets. based on the " national wealth survey, " the vintage at the end of 1970 was set at 8. 2 years. sources : ministry of finance ; bank of japan. chart 5 corporate financing and labor market conditions number of corporate bankruptcies labor market conditions cases per month 1, 800 2. 0 s. a., ratio s. a., % number of corporate bankruptcies 1, 600 1, 400 1. 5 1, 200 1, 000 1. 0 | the economy recover steadily and the output gap return to positive territory. even if the inflation rate turns positive again at an early stage, however, it is unlikely to accelerate further for a while. looking back at the situation prior to the spread of covid - 19, the inflation rate did not accelerate despite the economy being close to full employment and continuing to register a positive output gap. this phenomenon is not unique to japan as inflation rates in most major advanced economies have been slowing, albeit to varying degrees ( chart 8 ). i think that the question of why inflation has not been accelerating needs to be seriously revisited. it is often pointed out that the reason for japan's sluggish inflation rate is an entrenched deflationary mindset among consumers that is born out of their past experiences with deflation, making it difficult for firms to fully pass on upward pressure on wages to sales prices. in addition, structural changes that began in the years prior to the outbreak of covid19 have made the inflation mechanism more complex. specifically, these changes include the establishment of global supply chains, which resulted in low and stable goods prices worldwide, ( 2 ) the shift to a service economy in japan in response to globalization, ( 3 ) the resulting increased sensitivity of prices to service sector wages, ( 4 ) the increase in laborsaving investment as well as improvements in labor productivity by firms to address labor shortages, and ( 5 ) the tendency of firms to absorb the upward pressure on wages by improving productivity rather than passing it on to sales prices. similar structural changes can also be observed in other major advanced economies, and, while they have boosted job opportunities, they also appear to have acted to curb increases in wages and prices on the whole. given the possibility that these structural changes will regain momentum once covid - 19 subsides, it is difficult at this point to clearly judge whether inflation will accelerate immediately even if it turns positive again. however, as i mentioned earlier, it goes without saying that, even if actual inflation is sluggish, keeping inflation expectations somewhat positive is important from the perspective of ensuring that spending behavior in the private sector is forwardlooking. i believe that the impact of these structural changes on prices will need to be examined in more detail. i will return to the structural changes in japan and changes in the inflation mechanism later. iii. monetary policy a. current monetary easing policy and its basic framework next, i will touch upon the bank's conduct of monetary policy | 1 |
to avoid this. over recent times the australian economy has been operating at a very high level of capacity utilisation. this is evident in survey measures of capacity utilisation ( graph 2 ). it is also evident in the labour market, which has been very tight, with the unemployment rate having been at its lowest level in nearly 50 years. it is clear that total demand in the economy has been pushing up against supply, and that, recently, this has been contributing to the upward pressure on prices. r e s e r v e b a n k o f au s t r a l i a graph 2 spare capacity % % capacity utilisation * % % unemployment rate * non - mining capacity utilisation ; investment share weighted. sources : abs ; nab ; rba. the return of inflation to target requires a more sustainable balance between aggregate demand and supply. the tool that the rba has to achieve this balance is interest rates. i acknowledge that the use of this tool comes with complications. its effects are felt unevenly across the community, with rising interest rises causing significant financial pressure for some households. but this unevenness is not a reason to avoid using the tool that we have. it is certainly true that if the board had not lifted interest rates as it has done, some households would have avoided, for a short period, the financial pressures that come with higher mortgage rates. but this short - term gain would have been at a much higher medium - term cost. if we had not tightened monetary policy, the cost of living would be higher for longer. this would hurt all australians and the functioning of our economy and would ultimately require even higher interest rates to bring inflation back down. so, as difficult as it is, the rise in interest rates is necessary to bring inflation back to target in a reasonable timeframe. the evidence indicates that the higher interest rates are working and that inflation is coming down. the march quarter cpi confirmed that inflation peaked late last year at 7. 8 per cent ( graph 3 ). subsequent to this, the monthly cpi indicator showed a pick - up in the 12 - month - ended inflation rate in april to 6. 8 per cent. this was a higher outcome than expected, but it has not changed our assessment that inflation is trending lower. excluding the volatile items and travel from the monthly cpi, inflation was 5Β½ per cent in six - month - annualised terms to april, compared with 7Β½ per cent to october 202 | economy and inflation evolve. the board will continue to pay close attention to developments in the global economy, trends in household spending, and the outlook for inflation and the labour market. it remains resolute in its determination to return inflation to target and will do what is necessary to achieve that. thank you and i am happy to answer some questions. endnotes [ * ] i would like to thank david norman for assistance in preparing this speech. r e s e r v e b a n k o f au s t r a l i a | 1 |
he was the senior deputy governor ) : β it will take a while, partly because we have a very rotten legal and accounting system β¦ the most important thing is that we have very weak bankruptcy procedures. β 3 the social values of each country underpin the formal structure of laws and institutions. a relationship - based approach towards doing business is part of the culture of most asian societies. few asian societies have the β contract - based β commercial culture of the west, particularly the us, with its robust emphasis on legal and impersonal obligations. few have made a practice of separating the ownership of firms from their management. in some countries, there are close ties between the state, the banks and industry, e. g. the state - owned enterprises in china, and the chaebols in korea. all over the region, family - based firms and conglomerates are the norm, especially in banking. companies in the same group would do business with one another, maintaining trust on the basis of family ties and shared ownership. even in japan, where ownership of large corporations is not in the hands of families, long - term corporate relationships and cross - shareholdings have dictated business. this was how entrepreneurship evolved in east asian societies, and among the overseas chinese in south east asia. many of these family firms were hugely successful, driven by the business acumen and entrepreneurial drive of the founding patriarchs, and supported by a web of networks, or guanxi. but the world has changed. family relationships may be an adequate basis for running a medium sized company, but not for an mnc employing tens of thousands of people. to be world - class, companies need to be led by the best man for the job, and this person is not likely to come from the same family, generation after generation. and business based on relationships rather than hard - headed commercial calculations is prone to abuse and under - performance, as was shown in the asian crisis. it will not be easy for the families to relinquish control. the instinct to hand an heirloom down the generations is still strong. there are also real practical difficulties. if the families sell out, who will the buyers be? who will take charge of the companies? most asian countries lack a group of institutional shareholders who can exert market discipline and defend minority shareholder interests, like the straits times, 26 january 2000. mutual and pension funds in the us. nor have they developed a class of professional entrepreneurmanagers, like | seen how a shock in the european periphery can send money that was invested in emerging markets rushing back to the us or other safe havens. to be clear about it, there is a lot that is good about capital flows, including even short term flows. they add liquidity to markets, by bringing more buyers and sellers together. however, we know too that capital inflows can also be too much of a good thing. they can lead to asset prices, or exchange rates, becoming disconnected from fundamentals. and the sudden withdrawal of capital from emerging economies when investors switch from β risk on β to β risk off β in their portfolios can be destabilising. as i mentioned, the current global condition is unprecedented. the policy responses in the advanced countries too are without precedent. globally therefore, we need some humility in understanding the benefits and costs of qe3 and easy monetary policies in the advanced countries. but it will be wise to strengthen our policy toolkits in asia, so that we can deal with unpredictable and often excessive capital flows. there are some lessons that come out of our experiences in asia and elsewhere, and policy responses that we can learn from each other. i will mention three sets of policy responses that will inevitably have to figure in our toolkits. first, there is much sense in curtailing volatility in the exchange rate over the short - term. the costs of volatile and uncertain exchange rates are high in small open economies especially β which is what most of our asean economies are. accordingly, malaysia, singapore and several other asian countries have not felt comfortable leaving their exchange rates entirely to market forces. their central banks, within each of their monetary policy frameworks, have sought to instil a focus on longer term fundamentals. there is merit in allowing exchange rates in asia β s emerging economies to appreciate gradually over the long term, reflecting their more rapid growth. if we resist these long term trends, we are likely to see more inflation in our economies. but some stability in the short term is wise. second, macro - prudential policies are now an important part of the policy tool kit. many asian countries have introduced new macro - prudential measures to try and avoid bubbles in bis central bankers β speeches their property markets over the last two years. malaysia brought in stricter limits on loan - to - value ratios on housing loans. singapore and hong kong have done similarly, and have introduced additional stamp duties or transaction taxes to | 0.5 |
and well capitalised and our economy is not over leveraged and our external position remains strong, malaysia as an open economy is already adversely affected by these global developments. the domestic conditions are expected to remain challenging in the coming quarters and a range of policy responses are being implemented. two elements are vital in this process. the first is to ensure that the domestic intermediation process remains strong so as to support domestic demand. and secondly, the fiscal stimulus is key to containing the effects of the external developments and to placing malaysia in a position to resume growth once conditions in the global economy stabilises. during this challenging period, financial institutions including islamic financial institutions have an important role to ensure the continuous access to financing by the private sector. key to this, is the forward looking business strategies being adopted by banking institutions, the organisational structure and the operational capability that is put in place. i would like to take this opportunity to highlight two other important dimensions in the development of islamic finance, going forward. for more than two decades, the islamic financial system in malaysia has gradually transformed into a comprehensive islamic financial landscape. this has been reinforced by a legal and regulatory framework, the essential financial infrastructure, and an environment conducive for product innovation. notwithstanding the success of islamic finance, the global ramifications of the crisis also calls for more concerted efforts to bring the industry to a higher level of resilience. of importance, in this process, is to embrace the values of islamic finance of justice and fairness that benefits the society and the system. it is thus important for islamic finance to transcend beyond just the pursuit of growth and monetary performance but also to emphasise ethical market conduct practices. indeed, this is in line with the principles of maqasid al - shariah ( objectives of shariah ). financial innovation, as has been shown in the recent crisis has led to adverse consequences for the economy. by learning from the lessons of the recent crisis, the process of innovation in the formulation of islamic financial products and services must be done carefully and in accordance with shariah in its entirety and to take into account the distinct risk characteristics of islamic banking. the second dimension is on the need for continuous investment in human capital development. it is important for the islamic financial services industry to continually promote human capital development and expertise to create a larger pool of experts and high calibre professionals. this involves enlarging not only the existing talent pool, but also building a | zeti akhtar aziz : islamic finance developments in malaysia address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of public islamic bank berhad, kuala lumpur, 3 march 2009. * * * it is my pleasure to be here today on the official launch of " public islamic bank berhad ". this marks the transformation of the islamic window operations into an islamic subsidiary, a dedicated institutional structure that will give greater focus to islamic banking business operations. the continued progress of islamic finance in our financial system has demonstrated that despite the on - going global financial crisis, it has not discouraged the further expansion and development of islamic finance. malaysia now has a total of 17 islamic banks, of which nine ( 9 ) are the subsidiaries of the domestic banking groups. the underlying philosophy for the incorporation of an islamic subsidiary is primarily aimed at further strengthening the institutional structure for islamic banking business operations. financial institutions which have achieved a critical mass in their islamic banking business, have migrated from their islamic banking window operations to an islamic subsidiary. the establishment of islamic subsidiary has greater potential to complement the goals of the banking group by providing business flexibility and autonomy to the islamic subsidiary. currently, the islamic banking system in malaysia has successfully positioned itself as a robust and competitive component of our financial system. islamic banking assets now account for 17. 4 % of the total banking assets of the malaysian financial system while in the bond market, the sukuk market constitutes 57 % of the total market as at end - 2008. the product range has now also expanded into broad array of innovative instruments. several innovative islamic financial products have been introduced which included residential mortgage backed securities, commodity based financing, as well as investment and equity linked products based on musharakah, mudarabah and ijarah. today, however, the international and domestic environment in which we are operating is going to become even more challenging. delays in the resolution to the financial crisis in the advanced economies have resulted in a sharp and rapid deterioration in the recent months. the inability to stabilise conditions is highly likely to have a more protracted effect on the global economy. while there has been concerted monetary policy action and fiscal stimulus across the globe, confidence needs to be restored. this can however, only happen when the financial system in the crisis affected countries are repaired and credit continues to flow again, when markets continue to function efficiently and when prices reflects the value of the assets. while malaysian banks are sound | 1 |
jose manuel gonzalez - paramo : risk, return, resilience β the future financial system speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the 3rd annual risk and return russia conference, moscow, 14 april 2011. * 1. * * introduction ladies and gentlemen, as the crisis is still unfolding, we cannot tell with certainty how our economic and financial systems will function in the future. unfortunately, based on past experience, we can safely predict that individual banks, and the financial system as a whole, will face new challenges, and even crises. we, as risk managers, have the weighty responsibility of ensuring that our institutions are prepared to weather these financial storms. our role is not to eliminate the risk faced by an institution β this would not be possible or even desirable. in order to create resilient institutions, our role must be to act as guardians of the balance between risk and return. to do this, we must learn lessons from history ; however, we should not be blinkered by history β we must use our knowledge of the past, combined with our intellect and our imagination, to anticipate and design appropriate responses for the challenges of the future. in response to the crisis, a new risk control framework is evolving in many of our institutions. this framework puts risk management at the core of the decision - making process. today, based on lessons learned from the crisis, i would like to highlight some of the principles which should guide the development of this new approach. moreover, since this framework will require powerful quantitative and judgemental based tools to guide decision - making, i would like to highlight the importance of taking a twin pillar approach so that the risk to which an institution is exposed is recognised and controlled β here, i am referring to the twin pillars of statistical risk models and stress testing. although today i will focus on the framework being developed by institutions in the private sector, i would like to point out that many of the guiding principles as well as the quantitative and judgemental based tools are equally relevant in public institutions such as central banks. 2. the importance of the financial system1 before considering this new framework in more detail, let me first emphasise that the role of institutional risk managers and institutional - specific risk control frameworks is more significant than simply protecting an individual institution from failure : the concerted efforts of risk managers, regulators and central bankers can β and indeed must β ensure the resilience of | rate for ultra - orthodox women is very similar to the general average. in contrast, employments rates for men are particularly low. over time, we can see a sharp increase in employment among ultra - orthodox women, but we cannot distinguish such a trend among ultra - orthodox men. this is also obviously a result of education trends β the rate of higher education among the ultra - orthodox population is particularly low, and we cannot distinguish a higher rate of those holding an academic degree among the younger population, which is certainly a worrying phenomenon. we can see that among the ultra - orthodox students, there is a focus on professions such as business management and law, and that among women there is also a focus on therapeutic professions. over time, we do not see growth in the rate of those with higher education among ultra - orthodox men. there is no doubt that the way to integrate successfully in the labor market is to obtain an academic education. we can see that those holding degrees enjoy much higher rates of employment, and much higher wage levels, than those who do not hold such a degree. there is broad agreement regarding the policy measures required in order to increase education and employment rates among the ultra - orthodox sector. these need to be implemented : β’ it is important that the education system provide an infrastructure that will assist in obtaining a higher education later in life. β’ the variety of higher education fields must be expanded so that it boosts broad and variegated integration in the labor market. β’ it is important to adapt the professional training program to the needs of the labor market, while relating to various population groups. investment in professional training in israel is relatively low, and it is important to expand it among the general population, not just in the ultra - orthodox sector. β’ an expansion of the active labor market policy is required. β’ it is important that employers be ready to absorb employees from all sectors and population groups. employers who are open to taking on employees from the sectors with which they are less familiar will enjoy a broader variety of manpower that is available to them. these policy tools can provide the opportunity. in the end, it is the individual that needs to take that opportunity. as such, i am very happy to say these things here, before a group of students that have chosen to obtain an academic education and make the required effort to successfully integrate in the israeli labor market. bis central bankers β speeches | 0 |
systems. this explains why the fallout from the crisis has been fairly limited. like investors everywhere, however, all our banks and other investors are seeing the value of their investment portfolios decline as a result of the generalised decline in asset prices. this will result in lower profits, but since our banks are well capitalised they are able to cope with it. this does not mean there should be room for complacency, particularly at times of unprecedented market dysfunctionality and a looming global recession. a small banking system like ours is inevitably characterised by a degree of concentration risk and, because of a typical maltese idiosyncrasy, our banks are heavily exposed to the construction and property sectors. since our economy is likely to be affected by the oncoming recession and will experience a slowdown next year, it would be advisable for the banks to strengthen their balance sheets further. would you say that the worst is over for local banks? can you envisage a scenario where one of the banks will go down? there is no direct threat from the crisis β they are not directly exposed. if the economy slows down, certain borrowers might be overextended and there might be an increase in nonperforming loans. during a press conference in frankfurt last week, ecb president jean - claude trichet said he did not exclude further interest rate cuts. why the need for further cuts and are you optimistic that these cuts are the solution? during the ecb governing council of november 6, we concluded that the outlook for price stability had improved further because inflation rates are expected to continue declining. market expectations about medium - term inflation based on information extracted from the bond markets have fallen to just over two per cent. while the governing council does not pre - commit itself, should the data available at our december meeting point to a further alleviation of upside risks to price stability, then the conditions would be ripe for another cut in interest rates. lower interest rates should contribute to easing current tensions in the financial markets and also to facilitating the flow of credit. but monetary policy alone cannot resolve the financial and economic crisis. corrective actions at other levels of policy are required, and these have indeed been taken by national governments and central banks as well as by international institutions. it will, however, take a while for confidence to return to a level that would permit the financial system to fully service the needs of a globalised economy. so why did the ecb increase rates in | the current situation characterised by high fiscal and external deficits, moreover, the stimulation of aggregate demand would do more harm than good to the country β s economic prospects. living standards can only be raised on a sustained basis if we succeed in adding value to imported inputs and by providing services in a manner that is cost - effective in relation to our competitors. with regard to growth - oriented policies, inspiration can be obtained from a number of eu programmes, including the lisbon agenda for competitiveness and the stability and growth pact. although most member states have fallen behind in meeting the targets of the lisbon agenda, malta must make even more pronounced efforts to achieve them, particularly in the areas of human resource development and innovation. the national action plan for employment is a step in the right direction, but it can only produce the desired results if all social partners take ownership of it. with regard to macroeconomic stabilisation, the successful achievement of the convergence programme objectives would restore the use of fiscal policy as an instrument of economic management and lead to a better allocation of resources in the economy. it would also contribute to a smooth transition through erm ii and towards the adoption of the euro. as a small and highly open economy, malta stands to benefit significantly from the introduction of the single currency, mainly through the elimination of exchange rate risk and uncertainty and lower interest rates and transaction costs. on the microeconomic level there are a number of issues which need to be tackled to improve the efficient allocation and use of resources and to raise productivity. unlike macroeconomic policies, which tend to yield results only in the medium - term, efficiency improvements at the micro level are likely to produce more immediate benefits in terms of new economic activity and job creation. the truth is that sustained improvements in the country β s economic fundamentals cannot be attained without enhanced efficiency and productivity in both the public and private sectors. the achievement of such improvements requires efforts on a number of fronts. first, it must be understood that the quest for competitiveness can only succeed if it takes the form of a collective effort whose sole purpose is to boost the economy β s value added. without the latter, higher wages and profits cannot be paid. it cannot be an exercise in which one of the parties attempts to crowd out the other. it is clear, therefore, that a more focused social dialogue is needed that takes a stronger leadership role in identifying the policies and measures needed to improve malta β s international competitiveness and to ensure their implementation. second, there is absolutely no | 0.5 |
peter pang : islamic capital and money markets welcoming remarks by mr peter pang, deputy chief executive, hong kong monetary authority, at the workshop on β islamic capital and money markets β, hong kong, 19 march 2013. * * * distinguished guests, ladies and gentlemen, 1. it is my great pleasure to welcome you to this islamic finance workshop. we are particularly grateful to mr. mohd. radzuan, mr. azidy and mr. azahari, the experts from malaysia, who have flown all the way to hong kong to share with us their knowledge on islamic capital and money markets and their valuable experience in developing these critical components of islamic finance. i would also like to thank mr. najmuddin of bank negara malaysia for bringing the malaysian delegation here. two fast developing asset classes in the global markets 2. this workshop comes at a very opportune time as hong kong is looking to develop islamic finance as a way to diversify our financial platform and further enhance our capability as an international financial centre. in my view, to be a truly international financial centre, one needs to develop a conducive platform for the two fast developing asset classes in the global markets β islamic financial products and rmb - denominated investment assets. 3. the development of islamic financial markets has been phenomenal in the past two decades. the size of global islamic finance assets made a quantum leap from only us $ 150 billion in the mid - 1990s to us $ 1. 3 trillion at the end of 2011. 1 although the investment climate has been clouded by the us sub - prime crisis and the european sovereign debt problems in recent years, the global sukuk market is powering ahead. indeed, last year was the best year for the global sukuk market on record, with sukuk issuances growing by more than 60 % year - on - year, taking the outstanding sukuk amount to a new height of us $ 240 billion. 2 according to some market estimates, the size of the global islamic finance industry has the potential to increase five - fold from the current level to some us $ 6. 5 trillion by 2020. 3 4. the development of rmb - denominated investment products is equally impressive. in a short space of 6 years, the size of the rmb dim sum bond market in hong kong has grown from a modest amount of 10 billion yuan in 2007 to 237 billion yuan at the end of 2012. offshore rmb | percent in the short run depending on developments in crude oil prices, but is expected gradually to rise in the longer run. however, the pace of increase is likely to be moderate, given that the sensitivity of prices to changes in the output gap is declining due to factors such as economic globalization and deregulation. the year - on - year rate of increase in the cpi is expected to be slightly above 0 percent in fiscal 2007 and around 0. 5 percent in fiscal 2008. v. upside and downside risks to the outlook for economic activity i have so far outlined the most likely projection for the next two years or so. however, the economy constantly faces various risks, and due attention should be paid to the possibility that economic activity and prices might deviate from this projection should particular risks materialize. in the april 2007 outlook report, we pointed out the following as upside and downside risks to the outlook for economic activity : developments in the global economy ; supply and demand conditions for it - related goods ; and possible larger swings in financial and economic activity. let me elaborate on each risk. the first risk concerns developments in the global economy, which is expected to keep expanding with momentum being gained across a wide range of economies. in the united states, adjustments in the housing market, including problems in the market for subprime mortgage debt, are still ongoing, and some leading indicators of business fixed investment have been showing somewhat weak developments. if adjustments in the housing market turn out to be greater than expected or business fixed investment weakens, economic growth may decelerate further. on the other hand, there is a risk that inflationary pressures in the united states may persist longer than expected, given that the rate of change in the core cpi has been somewhat elevated reflecting higher utilization of resources. if inflationary pressures do not subside, there is a risk that not only the u. s. but also the global economy and financial markets may be adversely affected, for instance, through the reaction of long - term interest rates and foreign exchange rates to this situation. in china, there is an upside risk of the economy growing faster than expected, particularly fixed asset investments and exports. whether this risk can be reduced and the chinese economy can realize stable growth even after the 2008 olympic games in beijing should be the focus of attention. the second risk concerns supply and demand conditions for it - related goods. inventory adjustments of it - related goods are continuing, and this seems to be the result mainly of specific domestic | 0 |
european central bank : press conference β introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, frankfurt am main, 8 march 2007. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to today β s press conference. let me report on the outcome of our meeting, which was also attended by mr steinbruck, president of the ecofin council, and commissioner almunia. at today β s meeting, we decided to raise the key ecb interest rates by 25 basis points. this decision was taken in view of the upside risks to price stability over the medium term that we have identified through both our economic and monetary analyses. today β s decision will contribute to ensuring that medium to longer - term inflation expectations in the euro area remain solidly anchored at levels consistent with price stability. such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards fostering sustainable economic growth and job creation in the euro area. after today β s increase, given the favourable economic environment, our monetary policy continues to be on the accommodative side, with the key ecb interest rates moderate, money and credit growth vigorous, and liquidity in the euro area ample by all plausible measures. therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term is warranted. the governing council will monitor very closely all developments so that risks to price stability over the medium term do not materialise. turning first to the economic analysis, according to eurostat β s first estimate, the quarter - on - quarter growth rate of real gdp in the euro area for the fourth quarter of 2006 was 0. 9 %, which was above previous expectations. our current assessment is that the quarterly profile of real gdp growth is likely to be somewhat smoother in response to the impact of indirect tax changes in one large euro area country than had originally been anticipated. the strength of real gdp growth in the fourth quarter is thus indicative of ongoing robust growth in the euro area. both domestic demand and exports made significant contributions to real gdp growth, confirming the sustained and broad - based nature of the current expansion. the information on economic activity from various confidence surveys and indicator - based estimates supports the assessment that robust economic growth has continued into 2007. looking ahead, the medium - term outlook for economic activity remains favourable. the conditions are in place for the euro area economy to grow solidly. as regards | cleared markets face. on the other hand, some consequences of central clearing may increase systemic risk : β’ as a result of growing risk concentration in ccps and in a limited number of large global dealers, which act as general clearing members as a gateway for other financial institutions to ccps, β’ as a consequence of mutualisation, risks may spread among participants and markets more widely and the distribution of losses is more difficult to predict, β’ in order to avoid mandatory clearing, we might see migration of risk outside of the regulated universe through the artificial creation of bespoke ( and hence risky ) products that are not suitable for central clearing. moreover, the systemic effect of clearing depends on whether risk is redistributed to those who are more able to deal with it, which is difficult to determine. finally, the overall systemic effect depends on the incentives for risk - taking and central clearing that accompany risk redistribution. [ slide 5 ] to promote central clearing and avoid regulatory arbitrage, a number of reforms have been adopted including : ( i ) mandatory clearing, ( ii ) margin requirements for non - centrally cleared trades, and ( iii ) higher capital requirements for non - centrally cleared trades. this highlights the crucial complementarity between the regulation of banks and the regulation of financial market infrastructures ( fmis ), with the overall objective that regulation reduces overall risk, and does not shift it around the financial system. cooperation between the committee on payments and settlement systems and the international organisation of securities commissions ( cpss - iosco ) on the one hand, and the basel committee on banking supervision ( bcbs ) on the other hand, is key in this respect. a macroeconomic impact assessment led by the bis focused on the effects of these reforms and found net benefits of 0. 12 % of gdp per year. these are estimates of the long - run consequences of the reforms and are expected to apply once those reforms have been fully implemented and produced their full economic effects. however, central clearing also involves risk redistribution and potentially the creation of new risks. the overall impact is therefore less certain : there are significant benefits which need to be balanced against potential new risks and uncertain risk redistribution effects. ultimately, it seems to me that the success of central clearing as a tool for promoting financial stability critically depends on two factors : ( i ) the ability of ccps to handle the risks they are concentrating and thus the design of their corporate governance, risk management and recovery frameworks and ( ii ) the ability of the | 0.5 |
jean - claude trichet : financial services policy 2005 - 2010 - the ecb β s view speech by mr jean - claude trichet, president of the european central bank, at an exchange of views on financial services policy 2005 - 2010, european commission, brussels, 18 july 2005. * * * introduction i would like to thank the european commission for the invitation to participate in this important event. i am sure that all discussions today on the commission β s green paper on financial services policy in 2005 - 2010 will be highly beneficial for finalizing its thoughts on the matter, which will be reflected in the white paper to be issued by the end of this year. the definition of the main priorities for financial services policy in the years to come is an important milestone in the pursuit of further financial integration. although it should be recognized that financial integration in the eu has proceeded apace in recent years, in particular as a consequence of the introduction of the euro, further progress still needs to be made. while the objective of financial integration is inherent in the achievement of the single market, it is currently also extremely important in the context of the lisbon reforms. financial integration is a key factor in the development and modernisation of the financial system which, in turn, can lead to greater productivity and competitiveness, a more efficient allocation of capital and the potential for greater and more sustainable non - inflationary growth. for example, an empirical study by london economics1 estimated additional growth resulting from financial integration of the european bond and equity markets to be 1. 1 % over a decade or so. let me give you the views of the ecb on the proposals put forward by the commission, noting that the eurosystem is preparing a contribution on this subject, which will be issued shortly. i should underline that the interest of the eurosystem in the pursuit of financial integration is closely related to the tasks which have been given to it by the treaty, including the conduct of the single monetary policy, the promotion of smooth payment and settlement systems and the contribution to financial stability. i will start with some general considerations and then turn to some specific areas, notably financial regulation, financial supervision, and financial stability. general considerations speaking generally, let me express broad support for the key policy orientations set out in the green paper. over the next five years, financial services policy should aim primarily at consolidating and simplifying existing community legislation, while ensuring that the measures adopted thus far under the financial services action plan ( | fsap ) are effectively and consistently implemented and enforced at the national level. behind this broad orientation lies the shared notion that the main efforts to remove residual legal and regulatory obstacles to the free provision of financial services in the eu have been achieved with the fsap. therefore the adoption of new community legislative initiatives should be evidence - based. the role of public intervention in regulating the eu financial sector remains important. first, developments in financial markets will always pose challenges to the existing regulatory framework that have to be considered. second, the consistent and correct implementation of fsap measures at the national level remains a challenging task for all authorities involved, notably the commission, national governments and supervisory authorities. third, the importance of the work of consolidating and simplifying the existing eu regulatory framework proposed by the commission should not be underestimated. indeed, this work represents a window of opportunity for rationalizing the existing london economics ( 2002 ), β quantification of the macro - economic impact of integration of eu financial markets β, report to the european commission. 1 / 4 rules applicable to financial institutions, especially those operating on a cross - border basis. it also involves the pursuit of synergies among the several eu public policies applicable to the financial sector, notably financial services, consumer and competition policies. if this process is successful, responsibility for promoting financial integration will then chiefly lie with financial institutions themselves, which should exploit the framework promoted by public authorities to expand their activity across borders. in this context, i would emphasise that this is also dependent on the ability of the financial industry to coordinate its members effectively whenever common initiatives are needed. this applies for instance in the areas of payment and securities clearing and settlement systems, where common infrastructures benefit cross - border transactions. in this field there is also a specific role for public authorities, notably to serve as catalysts for coordination among market participants, thus facilitating the emergence of market - led initiatives. one example is the role played by the eurosystem in the promotion of the single euro payments area β sepa β project, where the ecb, together with the european commission, strongly supports the integration of retail payments. financial regulation turning to the area of financial regulation, let me highlight three aspects. first, there is a need to proceed with the adoption of the remaining measures envisaged in the fsap in order to complete the regulatory framework. in this respect, from the ecb β s perspective, the planned legislative work in | 1 |
, for example, by global demand for norwegian salmon or norwegian oil company stocks but is also driven by global demand for us streaming services or technology stocks. economic agents'preferences, whether relating to investments or goods and services, are in their turn shaped by a wide range of factors. it is therefore challenging to explain all exchange rate movements, as is also supported by a large body of research. 2 / 4 bis - central bankers'speeches but we do know something. we know that the difference between norwegian and foreign market interest rates matters for the krone exchange rate. normally, the krone appreciates when this interest rate differential increases. if the norwegian policy rate had not been increased in recent years, the krone exchange rate would have been weaker. the krone exchange rate is also influenced by more long - term trends, both at home and abroad. studies indicate, for example, that the development of the norwegian petroleum sector, combined with high oil prices, contributed to strengthening the krone over a longer period. over the past decade, the fall in oil prices and the oil industry's diminished importance for the norwegian economy may have contributed to weakening the krone. the krone exchange rate is also influenced by conditions in international financial markets. a substantial portion of trading in norwegian kroner is between financial players such as banks and hedge funds. some of the trades may be disconnected from the conventional economic mechanisms i just invoked. experience shows that financial market turbulence, like we saw this summer, often coincides with a depreciation of the krone against major currencies. in recent weeks, some observers have argued that norges bank should do more to strengthen the krone. some have suggested that the central bank should be given more instruments and should intervene in the foreign exchange market by buying kroner to influence the exchange rate. norges bank is tasked with keeping inflation low and stable while contributing to keeping employment as high as possible. it is our view that we have sufficient tools to deliver on the mandate we have been given. the policy rate is our most important monetary policy tool, and based on our current assessment of the outlook, inflation will return to target within a reasonable time horizon without a large increase in unemployment. we do have large foreign exchange reserves. the foreign exchange reserves are norges bank's own stock of foreign currency that it holds for contingency purposes. we can intervene in the fx market by buying or selling kroner, for example to ensure the functioning | the policy rate may be lowered earlier than previously envisaged. it is important that we go the last mile of disinflation. doing our job of ensuring that inflation returns to the 2 percent target is critical to maintaining the credibility of the inflation target. by doing so, we will be able to reap the benefits of our efforts. 4 / 4 bis - central bankers'speeches | 1 |
2 % this year to close to 3 % in both 2000 and 2001. consumer price increases, as measured by the harmonised index of consumer prices ( hicp ), have recently resumed their upward trend, as expected. in october the annual rate of change in the overall hicp was 1. 4 %, up from 1. 2 % in september and august owing to higher price increases for food and non - energy industrial goods. the impact of higher oil prices on energy prices in the hicp, which had accounted for most of the upward pressure since june 1999, was countered in october by more moderate increases in other energy components. some additional counterweight to the upward movement in goods prices came from a further moderation of increases in prices in the services sector. in general, the overall upward trend is expected to continue until early 2000 as a result of the increase in oil prices since spring 1999. forecasts available suggest that price increases will nevertheless remain below 2 % in the course of 2000 and 2001. however, the actual developments will very much depend on the behaviour of a number of factors, and in particular on wage developments remaining in line with price stability. in addition, our assessment has to take due account of prevailing uncertainties. on the upside, these relate to, inter alia, the behaviour of money and credit aggregates, the developments in oil prices and the path of the effective exchange rate, all of which are closely monitored with regard to their impact on price stability. on the downside, main factors are linked to the effects of deregulation and liberalisation. in conclusion, the current monetary policy stance should ensure a sustainable expansion of non - inflationary economic activity in the euro area. in line with its monetary policy strategy, the governing council will remain vigilant with regard to any risks to price stability arising either from domestic or from external sources and act in a timely manner. let me now give the floor to the vice - president to introduce some of the additional topics we discussed during our meetings. the governing council today also took a decision on the subject of the minimum reserve system. as you may be aware, interbank liabilities are not subject to reserve requirements. in this respect, the ecb allows those credit institutions which cannot provide evidence of their interbank liabilities - in the form of debt securities issued with an agreed maturity of up to two years or money market paper to apply a standardised deduction to the aforementioned liabilities in the computation of their reserve base. | since january 1999 this standardised deduction has been set at 10 % for both types of securities. today, following a review of new statistical evidence available, the governing council decided to increase the standardised deduction to 30 %. this decision shall have effect as from the determination of the reserve requirement to be fulfilled in the maintenance period starting on 24 january 2000. a separate press release presenting this decision and some background information on standardised deductions from the reserve base will be issued to you here today. the governing council today approved the ecb β s budget for 2000, which gives the ecb the green light to recruit further staff needed to support the ongoing activities of the ecb. this will bring the ecb β s staff to slightly over 1, 000 ; the number of staff employed to date stands at 750. at its meeting on 18 november 1999 the governing council approved the publication of an update of the book on β european union balance of payments statistical methods β ( the β b. o. p. book β ). this important book documents the statistical methodologies applied in member states in compiling balance of payments statistics and, as such, improves the transparency of the compilation of euro area statistics. this new version includes additional chapters on : ( i ) investment income ; ( ii ) estimation methods, especially for goods, investment income and portfolio investment ; ( iii ) financial derivatives ; and ( iv ) the stocks compiled for international investment position statistics. the book was published on the ecb β s web site at 4 p. m. yesterday and will be available from the ecb in hard copy format during the course of next week. finally, let me inform you that the general council discussed the monetary policy objectives, strategies and intentions of the non - participating eu central banks against the background set by the monetary policy of the eurosystem. this is the second time that such an exercise has been undertaken since the ecb was established. | 1 |
jurgen stark : economic perspectives and monetary policy speech by mr jurgen stark, member of the executive board and the governing council of the european central bank, at fionia bank investment conference, nyborg, denmark, 8 september 2008. * * * it is a great pleasure to have the opportunity to speak today at this conference. i very much welcome the opportunity to explain the ecb β s view on the economic perspectives and the challenges for monetary policy. i would like to structure my presentation along three points : first, i would like to devote a few minutes to reflecting on the 10th anniversary of the ecb. the creation of the euro has been one of the greatest endeavours in monetary history and an important step for europe. i think it cannot be denied that our single currency has been a great success. second, i would like to turn to the recent economic and monetary situation and outlook ; globally and in the euro area. third, i would like to close with some remarks on challenges to monetary policy - making and liquidity management in the current circumstances. 10th anniversary of the ecb when it was founded on 1 june 1998, the ecb became the central bank for europe β s single currency, the euro, which was launched in january 1999. the euro area originally consisted of 11 eu member states. subsequently, in three enlargement rounds, four additional member states have adopted the euro and on 1 january 2009 slovakia will become the 16th member of the euro area. this shows that the euro area is not a closed shop. the euro is now the currency for 320 million european citizens. the inflation rate in the euro area has been slightly above 2 % on average during the first 10 years following the creation of the emu, an unprecedentedly low level in historical terms. this is a remarkable result ; all the more so taking into account that the euro area was affected by a particularly challenging sequence of adverse shocks for monetary policy : the burst of the β new economy β bubble and the terrorist attacks in 2001 as well as several waves of strong global commodity price increases. coping with these challenges the ecb has been able to build an impressive track record. key to the success has been the high level of credibility of the ecb in safeguarding price stability in the euro area. this credibility is primarily rooted in the institutional framework of the ecb enshrined in the maastricht treaty and the ecb β s stability - oriented monetary policy strategy. as regards the institutional framework, the first cornerstone | jean - claude trichet : press briefing on the ecb convergence report opening remarks by mr jean - claude trichet, president of the european central bank, at the press briefing on the ecb convergence report, frankfurt, 20 october 2004. * * * ladies and gentlemen, welcome to this special press briefing on the publication of the ecb β s convergence report 2004. let me start by saying that only 15 years ago i could not have imagined that we would, in october 2004, be presenting to you a report examining the economic and legal convergence of sweden and ten countries from central and eastern europe and the mediterranean. at that time, most of these countries were still deprived of democracy and economic freedom. the prospect of joining the european union and eventually adopting a single european currency was out of sight for the most imaginative minds. but since 1 january 1999 the euro has been a reality, and since 1 may 2004 ten new countries are with us in the european union. the rules of eu membership say that at least once every two years, or at the request of a member state not participating in the euro area, a report needs to be prepared by the ecb and by the european commission. let me briefly recall the relevant treaty articles and the procedure laid down therein. according to article 122 of the treaty establishing the european community, the two institutions must report to the council on the progress made in the fulfilment by the member states of their obligations regarding the achievement of economic and monetary union, in accordance with the procedure laid down in article 121 ( 1 ). article 121 ( 1 ) stipulates that these reports must include an examination of the compatibility between each member state β s national legislation, including the statutes of its national central bank, and articles 108 and 109 of the treaty and the statute of the escb. the reports must also examine the achievement of a high degree of sustainable convergence. this is to be done by reference to the fulfilment by each member state of the criteria on prices, fiscal positions, exchange rates and long - term interest rates. thereafter, the treaty foresees that, after consulting the european parliament and after discussion in the council meeting in the composition of the heads of state or government, the council must, acting by a qualified majority on a proposal from the commission, decide which member states with a derogation fulfil the necessary conditions to adopt the euro on the basis of the criteria set out in article 121 ( 1 ). the publication of | 0.5 |
role in reducing risk in the system, alongside the overall improvements in capital, risk management, and the financial infrastructure. further progress in strengthening risk management practices is an investment worth making, particularly at a time when the markets appear to be pricing in a relatively benign view of risk in the financial system and in the economy overall. | chf 1. 20, and at times, values were recorded which were last seen in spring 2011, in other words, before the introduction of the minimum exchange rate. on a trade - weighted basis, however, the swiss franc has remained largely unchanged since the beginning of the year. the favourable developments on the financial markets, which have persisted over a lengthy period, were the result of a reduction in extreme risks. this was due, on the one hand, to measures taken by the ecb, and on the other, to the fact that, in the us, the β fiscal cliff β was averted. as recent weeks have shown, conditions on the financial markets can change again swiftly. in japan, there has been a sharp correction on the stock market and the yen has again gained somewhat in value. meanwhile, in the euro area, there is a discrepancy between the generally favourable trend on the financial markets and the disappointing economic data. finally, in the us, a certain degree of uncertainty about the future monetary policy direction of the federal reserve ( fed ) has gained ground. overall, the market bis central bankers β speeches environment continues to be dominated by high levels of uncertainty, thereby remaining susceptible to sudden shifts in mood. management of currency reserves the easing of tensions on the financial markets also affected the swiss national bank β s ( snb ) currency reserves. these are mainly composed of foreign currency investments and gold. at the end of may, the snb held foreign currency investments of just over chf 440 billion ( cf. chart 1 ). due to our liquidity and security requirements, a large portion of our foreign exchange holdings are in government bonds and deposits with other central banks. this portion amounted to 78 % at the end of the first quarter of 2013. to further diversify investment risk and increase investment in real assets, we raised our proportion of equities from 12 % to 15 % in the first quarter. we currently hold equities worth around chf 65 billion, which is three times more than at the end of 2011. in this regard, we have widened our scope to include shares of companies with relatively small market capitalisation, as well as those in advanced economies not previously considered, with the result that our equity portfolio now covers all advanced economies. since we have invested relatively little in these new markets, our currency allocation has hardly changed in recent months. the proportion of gold in the currency reserves amounted to 10 % at the end of the first quarter | 0 |
back to the ecb. at a more informal level, communication is facilitated by frequent contact between bank staff and market participants and i would encourage you to contact the central bank with your views on any notable market developments. the variety and type of assets acceptable as eligible collateral in eurosystem credit operations is also currently under review by the eurosystem. following a public consultation process the governing council decided, in may of last year, to replace the current two - tier collateral system with a single list of collateral. this move, which will take place on a gradual basis, aims to reduce the diversity of the assets currently eligible as tier - two, thereby enhancing the transparency of the overall collateral framework. the first step towards establishing the single list comes into force at the end of may and involves the inclusion of euro - denominated assets from issuers in major markets outside the european economic area ( for example, euro bonds of us issuers ) and the phasing out over time of some tier - two collateral, for example equities. as a second step, the governing council has approved, in principle, the inclusion in the single list of bank loans from all euro - area countries and mortgage - backed promissory notes which were specially developed for irish market conditions. i am particularly pleased at the retention of mortgage - backed promissory notes as this represents a positive result of a great deal of work undertaken by the bank's representatives at eurosystem level. in terms of market functioning, we particularly welcome the aci initiative that is aimed at integrating the short - term securities markets across the euro - area. supported by the ecb, this should soon see the issuance of short - term securities under the imprimatur of the aci step committee. along with a small number of other euro - area national central banks, the bank will contribute to the process of granting the step label, in our case for assets originating in ireland and in some other jurisdictions. eu financial integration turning now to eu financial integration. the eu policy framework for achieving greater financial integration is through regulation, supervision and financial infrastructure. in relation to regulation and supervision, while the single market was established in 1992, it was only in 1999, with the drafting of the financial services action plan ( fsap ), that a concerted effort was made to break down the barriers to the provision of pan - european financial services. the plan has led to the adoption of almost 42 community measures which cover banking, | sharon donnery : financial markets and institutions - collaboration and knowledge dissemination welcome address by ms sharon donnery, deputy governor ( central banking ) of the central bank of ireland, at the policy research meeting on financial markets and institutions, dublin, 15 june 2017. * * * good morning to you all and a very warm welcome to our new campus here at north wall quay in dublin. our official opening took place in late april, with staff on the ground since january, so you really have come here at a time of renewal and great excitement for us as an institution. i hope that you enjoy your time here. we are delighted to be welcoming such an eminent group of speakers to the bank today. i would particularly like to thank our colleagues from the federal reserve who first initiated this event, which has been running since 2012 with previous workshops having taken place in turkey, luxembourg, the netherlands, belgium, rome and stockholm, along with the proceedings in helsinki earlier this week. special thanks also to wayne passmore and scott frame who have provided the impetus, helped shape the program, and ensured the participation of such a distinguished group of speakers from across the federal reserve system. cross - institution collaboration and knowledge dissemination is of critical importance in central banking. the coming together of people with a rigorous background in empirical research, yet with such a keen focus on the ways in which research, data analytics, empirical evidence and policy decision making are interwoven is fundamental to the development of evidence based policymaking. this is entirely consistent with the type of working environment that we continually strive to develop here at the central bank of ireland. i hope that we will all leave here tomorrow having learned a great deal. i am impressed by the breadth of topics being discussed over the two days of this event. the discussions about the implementation and effects of unconventional monetary policy are taking place at a historic time for central banks. the differing paths faced by the united states and euro area economies over the past half - decade mean that we find ourselves at an extremely interesting juncture. a stock - take of the effectiveness of unconventional policy, the risks associated with tapering and the differing experiences in the american and european systems is highly important for the calibration and effectiveness of monetary policy on both sides of the atlantic. at the nexus between unconventional monetary easing and the legacy impairments of the previous crisis lies the issue of bank profitability, which will be the subject of a session that i will chair later this morning. given my work on the issue of | 0.5 |
that note, i wish you all success and may you have a productive and fruitful conference. thank you. | such safeguards, which do have a bearing on the design of euro area integration, should not prevent euro area members from taking the decisions that are necessary for the smooth functioning of emu. to sum up, a lot has already been done over the past five years to draw the lessons of the financial and sovereign debt crisis. but this is not the end of the process. as most of you are lawyers, you know very well that once legislation has been enacted, implementation by the relevant authorities is equally important. at the european level, the agreed tools and procedures have to be fully enforced by the commission and the member states. this applies in particular in the field of economic governance. at the national level, member states have to adjust their domestic regulatory framework to the new european environment. enjoying the benefits of being part of the banking union should come together with the adequate responsibilities. in some cases, the timeline for implementation is ambitious and requires speedy and determined action by national authorities : for example, the main provisions of brrd need to be transposed until 31 december 2014. a number of member states, including smaller ones, have to close a number of outstanding gaps and loopholes. bis central bankers β speeches further legislative action is necessary to complete the single market for financial services let me now turn to the next five years and the legislative agenda for the eu. i see a number of areas where further progress is required in order to complete the single market for financial services. this would benefit all 28 member states : if i may use again the metaphor, solidifying the walls of the ground floor is in the interest of all co - owners. but it may be even more important for those involved in the construction of the additional floor, i. e. the euro area member states. two major legislative proposals which are highly symbolic for citizens as an eu response to the crisis are now on the table and need to be carefully analysed against their potential benefits and drawbacks. let me mention first the commission β s proposal on structural measures for banks. a few years after the start of the crisis, assessing the banking sector β s structure and reflecting on how to make banks safer is essential. a coherent approach would contribute to reducing the potential fragmentation caused by different national structural regulations. nevertheless, the devil is in the detail when implementing such reform, especially because the potential benefits are still untested. second, in a different domain, the ecb shares only some of the objectives that have motivated the proposal for a financial | 0 |
were most likely to fail. the wave of losses, consumer foreclosures and business failures infected every element of the economy. the deleveraging process commenced as highly - leveraged financial institutions, working with highly - leveraged consumers and business, had insufficient capital to withstand the financial blows. increasing numbers of homeowners were unable to keep up with their mortgage payments, leading to higher defaults. mortgage defaults, in turn, sharply lowered the values of mortgage securities held by financial institutions. these losses led banks to attempt to reduce their leverage, which required rebuilding tangible capital and reducing total assets β thus reducing loans. this placed downward pressure on asset values, losses worsened and the vicious cycle of deleveraging worsened. homes and businesses were lost to foreclosure and liquidation, while unemployment climbed. the large increases in leverage over the past decade have wrecked havoc on our economy and are responsible for the sluggishness of our recovery. strong economic growth simply cannot occur if consumers and businesses must focus on rebuilding balance sheets instead of on increasing spending, production and hiring of new workers. once again we have learned that the double edged sword of leverage is a pro - cyclical weapon. constraining leverage today, the largest financial firms are showing a solid recovery. regional and community banks continue to show stress but problems may have peaked as they have worked to reestablish stable capital and leverage levels. the market appears to be correcting and leverage based on high quality capital is returning to more historic norms. in time credit will once again expand and the economy will improve. but it won β t be quick or easy. therefore, we must now turn to actions that will prevent the impulses of consumers, businesses, and financial institutions from assuming ever more leverage as the expansion becomes a boom. if we take action now, then when the next economic correction occurs there will be less devastation to our economy. if we don β t change policy now, then this crisis will be remembered only in text books and leverage will rise again and lead to another crisis. i strongly support establishing hard leverage rules that are simple, understandable and enforceable and that apply equally to all banks and bank holding companies that operate in the united states. as we saw in the years leading up to the current crisis, leverage tends to rise during economic expansions as investors and lenders forget their past mistakes and believe that prosperity will continue with no end in sight. straightforward leverage and underwriting rules are not procycl | ##ical, so that as the economy expands and heats up, bankers must match increases in assets with increases in capital, which constrains reckless growth. thus, such rules would serve to limit growth beyond a prudent level by creating a counter - cyclical force that moderates booms and provides a cushion to bank losses when the next recession occurs. for an example of the power of a hard leverage rule, consider the impact on assets and / or equity of restricting bank holding companies to holding no more than $ 15 of tangible assets for every $ 1 of tangible equity capital ( chart 9 ). as i noted, at the end of 2007, the 10 largest bank holding companies held $ 34 of tangible assets for every $ 1 of tangible equity capital. if the maximum leverage ratio was 15 : 1, these companies would have had to reduce their assets by $ 4. 9 trillion ( 56 percent ), increase their tangible common equity by $ 326 billion ( 125 percent ), or some combination of the two. simple rules also provide examiners with the tools they need to prevent leverage from rising and underwriting standards from declining. without hard rules on leverage ratios and lending standards, bank examiners were disadvantaged in taking actions on rising leverage and declining loan - to - value ratios because bankers could correctly claim they were following supervisory guidance on capital levels, and their loan problems were very low, while profits were strong. finally, the rise in leverage in the last cycle was facilitated by the complexity of international risk - based - capital requirements. in particular, the basel i risk - based capital standards in place leading up to the crisis provided very crude measures of asset riskiness, which increasingly underestimated risk as asset markets deteriorated. banks also could arbitrage capital standards and raise their risk - based capital ratios by shifting assets to favorably treated off - balance sheet vehicles or exchanging assets such as prime mortgages for β lower risk β subprime mortgage - backed securities. the basel ii risk - based standards, which we were starting to phase in, would have enabled an even greater amount of leveraging to occur. these standards, which allow banks to use model - based risk estimates for many types of assets, actually suggested banks were holding too much capital in the months leading up to the crisis. | 1 |
hand, and the uk and the netherlands, on the other, began in october 2008 when landsbanki failed and was placed into receivership by the icelandic financial supervisory authority and the icelandic government made clear that it would not compensate depositors in the uk and the netherlands with icesave accounts. the british and dutch governments unilaterally decided to refund savers in their respective countries. thereafter they entered into negotiations with the icelandic government demanding repayment of the refunds corresponding to the eu guarantee. still today no agreement has been reached. it is a general phenomenon that firms with foreign operations tend to be relatively big and this phenomenon can be explained as the outcome of a selection process where only the most productive firms find it profitable to pay the sunk fixed costs associated with entering new markets through foreign affiliates ( see e. g. helpman, melitz and yeaple, ( 2004 ) ). operations that are the problem. therefore, i will not discuss the problems arising from institutions being β too big to fail β but instead focus on how we can best deal with problems arising from cross - border banking activities. from a policy perspective, the key problem with cross - border banking is that the regulatory framework for ensuring financial stability has not been adapted to market developments as quickly and as thoroughly as needed. while financial markets have developed beyond national borders, the current legal and institutional frameworks β including regulation, supervision, deposit insurance and crisis resolution β remain national. the complexity of this problem has aptly been described as the european financial trilemma, meaning that the three objectives of global financial stability, financial integration and national financial independence cannot be achieved at the same time. 19 so far, eu member states have chosen to prioritise financial integration and to safeguard national powers. until the financial crisis, this combination seemed to work well, but only because the financial safety nets were not really put to the test. in connection with the financial crisis, however, policy makers have been forced to realise that financial stability and financial integration cannot be achieved in combination with strictly national policies. and since the costs of financial instability have proved to be too high to be acceptable, a choice between the latter two has to be made. in this context continuing to safeguard national independence would imply closing borders to foreign financial institutions. such an option would not only be extremely costly, but also strike a serious blow at the very heart of european integration β the single market. restrictions on operating abroad through branches has been proposed as a possible way | its operations. what this means for the banks in the end, as for the rest of us, is that they must try to earn more money than they spend and have sufficient reserves to cope with the periods when they don β t. the banks manage this by constantly assessing the risk that a borrower will experience difficulties in meeting interest payments or paying off the loan. if this risk increases, the bank leaves a good margin for it by adjusting its lending or allocating reserves for potential losses. but as borrowers are affected by so many factors that are difficult to judge β for instance, economic recessions have very different impacts on different sectors and geographical areas β it is easy for the bank β s losses to become larger than expected. the minimum capital required by the regulations should act as a buffer against such unexpected losses. it is necessary for everyone to be convinced the bank will survive in order for it to survive. if the bank is perceived as unsteady, the supply of money will be cut off. a lack of sufficient capital buffers can easily shake confidence in the bank. and this was exactly what happened when the crisis loomed large. people were uncertain how badly off the banks were. no one knew how large the losses would be and whether the reserve capital would suffice. funding ran short. because what financiers in the market would want to give loans to a bank that appears unsteady? and who would want money in an account in this bank? i am sure you will remember the pictures of the queues outside northern rock β s branches in the united kingdom. to restore confidence, the state and the taxpayers in many countries had to inject capital and go in as owners of the banks. this would not have been necessary if the banks had held more capital when the dark storm clouds gathered in summer 2007. the basel committee has taken note of this. the current capital requirements are being raised substantially. if i may go into technical details, the new regulations require that the banks should have a tier 1 capital corresponding to at least 6 per cent of their assets, or more correctly their risk - adjusted assets. the risk adjustment means that for each asset one recalculates the value, depending on whether the value of the asset can be regarded as certain. one sign of this might be, for instance, that the value of the asset has varied a lot. the higher risk an asset is believed to entail, the more capital needs to be allocated. at present, | 0 |
to continue to work very actively on all of its work streams regarding the regulation of the non - banking sector. this includes regulatory reform of money market funds, securitisation and the interaction with the banking sector. i am looking forward to the progress report to be delivered for the g20 meeting in october. further regulatory challenges in a number of key domains, decisions have been taken by the international community. it is no time to challenge them. it is time to implement. in a crisis period where confidence is of the essence, it would be extremely damaging if the authorities were to hesitate, demonstrate an absence of resolve and of the fortitude that is required by the circumstances. i see resistance of some in the financial sector against basel iii. i see similar messages on the sifis. for me, it is crystal clear : what has been decided is decided. but there are other areas of regulatory reform where work is still underway. let me briefly highlight two key areas on which we need to stay committed and where swift progress is of the essence. first, there is the review of the markets in financial instrument directive ( mifid ), on which a proposal is expected to be released by the european commission this autumn, will represent a key step in the right direction. amending the mifid should enable the eu regulatory framework to keep pace with financial innovation while responding to the g20 commitments to deal with less regulated and more opaque parts of the financial system. second, it is key that transparency is enhanced across the board : with regard to markets, institutions and products. lack of information contributes to the mispricing of risks, mistrust among market participants can turn situations into downturns. in order to build confidence and contribute towards the stability of markets it is important that financial innovation and technological advances contribute to the ability of financial markets to sustainably provide financial services to the real economy. we need to establish a harmonised framework that enables coordinated action, increases transparency and reduces the risks posed by these market practices. moreover, we need to better identify, monitor and assess the potential threat to market stability posed by high frequency trading. the iosco consultation on regulatory issues raised by the impact of technological changes on market integrity, carried out in response to a g20 leaders request during the seoul summit in 2010, recalls that β the benefits from technological advances should not bis central bankers β speeches overshadow the risks that these innovations pose to the efficiency and integrity of markets. these changes raise issues | benoit cΕure : interview in el financiero interview with mr benoit cΕure, member of the executive board of the european central bank, in el financiero, conducted by ms leticia hernandez moron, and published on 4 november 2015. * * * how can the financial system be kept stable amid divergent monetary policies? monetary policies in advanced economies are indeed set on different courses as a result of different positions in the business cycles. the united states is at a more advanced stage in the cycle compared with the euro area, where the policy is and will remain more accommodative. in view of the current volatility on the global financial markets, it is vital that these different paths are not in themselves a source of instability. i think the key word here is transparency. as central banks, we need to be as clear as possible about what we are thinking and heedful of the financial reaction. in the case of the ecb we introduced forward guidance in 2013, we have been very clear about the path of accommodative policy due to the economic situation, and we have been specific about the downside risks in the scenario, particularly at the ecb β s most recent meeting in malta. the governing council saw an increased risk that inflation would stay too low for too long, and concluded that additional monetary policy reactions could be warranted, should this risk materialise. thus transparency is the key word. what are the side effects of the ecb β s monetary policy outside the euro area? we are mindful of the impact of our decisions on the rest of the world, and in particular on neighbouring economies. but our mandate is limited to the euro area and in the end, the best contribution that we can make to the global economy, also to neighbouring economies, is to make europe as robust and stable as possible. how have you handled the effects of the monetary policy of the us? the decisions taken by the ecb are based on the region β s economic and financial situation and do not specifically follow any adjustment made in the united states by the federal reserve system or in any other part of the world. we ensure that the financial conditions in europe are appropriate for the economy. what measures have to be taken to manage the risks of greater global financial integration without losing the benefits that it brings? volatility is currently high in global capital markets, due to macroeconomic uncertainty and changing business models. in such an environment, policy | 0 |
bojan markovic : macroeconomic developments in serbia speech by mr bojan markovic, vice governor of the national bank of serbia, at the presentation of the november 2011 inflation report, belgrade, 16 november 2011. * * * ladies and gentlemen, esteemed members of the press and fellow economists, despite repeated media announcements about the β waves of price hikes β, inflation continued down over the past several months and settled at 8. 7 % in october. we expect this downward trend to persist and inflation to retreat within the target tolerance band in the first quarter of 2012. at the same time, pessimism over global growth prospects intensified, particularly in the euro area prompting us to revise the economic growth forecast for serbia down to around 2. 0 % in 2011 and 1. 5 % in 2012. in response to subsiding inflationary pressures, the national bank of serbia cut the key policy rate during the last six months. the key policy rate currently stands at 10 %, and its further cautious lowering is likely in the coming period. chart 1 inflation projection ( y - o - y rates, in % ) chart 2 gdp growth projection ( y - o - y rates, in % ) - 2 - 4 12 3 12 3 12 3 12 3 iii iv i ii iii iv i ii iii iv i ii iii iv i ii iv today we will present in more detail our view of past macroeconomic developments and our expectations for the period ahead. * * * mounting doubts about the sustainability of public debt in advanced economies and unfavourable growth indicators for the second and third quarters have led to a downward revision of the global economy growth forecasts, particularly that of the euro area. the third quarter witnessed a drop in share prices and a rise in interest rates on public debt in a number of countries. the prices of primary commodities, such as oil, base metals and agricultural products, also declined in the third quarter. though financial markets showed some recovery in october, global economic growth will no doubt be slower than expected until recently. also, the governments might not be able to respond with fiscal stimuli as they did during the first wave of the crisis, primarily due to high public debt. turbulences in the global financial market led to an increase in serbia β s risk premium ( measured by embi ), albeit smaller than those of other countries in the region. as a result, the dinar was more stable during this period than the currencies of other east european countries with flexible | β. the resultant combination of reckless lending and unsophisticated borrowing, which started in the usa ended up engulfing large parts of the financial world. a need for change against this background i attended the annual meetings of the international monetary fund ( imf ) and the world bank last week. these institutions were created at the end of the second world war to fill a much needed gap of providing capital in the global financial system, as well as ensuring the orderly functioning of the system. the imf was, inter alia, created to provide financial support to countries that may be experiencing short term balance of payments problems, while the world bank was established to assist countries, in particular european countries, in their post war reconstruction efforts. over time, the size and the needs of the membership of these institutions have changed. these institutions have, however, not kept pace with the changing conditions in their operating environment. the governance and representation structures have lagged behind the changing global economic realities. the imf has not fully lived up to one of its core responsibilities, being the conduct of effective surveillance of the global economic environment and that of individual countries. the relevance of the bretton woods institutions, as the imf and the world bank have become to be known, has come under severe scrutiny, particularly over that last ten years in the aftermath of the asian crises. questioning the relevance of the imf has intensified in the wake of the current crisis. a key area of criticism has been the failure of the imf to warn its members of the outbreak of financial crises in a timely manner. the imf and indeed other global financial institutions are in serious need of change. a need for collective action we need collective global action to overcome the current crisis. the imf was established to promote coordination and collective action in order to avoid the kind of crisis we are now facing. we all saw the dangers building up over the last few years, particularly with regard to global imbalances. these problems have for many years been discussed within the international monetary and financial committee ( imfc ). but this common knowledge was not enough to spur any determined action. global policy makers were not able to act in unison, and the institutions tasked with facilitating a collective response could not or would not act in accordance with their mandates. this failure on the part of the global economic policymakers needs to be recognised, and as we acknowledge this failure, we must recommit ourselves to deeper multilateral cooperation, mutual accountability and active | 0 |
, investors in the stock market closely monitor businesses, and will withdraw funds from those that have low prospects of future growth, moving them to those with better prospects. the growth prospects will be realized, and in aggregate will improve the whole economy β s growth potential. a well - developed financial market also lowers the cost of raising funds, as the increased competition broadens the variety of financial products offered. an sme for example, whose credit - worthiness is difficult to assess compared to a corporation, might be limited to self - funding in a less - developed market. but in a well - developed financial market, corporations can turn to other channels, leaving commercial banks more incentive to serve smes. in 2004, financial sector master plan phase 1 was adopted and, to continue improving the financial sector, financial sector master plan phase 2, the current phase, was launched in 2010. this current plan helps promote competition in the financial market. continuity of these plans and implementation over several years has improved thailand β s financial infrastructure, as indicated by lower cost - to - income of commercial banks. progress is especially visible in the sme segment. promoting competition among players in the banking sector has steered banks to seek more opportunity in this segment. at the same time, the bank of thailand has helped lay down infrastructure that reduces the asymmetric information problem in this segment by means such as setting up the sme database. with the convincing results of the current plan which will end this year, the bank of thailand has recently set up a steering committee to look after the next phase, financial sector master plan phase 3. in addition to financial sector master plan, the bank of thailand also encourages thai companies and depositors to diversify their investments and promote financial market development through the implementation of capital account liberalization master plan. as a result, there is increase in the number of thai companies doing outward foreign direct investment which allows capital as well as resources to be allocated more efficiently. bis central bankers β speeches at this point, it is important to note that resources and infrastructure built by the government and central bank are not sufficient in themselves to lift the economy β s growth potential. more importantly, financial institutions and businesses must utilize them and act as the main player that will drive the economy to its highest potential. therefore, cooperation of financial and business sectors is vital for lifting growth potential. the private sector needs to add more value to products and services by having long run commitment and investing in both physical and human capital, for example, | fiscal compact results in handicapped liquidity support efforts on the part of the authorities and heightened market concerns. rising risk premium leads to explosive debt dynamics, loss of market access and rollover difficulty, which in turn leads to even greater liquidity needs. with the cost of rescue mounting, internal country politics may further delay policy leading to a vicious cycle between rising rescue costs and policy inaction. there are signs that these risks are very real. for example, last month in late july, spanish bond yields recently jumped up again over 7 percent, making the country β s debt dynamics unstable. there has also been upward pressure on italian bonds. the ecb came to the rescue by promising to β do whatever it takes to preserve the euro as a stable currency β. markets stabilized and yields came down. the us stock market also picked up. nevertheless, the risk that yields could erupt again persists, especially if concrete progress in implementing policy does not take place. in the event of a liquidity seizure, there will be considerable spillover into global financial markets. trade will decline amid the credit crunch that will surely follow. asia, thailand included, will not be spared the turmoil. so that β s the extreme scenario. now let me go over the baseline scenario. in this scenario, piecemeal policy averts a systemic crisis and leads to a prolonged recovery. in the baseline scenario, progress in implementing policy remains bogged down by internal politics but makes sporadic progress, especially once the possibility of a systemic crisis becomes all too real. this scenario is basically a continuation of the present state of affairs with which you are all familiar. global capital markets are in flux. and global trade slows down. the recovery process is long and drawn out and the authorities eventually make progress on fiscal integration and banking union. so which scenario will be likely? this is the big question mark. there is considerable uncertainty due to the ups and downs of internal politics. but political imperative to maintain the union has always been strong. and a strong union needs a stable common currency and economic growth. once the crisis becomes imminent and threatens the union, authorities will have no choice but to take decisive action to avert a systemic crisis. so those are of my views of how the euro crisis will play out. let us move to the second question : can thailand grow through the euro crisis? yes, long - term sources of growth remain but adjustment pain will be unavoidable. in a globalized world, nobody is immune from | 0.5 |
ishrat husain : economic cooperation in asia address by mr ishrat husain, governor of the state bank of pakistan, at the high level seminar organised on the occasion of the asian cooperation dialogue, islamabad, 5 april 2005. * * * during the past five decades developing countries in asia have provided the most persuasive and credible story as to how poor countries can progress and bring about prosperity for their downtrodden people. beginning with japan, followed by nics particularly korea, asean countries and now china, these countries have not only doubled or quadrupled per capita incomes in a record time but also significantly reduced the incidence of poverty. there are several different interpretations of the east asian miracle and every school of thought has taken the credit for the unprecedented success of more than 1. 5 billion people inhabiting this region. those who believe in the supremacy of state led industrialization have attributed the turn around to the selective interventions by the government through directed credit, subsidized foreign exchange, tax concessions, tariff exemptions and picking the winners. those whose faith in pure market mechanism remains unblemished argue that unilateral trade liberalization, integration with the global economy, attracting foreign investment and technology and generally pursuing market friendly economic policies were responsible for these spectacular results. a more dispassionate analysis would reveal that no single extreme model can satisfactorily explain this phenomenon. there are, however, several common elements of strategy that have also been practiced outside east asia and have also generated similar results. there is now a wide consensus that participation in international, inter - regional and intra - regional trade enhances the market size for sale of goods and services substantially relative to those who remain confined to the domestic markets. this added purchasing power accelerates the pace of economic growth and shortens the period required for doubling incomes. second, as the poor countries have low domestic savings in relation of their investment needs they have to draw on foreign savings either in form of official flows, commercial loans or foreign direct investment to supplement this inadequate pool of domestic savings. the only exception is china whose citizens save a remarkable 40 percent of their income in form of savings. the contrast between china and other comparators is evident in the time it took china to double its per capita income. third, even if the countries have large pool of domestic savings they cannot transform this pool into productive and remunerative investment over sustained period unless they acquire, assimilate and di | risk management. for instance there is a basic rule since inception of banks which says β do not put all your eggs in one basket β. had this simple rule been followed, many institutions could have avoided huge losses. the challenges posed by the global financial crisis have impacted leaders of all major businesses. elevating corporate governance should not be confined to banks, but commercial concerns must also do the same. we all know the pace of globalization has accelerated, resulting in increased domestic and global economic integration. today we cannot just shrug off failures within a particular sector or sometimes even a single entity if it has global linkages. gone are the days when a financial or political crisis in one country could be contained to that country ; now there are several contagion effects at different levels. that is why emphasis on good corporate governance regimes cannot be underscored more as it creates an attractive investment climate necessary to maintain investors β confidence, resulting in positive impact on the share price and creating possibilities for raising low cost capital. it is imperative that we develop and implement good governance practices in order to provide impetus to economic growth. given globalization and the crisis we all face, let me highlight the traits of effective leadership that are universally applicable and that i have cited in earlier talks. leaders must be visionary to see the future trends, anticipate institutional bottlenecks, remain competitive and be able to adap rapidly to changes. they should be continuous learners, a necessity for enhancing leadership skills. leaders need also to take into account their corporate social responsibility so that profit seeking is balanced against the objective of social service and well being of society. leadership success requires strong conviction and belief. yet having humility and recognizing the need to reinvent and inspire their organization to adapt to new challenges remain an integral part of successful leaders. this is vital if businesses want to remain at the forefront of new innovations, critical for long term competitiveness. all these and more comprise the necessary characteristics for dynamic leaders that push the frontiers of excellence. such corporate leaders fuel the drive towards long - term growth and stability. i β ll conclude my thoughts with a small personal aspiration. twenty years from now, i would like to hear the story of how a pakistani corporation entered the global market, the challenges it faced and overcame, and became the first pakistani company to be bis central bankers β speeches consistently featured in the fortune global 500 list of companies. i look forward to being in an audience of thousands, listening to that story. that is my final challenge | 0.5 |
risk - based supervisory framework becomes fully operational, banks posing higher risks to the system will be subject to more intensive supervision. we have also introduced a framework for domestic β systemically important banks since july 2014. all banks which have been identified as being systemically important are required to hold a capital surcharge in the range of 1 % to 2. 5 %. mauritius, as a highly open economy, has a few large corporates that dominate economic activity. these corporates require a close monitoring. a large exposure limit is in place to curtail the exposure of any borrower or group of borrowers. the basis for computing the large exposure limit was recently enhanced from capital base to tier 1 capital. further, in our framework for domestic β systemically important banks, exposure to large groups is a supplementary indicator. these large groups have been defined as having an exposure of at least rs2 billion to the banking sector. another topic that warrants attention is climate change and the reduction of global carbon emissions. the financial services industry has an important role to play in that area. i know that some central banks are already at an advanced stage in their work and that much work has already been done on that subject at the level of the fsb. in sub - saharan africa, central banks have not focused extensively on climate change. we are eager to know more about the work that has been carried out by the fsb. climate change related measures could also, perhaps, be on the agenda for future meetings. an area on which we must also focus is that of the application of technology in finance. the emergence of fintech represents an opportunity for africa. advances in areas of finance - related technology, such as blockchain, mobile payments and artificial intelligence are opening up new possibilities for financial service firms. this is an area where regional cooperation will be of paramount importance. the setting up of the fintech association will give the impetus to position mauritius as a regional hub for that industry. ladies and gentlemen, our common ambition is to transform africa into an innovative and technologically - enabled continent. however, as regulators, we have an important role to play in fostering innovation. it is our responsibility to ensure that banks operate safely and comply with applicable laws. this is why we must ensure that our regulatory and supervisory structures remain effective by constantly adapting them to changing technologies and business models. since 2017, banks are allowed to have recourse to cloud - based services subject to the fulfilment of certain | more pointedly to acknowledge both the binding power of statutory law and the more subtle capacities of common law that survive, resilient, through the manifold tests of time. performance criteria the commonwealth heads of government at their meeting in june this year formally addressed the governance of international banks that : β global crises require truly global and universal response β¦ β and they called on these institutions to exhibit : more legitimacy, fairer representation, more responsiveness, flexibility, transparency, accountability and effectiveness β¦ they made a commitment to pursue these matters with the un and in other international fora, as a matter of urgency. but for us now, this very critique of governance of international banks can provide the tests for our future plans. are we giving enough weight in our plans for regional union to these seven critical tests : legitimacy, representation, responsiveness, flexibility, transparency, accountability and, above all, effectiveness? how do we score on these test at national level? tough talk from the commonwealth ; tough tests for us! yet are these not the very pertinent principles we should adopt for governing the governors? as we look forward to our regional banking and our closer monetary engagement, what import do these performance criteria have for any future contract of marriage? what do these principles imply, indeed, for the governance of central banks at national level? will they help to provide a new more relevant architecture, to ensure the resilience we shall need, to confront the looming crises of confidence and sustainability in our region and beyond? for as a p herbert, that wit and lawyer of yester - year, once remarked : β the critical period in matrimony is breakfast - time β the cyber - state financial services and their ict dependent back - up are rapidly becoming the over - riding powers in our economies. our leaders here refer to our β cyber β city. now that word β cyber β, derives from the greek, meaning β steersman β. it has become a metaphor for guiding the ship of state. but after breakfast when we go ahead in regional banking, if the governments are at the helm ; the private sector, the engine, are the central banks to be confined to be merely the brakes? the trouble with the imf and the world bank is not in their lack of capacity for applying or releasing the brakes, but they ran off the road when they tried their hand at navigation and driving. this sorry tale has lessons for us at national level at the interface of the governance of banking, finance and political government. | 0.5 |
##tracted approval procedures. ladies and gentlemen, a sound welfare system helps those who are hit particularly hard by structural change. but that alone is not enough. our aim must be to ensure that as many people as possible can grasp the opportunities presented by this change. the key here is education. β’ in the long run, it also plays a part in the economic prosperity of a society. β’ so when it comes to the future of our economy, education policy is just as vital as economic policy. people never stop learning β after school, their training, or their studies. we therefore need a culture of lifelong learning. the oecd has praised germany β s dual training system, highlighting the vital role that you, as entrepreneurs, play in the world of education. but it β s still not perfect. β’ out of all the oecd countries, the gap in training participation between high - and low - skilled workers is largest in germany. β’ digital education that provides young people with a firm technical grounding and strengthens their media skills is crucial. β’ in addition to schools with modern it equipment, this also requires sound educational programmes that prepare students for the digital world. β’ that said, an international comparison reveals that the digital skills of german schoolchildren are average at best. the share of young people with low computer literacy and it - related skills in germany is β above average and worryingly high β. for central banks like ours, a [UNK] level of general financial literacy is important β both for individuals and for the stability and smooth functioning of the financial system as a whole. [ 21 ] that β s why, during its g20 presidency, germany committed to improving the country β s pool of knowledge on these issues. 4 conclusion ladies and gentlemen, as you β ve no doubt come to realise, structural change provides plenty of topics for discussion and will leave no sector untouched. we all have ideas and views as to how structural change can succeed and lead to more growth without overwhelming society. when choosing alternatives, two things are necessary : β’ facts and information that support sound decision - making β both in business and in politics, but also β’ processes for weighing up the costs and benefits of measures and for learning from experience. cologne is the perfect example of how such processes have taken place time and again over the decades, and how solutions have been found. this has only been possible thanks to a combination of two factors : a spirit of innovation and an environment that facilitates it. thank you for listening, and | low. so how well equipped are we to rise to the structural change we will see over the next decade? what needs to be done to get to grips with demographic change, the challenges of going digital, and climate change? demographic change demographic change in germany is quite easy to predict. β’ the mid - 2020s are when we will begin to notice its impact far more clearly than hitherto β that is when the baby boom cohorts will start retiring. β’ this will reduce the number of people available to the labour market, dragging on potential growth. β’ the bundesbank estimates that potential growth β that is, trend growth with cyclical effects stripped out β will drop to just under 1 % during the course of the 2020s. a stronger supply of labour can counteract the decline in trend growth. improved childcare or nursing facilities, for example, can help boost labour market participation. but at the end of the day, a broader approach is called for β one that makes germany an altogether more attractive place to do business and fosters more innovation. climate change climate change is another factor that might have longer - term repercussions for the economy, not least because extreme weather events like heatwaves, hurricanes and torrential rainfall are becoming more common. β’ innovation and sound technological ideas are urgently needed if we are to cope with the effects of climate change. so you could say that climate change is two things : an opportunity and a risk for the economy. β’ to rise to the challenge of adapting to climate change, reliable framework conditions will have to be put in place. european commission president ursula von der leyen presented her plan for a european β green deal β in december. β’ her proposal is to make europe the first climate - neutral continent by 2050. β’ the path towards that goal will also see the eu raise its climate targets for 2030, by which time greenhouse gas emissions would be cut from 1990 levels by at least 50 %. all that remains is the question of β how β. nobel prize winner william nordhaus called it an β inconvenient truth β : for climate policy to be effective, there is no avoiding putting a price on carbon emissions. the use of fossil fuels such as coal and oil has to be made more expensive β so far, no adequate price has been paid. thus, a good climate policy corrects prices and enhances the functioning of the market economy over the longer term. right now, it β s practically impossible to come | 1 |
bank of japan β s july report of recent economic and financial developments1 bank of japan, 16 july 2003. * * * the bank β s view economic activity remains virtually flat. with regard to final demand, business fixed investment is on a gradual recovery trend, albeit showing some fluctuations. meanwhile, private consumption continues to be weak, housing investment remains sluggish, and public investment is declining. net exports are virtually flat. industrial production continues to be basically level in response to these developments in final demand. corporate profits continue to recover, although the pace is moderating. under these circumstances, uncertainty regarding the economic outlook is diminishing somewhat, and business sentiment is improving to some extent, mainly among large manufacturing firms. as for the employment situation, the number of employees including non - regular employees such as temporary workers has almost stopped declining. however, the increase in the overtime hours worked and new job offers has come to a halt. firms are maintaining their stance on reducing personnel expenses, and household income still continues to decrease as wages are on a downtrend, albeit gradual. thus the employment and income situation of households overall remains severe. turning to the economic outlook, a widely shared view of the prospect for overseas economies is that the growth rate, especially that of the u. s. economy, will accelerate in the second half of this year reflecting diminished geopolitical risks. for the time being, however, the pace of recovery in the u. s. economy is projected to remain very gradual. moreover, economic activity in east asia has decelerated somewhat, due partly to the slower growth of domestic demand in south korea and the epidemic of severe acute respiratory syndrome ( sars ). in this situation, both exports and industrial production are projected to remain virtually flat for the time being. with respect to domestic demand, public investment is projected to follow a declining trend, and private consumption is likely to remain weak for some time due to the severe employment and income situation. meanwhile, the uptrend of business fixed investment is expected to become established in the period ahead, mainly in large manufacturing firms, whose investment has been thus far significantly restrained despite the recovery in their profits. however, the pace of increase in overall business investment is likely to remain modest, as long as uncertainty regarding a recovery in exports and production remains. overall, assuming that the growth rate of overseas economies accelerates in the second half of this year, the uptrend in exports and production will resume gradually, which in turn | overnight call rate continues to move at around zero percent. longer - term interest rates remain steady at low levels. yields on long - term government bonds declined further until mid - june, as investors increased their demand for the bonds. after that, the yields rose sharply partly because the bonds were sold at a profit on a large scale. recently, they are moving at around 1. 0 percent. meanwhile, yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds continue to be at low levels. stock prices are recovering, reflecting a gradual improvement in market participants β view on the outlook for japan β s economy and foreign investors β active investment stance on japanese stocks. the nikkei 225 stock average is recently moving at the 9, 500 - 10, 000 yen level. in the foreign exchange market, the yen depreciated toward the end of the month, due mainly to an improvement in some u. s. economic indicators. after that, the yen rebounded reflecting further investment in japanese stocks by foreign investors, and is currently traded in the range of 117 - 119 yen to the u. s. dollar. with regard to corporate finance, private banks remain cautious in extending loans to firms with high credit risks, while they continue to be more active in extending loans to blue - chip companies. their lending attitudes seem to be becoming slightly more accommodative in areas such as interest margin charges. meanwhile, the lending attitudes of financial institutions as perceived by firms are improving somewhat, although small firms continue to perceive them as severe. in the corporate bond and cp markets, the issuing environment for firms with high credit ratings continues to be favorable on the whole, although some firms seem to be taking a wait - and - see stance in the corporate bond issuance market in view of the rise in long - term interest rates. credit demand in the private sector continues to follow a downtrend mainly because business fixed investment is at low levels and firms are continuously reducing their debts. amid these developments, private banks β lending continues to decline by about 2. 0 - 2. 5 percent on a year - on - year basis. the amount outstanding of corporate bonds and cp issued is slightly above the previous year β s level. meanwhile, according to business surveys, financial positions of firms are improving slightly, although those of small firms in particular remain severe. the year - on - year growth rate of the monetary base rose and is around 20 percent. the year - on - year growth rate of | 1 |
on this issue in late march and has held consultative meetings recently. final policy recommendations are expected in the summer. β’ the fsb is working to have the hedge fund industry bodies bring forward proposals for high quality global best practice standards for hedge fund managers. these are now expected in may. the various interested bodies will assess their adequacy and report in the fall. three distinct efforts are underway internationally on other systemically relevant entities and products : β’ the joint forum is advancing its project on the differentiated nature and scope of regulation. it covers four areas : ( i ) consolidation and group - wide approach, which deals with non - regulated entities within groups ; ( ii ) hedge funds ( other funds, such as money market funds, will be considered at a later stage ) ; ( iii ) mortgage originators and brokers and other intermediaries ; and ( iv ) risk transfer mechanisms, focusing on credit risk transfer instruments and associated markets. β’ this group is drawing on iosco β s work on unregulated markets and products, focused on securitised products and credit derivatives markets β a consultative document in this area will be put out in the next days. β’ the imf and the bis are advancing their work on methodologies to quantify systemic risk and identify systemically relevant institutions and activities. there will be discussion in the weeks ahead on the expectations for joint delivery for the fall. all the above address a few of the areas for actions highlighted during the london summit. in addition, β’ on supervisory colleges, the fsb is reviewing progress in the establishment and operation of the colleges. it is expected that colleges for all selected large and complex groups will have been established by june. β’ on cross - border crisis management, firm - by - firm groups will be established shortly to review contingency planning for the institutions that have fsb supervisory colleges. β’ the g20 also called on the fsb and standard setters to assess and raise supervisory and regulatory standards and codes, drawing efficiently on existing processes β including the joint imf / world bank financial sector assessment program ( fsap ). three related objectives under this headings include ( i ) fostering greater adherence to international standards ; ( ii ) helping to identify jurisdictions that lag behind in terms of their implementation of these standards ; and ( iv ) supporting a peer review process among fsb members. the fsb, with its expanded mandate and membership, is well placed to carry through and build on these various initiatives. | mario draghi : financial stability board β various initiatives statement by mr mario draghi, governor of the bank of italy and chairman of the financial stability board, to the international monetary and financial committee, washington dc, 25 april 2009. * * * in the last several weeks we have witnessed a modest revival in market confidence. it appears that the worst scenarios regarding prospects for the global economy and financial system are no longer quite so prominent in the minds of market participants. this offers us a unique window of opportunity both for short - term actions to stabilise institutions and promote credit extension, and for implementing measures to strengthen the system for the longer term. our main challenge is to break the negative feedback loop between the financial system and the real economy. repairing the balance sheets of financial institutions is a key part of this, and authorities have taken a range of actions to inject capital into banks, guarantee their liabilities and reduce or remove their exposures to bad assets. the ultimate objective of these measures should be to create an environment in which banks are able to repair their balance sheets through sustainable earnings growth and raise the capital they need from private markets at a relatively low cost. this also means providing enough transparency about risk exposures to allow the market to confidently distinguish strong from weak banks, and reducing market uncertainties on the future treatment of different classes of claimants. regulatory stress tests are a central part of this process, as are efforts to improve disclosure. another important part of breaking the feedback loop is to take steps to maintain credit extension to creditworthy borrowers. this has involved, and will continue to involve, a role for public sector balance sheets, including central bank lending and a variety of programmes by fiscal authorities. steps to restart securitisation markets, with improved transparency and incentive structures building on the lessons of the crisis, can also help to restore credit flows, while enabling banks to clear their warehoused assets. governments can help here by supporting transparency and standardisation initiatives in the private sector. in the short term, another useful step might be providing guarantees or wraps for the senior tranches of new securitisation issues that conform to strengthened standards of transparency. as we take steps to revive credit markets, we should be especially mindful of the need to maintain an integrated global financial system. cross - border financial flows have fallen dramatically, among both advanced and emerging economies. this would not be a concern to the extent that it merely reflected a broader process of deleveraging and reduced risktaking. | 1 |
why long - term interest rates are so extraordinarily low in advanced economies around the world. the yield on our own benchmark 10 - year u. s. treasury security has increased lately, but at 2. 3 percent it is still far below what was normal before the financial crisis. in fact, this next chart shows that, as growth and inflation have fallen, longer term interest rates have fallen as well over the past 35 years ( figure 13 ). so why are long - term interest rates so low? many of you will no doubt be thinking, β they are low because you people at the fed set them low! β while there is an element of truth there, that is not the whole story. the fomc has considerable control over short - term interest rates. we have much less influence over long - term rates, which are set in the marketplace. long - term interest rates represent the price that balances the supply of saving by lenders and demand for funds by borrowers, such as businesses needing to fund their capital expenditures. lenders expect to receive a real return and to be compensated for inflation and for the risk of nonpayment. meanwhile, borrowers adjust their demand for funds based on their changing assessment of the risks and expected returns of their investment projects. when desired saving rises or investment - 9demand falls, then long - term interest rates will decline. today β s very low level of longterm rates suggests that both of these factors are at play. both expectations of slower growth and the aging of our population are having significant effects on desired saving and investment and are thus important causes of lower interest rates. if the economy is expanding more slowly, then the level of investment needed to meet demand will be lower. the lower path of growth reduces future income prospects of households, and they will tend to raise their saving. the pending retirement of baby boomers means higher saving, because people tend to save the most in the years just before their retirement. in addition, the lower rate of return on capital owing to lower productivity growth will lead to less investment and lower interest rates. as with productivity, the factors behind the fall in u. s. interest rates include an important global component, as rates are low around the world. indeed, although our rates are near historical lows, u. s. treasury rates are among the highest among the major advanced economy sovereigns ( figure 14 ). is this the new normal? what can we do | ' s economy has continued to expand strongly and economic recovery in the euro area has become more evident. oil - producing countries, especially those of the middle east, and the asean economies continue to show steady growth. given these developments, our main scenario is that the global economy as a whole will likely keep expanding through 2007, with possible slowing growth in the u. s. economy being offset by high growth in other regions. ii. developments in the corporate sector japanese firms are succeeding in utilizing the strong growth of overseas economies to realize good business performance. in 2006, the strength in the corporate sector, as seen in steady growth of profits and increases in business fixed investment, became more evident. the recently released december tankan ( short - term economic survey of enterprises in japan ) shows that firms are projecting growth in their current profits for the fifth consecutive year since fiscal 2002 and the ratio of current profits to sales is exceeding the peak reached in the bubble era. in this situation, business sentiment continues to be favorable and firms are planning to increase fixed investment for the fourth consecutive year. moreover, their projections of both current profits and fixed investment for fiscal 2006 have been revised upward from the september tankan. nevertheless, we believe the current strength in business fixed investment does not indicate " overheating, " given that firms are increasing investment to reinforce their production capacity not only to meet domestic demand but also to capture opportunities for higher profits in growing overseas markets. firms continue to scrutinize the investment profitability of each project amid greater exposure to the discipline of the capital market. continuation of this disciplined investment stance under accommodative financial conditions is important if japan's economy is to follow the path of sustainable growth. iii. developments in the household sector the positive influence of the strength in the corporate sector is feeding through to the household sector at a moderate pace. throughout 2006, the number of employees has increased steadily. a closer look reveals that not only part - time employees but also full - time employees have been increasing steadily. many firms seem to have hired a greater number of new graduates this year. the december tankan shows that both large and small firms are planning to continue hiring more new graduates in the coming year. labor market conditions are tightening as suggested by the fact that the annual average of the ratio of job offers to applicants is almost certain to exceed 1. 00 for the first time in 14 years and the unemployment rate decreased further from last year's level. as for wages, with overtime | 0 |
speech embargo 20 september 2018, 5. 30 pm third karl brunner distinguished lecture introduction of otmar issing, eth zurich thomas j. jordan chairman of the governing board swiss national bank zurich, 20 september 2018 Β© swiss national bank, zurich, 2018 page 1 / 4 ladies and gentlemen, i am very pleased to welcome you all to the third karl brunner distinguished lecture. in this lecture series, the swiss national bank pays tribute to academics whose research is of particular relevance for central banking. this year, we are expressing our appreciation of an outstanding monetary policy theorist and practitioner, an independent mind and a leading voice in economic affairs. from this description, you may doubt that i am talking about just one person. but i am. that person is, of course, otmar issing. professor issing β s life has been extraordinary and widely admired. his scholarly activities and policymaking contributions have been both impressive and mutually reinforcing. his publication list includes numerous articles in scientific journals and periodicals. his collected speeches and articles in the library of the bundesbank amount to 21 volumes of about 10, 000 pages. his textbooks have shaped the understanding of monetary theory and policy of entire generations of students, myself included. while there are many reasons for the snb to honour otmar issing with this karl brunner lecture, three stand out : his role as chief architect of the european central bank β s ( ecb ) monetary policy strategy, his tireless commitment to price stability, and his significant influence on general economic debate. i shall discuss each of these during the rest of my welcome address. however, first allow me to recount a few stages in a career full of accomplishments. otmar issing was born on 27 march 1936 in the university town of wurzburg. at the age of 18, he enrolled for classical philology, the study of classical languages, but soon switched to economics. he earned his phd in 1961 and received his habilitation in 1965. from 1967 to 1990 he was a professor of economics. in 1990 he joined the board of the deutsche bundesbank. and in 1998 he became a founding member of the executive board of the ecb and its first chief economist. since 2006 he has been president of the center for financial studies at the goethe university in frankfurt am main. architect of ecb strategy ladies and gentlemen, let me now focus on the three attributes central to our decision to honour otmar issing with this lecture. | of attention in the literature over the last two decades. who better to speak to us this evening on this topic than otmar, with his extraordinary talent for communicating with an interested general public? ladies and gentlemen, please join me in welcoming otmar issing with a big round of applause. page 4 / 4 | 1 |
from the consensus forecasts up through 2014 / q2 are linearly interpolated. figures for the bank β s opinion survey on general public β s views and behavior exclude inflation expectations by respondents whose annual inflation expectations were Β±5 % or greater. the output prices di in the tankan represents the difference between the share of firms that raised prices in the preceding three months and the share of firms that lowered prices. 3. in the right - hand graph, inflation expectations of firms are taken from the tankan and those of households are taken from the bank β s opinion survey. for experts β and markets β inflation expectations, data from the consensus forecasts, the quick survey, and the inflation swap rate are used as indicated by their respective lines. sources : ministry of internal affairs and communications, β consumer price index β ; consensus economics inc., β consensus forecasts β ; quick, " quick monthly market survey ( bonds ) " ; bloomberg ; bank of japan. strengthening the framework for continuous powerful monetary easing chart 8 ( 1 ) yield curve control short - term rate : minus 0. 1 % long - term rate : around 0 % short - term rate : minus 0. 1 % long - term rate : around 0 %. the yields may move upward and downward to some extent depending mainly on developments in economic activity and prices. ( 2 ) asset purchases ( target amount of net purchases ) etfs : 6 tril. yen per year j - reits : 90 bil. yen per year etfs : 6 tril. yen per year j - reits : 90 bil. yen per year the bank may increase or decrease the amount of purchases depending on market conditions. ( 3 ) commitment ( future monetary policy commitment ) inflation - overshooting commitment β the bank will continue expanding the monetary base until the year - on - year rate of increase in the observed cpi ( all items less fresh food ) exceeds 2 percent and stays above the target in a stable manner. β inflation - overshooting commitment forward guidance for policy rates β the bank intends to maintain the current extremely low levels of short - and longterm interest rates for an extended period of time. β chart 9 inflation momentum ( measured by 2 percent - passage probability ) 0. 9 0. 9 0. 8 0. 8 0. 7 0. 7 0. 6 0. 6 0. 5 0. 5 0. 4 0. 4 0. 3 0. 3 0. 2 0. 2 0. | . amid relatively weak inflation rates, inflation expectations are likely to remain somewhat weak through the adaptive formation mechanism. therefore, i believe there is little likelihood of the momentum increasing under the current policy. another way to assess the momentum in inflation is the pace at which price rises will lead to achievement of the price stability target of 2 percent. chart 9 shows a statistical estimate of the probability of japan's inflation rate reaching 2 percent within two years. 2 based on the assumption that the average of the changes in the monthly inflation rate over the past year will continue, the 2 percent - passage probability has declined since may 2018. this suggests that the momentum in inflation has weakened somewhat. moreover, the 2 percent - passage probability calculated using the cpi for all items less fresh food and energy has been almost 0 percent since mid - 2016, indicating that the momentum over the past year or so was mostly attributable to energy prices. in other words, it is possible to conclude that, under the current monetary policy, the momentum in inflation has not strengthened enough to achieve the price stability target as soon as possible. second, i believe that it is unnecessary for the bank to conduct policy changes so as to allow some degree of fluctuation in the long - term yields, at a time when the cpi forecasts of the policy board members have been revised downward. personally, i am concerned about this policy change, in that it is possible that the long - term interest rate target level of around 0 percent will gradually lose significance if expectations of a rise in long - term yields heighten in financial markets. the timing of achieving the price stability target may be delayed if interest rates rise, whether temporarily or not, in a situation where inflation expectations and prices have not risen sufficiently. furthermore, one advantage of yield - curve control is that it strengthens the monetary easing effects by maintaining long - term interest rates at around 0 percent when they are subject to upward pressure ; however, controlling long - term yields in a flexible manner is thought to weaken such effects. third, as for the bank's commitment regarding future monetary policy changes and forward guidance for policy rates, my view is that, taking into account the current situation in which the observed inflation rate is still evidently far from the 2 percent price stability target, it is important for the bank to make clear the influence of its monetary policy on prices and to show its strong determination to achieve the price stability target. it is true that enforcing the bank's commitment is desirable, | 1 |
. in the long run, a rise in property prices should be accompanied by an increase in rental income, since rental income is the underlying return on property investment. the situation today differs considerably from the conditions seen at the time of the property crisis in the early 1990s, when property prices had risen rapidly over a long period without any corresponding upswing in rental income. at that time the price increases were driven instead by expectations that prices would continue to rise strongly in the future. when it eventually became evident that these expectations were not going to materialise, the prices fell quickly. such speculative elements do not appear to exist today. at the same time, property companies β earnings and debt - servicing ability are good. as things stand today, the property sector will hardly cause any large loan losses for the banks and so it does not constitute a threat either to the stability of the financial system. housing prices and household debt over the past one to two years we in the riksbank β s executive board have devoted quite a bit of attention to the house market, where a rapid rise in prices has gone hand in hand with an increase in household debt. but it is important to distinguish between the conclusions we have come to regarding 1 / 6 the significance for financial stability and the discussions we have had in connection with our monetary policy decisions. i will come back to this. that house prices have risen rapidly in sweden and many other countries can hardly have escaped anyone β s attention. in sweden, house prices in the past ten years have more than doubled, and the upswing has been especially strong in metropolitan areas. increasing house prices have been accompanied by an accumulation of household debt. due to the fall in interest rates, households β interest costs have dropped, despite the rise in debt. in historical terms, households β interest costs are currently very low. that the low interest rates have increased households β ability to take on bigger loans is one cause of the upturn in house prices. during the summer and autumn, the rate of increase in house prices appears to have been dampened somewhat in certain areas, but the rate of increase is still high. monthly data show that the annual rate of growth for the whole country during the period july to september was 10 per cent. the developments in sweden are by no means exceptional. internationally, there are examples of countries which have seen sharper rises in house prices, such as australia and the uk. but there are also examples of countries where the rate of increase has been lower, such | , achieving fiscal sustainability, and rebuilding a sound, domestically oriented financial sector. comprehensive capital controls were a key element in the programme. the recession that followed was the deepest in post - war history, with gdp falling by 12 % from peak to trough and unemployment soaring from around 2 % pre - crisis to a peak of 8 β 9 %. the exchange rate fell by over 50 % in 2008, taking the real rate to around 30 % below its long - term historical average. that helped turn the huge current account deficit around to an underlying surplus but wreaked havoc on domestic demand and balance sheets, as β
of corporate debt and 20 % of household debt was in foreign currency, and an additional ΒΎ of household debt was indexed to the price level. but the policy measures were successful in turning the situation around : the exchange rate stabilised in 2009, fiscal consolidation progressed from 2010 onwards, growth resumed in the second half of 2010, the sovereign regained foreign capital market access in summer 2011, and the new banks were profitable and well capitalised. on the other hand, private sector debt restructuring has proven more time - consuming than originally hoped, and lifting the capital controls is a challenging task. according to the latest figures, iceland β s growth rate is 4. 5 % and the unemployment rate has fallen to the 5Β½ β 6 % range. what lessons can be drawn from this story? 1. excessive and volatile capital flows played an important role in iceland β s crisis, and the capital controls and the underlying balance of payments problem are a legacy of that. 2. to a significant degree, the euro area crisis is also a capital flow β balance of payments problem. 3. the framework for cross - border banking in the eu is deeply flawed. either there will be a regression of financial globalisation at the eu level, or the freedoms must be matched by public frameworks and policies. 4. in the absence of international or eu - wide reforms, small, open economies like iceland might have to take action to protect themselves, such as restricting the international activities of home banks and placing much more stringent prudential limits on foreign currency maturity mismatches and foreign currency lending. 5. an independent flexible currency is a double - edged sword. in iceland β s case, it was both part of the problem and part of the solution. 6. we need to think of ways to protect the sovereign from failing banks. bailing out bondholders is probably not always the best policy. 7. finally | 0 |
based upon a forward - looking assessment of the losses that would be suffered under hypothetical adverse economic scenarios, so that capital will be built and maintained at levels high enough for the firms to remain viable financial intermediaries even under such stressed conditions. in addition to the microprudential improvement that comes from substituting a dynamic for a static capital calculation, there is an important macroprudential motivation, reflected in the design of scenarios and the required levels of post - stress capital. the efficacy of the ccar process is substantially enhanced as the information systems and internal risk - management capacities of the firm improve. beyond this important, but discrete regulatory measure, well - developed processes for determining risk appetite give supervisors better insight into risks specific to the activities and strategic decisions of each firm. as a result, supervisors should be better able to identify points at which a firm β s risk - taking may diverge from that which is consistent with microprudential and macroprudential objectives. this, in turn, should permit more timely supervisory or regulatory responses. regulatory objectives and fiduciary duties the regulatory focus on risk in corporate governance will produce additional examples of each of the three kinds of measures i have just described. for instance, the office of the comptroller of the currency has recently proposed guidance for risk governance at large national banks. 16 still, particularly with an audience half composed of corporate law an mra is a supervisory finding that the federal reserve communicates to the firm and requires remediation. for more information, see board of governors of the federal reserve system, division of banking supervision and regulation ( 2013 ), β supervisory considerations for the communication of supervisory findings, β supervision and regulation letter sr 13 β 13 ( june 17 ). u. s. department of the treasury, office of the comptroller of the currency ( 2014 ), guidelines establishing heightened standards for certain large insured national banks, insured federal savings associations, and insured federal branches ; integration of regulations, 79 fed. reg. 4282 ( january 27 ). bis central bankers β speeches professors, it is natural to ask whether corporate law tools might usefully supplement regulatory measures. specifically, the question arises as to whether the fiduciary duties of the boards of regulated financial firms should be modified to reflect what i have characterized as regulatory objectives. doing so might make the boards of financial firms responsive to the broader interests implicated by their risk - taking decisions even where regulatory and supervisory measures had not anticipated | unclear and, at the same time, could introduce significant risks and tradeoffs. that said, recognizing the interconnected and global nature of the financial system, i see value in continuing to research and understand the underlying technology and associated policy implications as other jurisdictions continue to actively pursue cbdcs. doing so ensures we are aware of and can be responsive to any developments and can continue to support a safe and efficient financial system into the future. stablecoins but a cbdc is just one potential piece of the evolving payments landscape. another alternative to traditional forms of money and payment, or to a cbdc, is stablecoins. this form of payment emerged primarily to support the trading of cryptoassets but increasingly has been proposed as an alternative to traditional payments and as the federal reserve β s initial analysis suggests that a potential u. s. cbdc, if one were created, would best serve the needs of the united states by being privacy - protected, intermediated, widely transferable, and identity - verified. see board of governors of the federal reserve system, β money and payments : the u. s. dollar in the age of digital transformation β ( washington : board of governors of the federal reserve system, january 2022 ), https : / / www. federalreserve. gov / publications / files / money - and - payments20220120. pdf. - 6a store of value. stablecoins purport to have convertibility one - for - one with the dollar, but in practice have been less secure, less stable, and less regulated than traditional forms of money. digital assets used as an alternative form of money and payment, including stablecoins, could pose risks to consumers and the u. s. banking system. therefore, it is important to understand risks and tradeoffs associated with digital assets and new arrangements used for banking and payments. while i support responsible innovation that benefits consumers, i caution against solutions that could disrupt and disintermediate the banking system, potentially harming consumers and contributing to broader financial stability risks. and, where the activity happens outside the regulatory perimeter, consumers would be left without the adequate protections that our regulated and supervised banks provide today in the united states. a comprehensive regulatory framework for these reasons, my vision for responsible innovation includes a clear and sensible regulatory framework, where we incorporate what works well today in the u. s. banking system, allowing for private sector innovations within established guardrails. within this framework | 0.5 |
οΌ status of efforts in each country ( according to fsb and ngfs survey ) about 40 countries or regions had already conducted or are planning to conduct scenario analysis the objectives include understanding the impacts on individual fis and the financial system as a whole, improving the analytical capacity of both authorities and fis, and identifying data constraints [UNK] οΌ status of efforts in japan the bank of japan and the financial services agency jointly conducted a pilot scenario analysis exercise with major financial institutions in 2021 the results were released in august 2022 the pilot exercise was not intended to provide a quantitative assessment of the impact of climate change. rather, it was intended to serve as a means to continuously improve and develop analytical methods of the scenario analysis and it focused on understanding data constraints, assessing the validity of analytical assumptions and methods, and identifying issues relevant to future improvement and development ( slide 7 ) market functioning survey concerning climate change climate - related risks and opportunities in stock prices and corporate bond prices in japan % stock prices all respondents corporate bond prices banks " somewhat tight " to " tight " " more or less balanced " financial institutions other than banks " somewhat accommodative " to " accommodative " nonfinancial corporates reflected somewhat reflected 0 10 20 30 40 50 60 70 80 90 100 % not reflected not reflected much notes : the top left chart asked whether the risks and opportunities arising from climate change were reflected in stock prices and corporate bond prices in financial markets in japan. 2. the bottom right chart asked the respondents to rank their answers in the order of importance from first to third. 3. survey was conducted from april 13 to may 31, 2022. it was distributed to 663 recipients, of which 290 responded ( i. e., the response rate was 44 % ). source : bank of japan. 1. view / impression on the supply and demand conditions of climate change - related esg bonds in japan challenges for increasing the size of the climate change - related esg bond market in japan increasing investors and / or issuers that place a high value on climate - related risks and opportunities enhancing and / or standardizing information disclosure increasing efforts and projects to respond to climate change improving transparency in esg evaluation further developing analysis methodologies for climaterelated risks, opportunities, and'impacts'clarifying policy measures for climate change bridging data gaps on climate - related data promoting engagement and enhancing dialogues first second third other 80 % ( slide 8 ) issues in financial and economic analysis [UNK] οΌ further development | are planning to conduct scenario analysis. the objectives of scenario analysis include understanding the impact on individual financial institutions and the financial system as a whole, improving the analytical capacity of both authorities and financial institutions, and identifying data constraints. however, in most countries or regions, the use of scenario analysis is still at the trial stage. in japan, the bank of japan and the financial services agency ( fsa ) jointly conducted a pilot scenario analysis exercise with major financial institutions last year, with the results released in august this year. 3 the pilot exercise was not intended to provide a quantitative assessment of the impact of climate change on these major financial institutions. rather, it was intended to serve as a means to continuously improve and develop analytical methods of the scenario analysis and focused on understanding data constraints, assessing the validity of analytical assumptions and methods, and identifying issues for future improvement and development. specifically, the bank and the fsa prepared scenarios based on those provided by the ngfs and let the major financial institutions conduct risk analyses of these scenarios using their own models. the results of the analysis showed that the major financial institutions had their own frameworks in place to perform risk analysis for various scenarios. on the other hand, they also showed that there was considerable variation in the risk measurement results due to differences in the data and measurement models used by the major financial institutions. this variation reflects the lack of data necessary for the analysis as well as the substantial uncertainty surrounding issues such as technological developments and client firms'behavior. going forward, the bank intends to further improve the sophistication of the scenario analysis by deepening its dialogue with financial institutions, taking the issues identified in the pilot exercise into account. in addition, in its on - site examinations and offsite monitoring, the bank makes efforts to continue its in - depth dialogue with financial institutions on their responses to the results can be found here : https : / / www. boj. or. jp / en / announcements / release _ 2022 / rel220826a. htm /. climate - related financial risks and their support for client firms'efforts toward net zero. moreover, the bank also encourages financial institutions to enhance the quality and quantity of their disclosures based on the tcfd, etc., in light of the revised corporate governance code. the " market functioning survey concerning climate change " to address climate change issues, it is also important that financial markets fulfill their financial intermediation function. if risks and opportunities arising from climate change | 1 |
33 % year on year to 16 trillion yuan, 22 percentage points faster than the average. monetary policy is also focusing on small - and - medium enterprises and vulnerable groups hit by covid. as of end - march, the balance of inclusive lending to mid -, small - and micro - businesses grew 25 % year on year to 21 trillion yuan. recently, the pboc announced 23 policy measures for supporting the real economy, including providing assistance to people hard hit by covid - 19. the accommodative monetary policy helped to ensure a sound economic start in q1 2022. the chinese economy grew by 4. 8 percent in q1 2022, a slight improvement from q4 2021. consumer price index stayed within a moderate range. cpi right now is 1. 1 percent in q1 and producer price index is 8. 7 % recently. price stability is our policy priority. grain production and energy supply are crucial for price stability this year. agricultural production, and the production and import of key energies, such as coal, oil and gas are the focus of financial services. as long as grain production and energy supply remain stable, inflation will be kept within a reasonable range. to sum up, china's monetary policy is accommodative and is in a comfortable range. we also stand ready to support small and medium enterprises with more instruments if needed. so with that outlook, certainly we have accommodative monetary policy supporting our real economy throughout this year. thank you. date of last update apr. 22, 2022 | , we can say that the financial system as a whole is restoring its soundness and evolving a forward - looking, more dynamic style of management. to sustain these actions, financial institutions need to upgrade the integrated risk management system, in which various types of complex risks are controlled in a consolidated manner, and construct a framework to deploy capital more efficiently. a draft of the new basel capital accord released at the end of june has adopted a risk - sensitive framework to encourage the upgrading of risk management. in line with this global trend, the bank of japan is working to improve the functioning of financial institutions through on - site examinations and off - site monitoring. price developments while the corporate goods price index, particularly raw materials and intermediate goods, has been rising partly because of higher crude oil prices, the consumer price index ( cpi ) has been on a slight downtrend. a small decline in the cpi is largely due to the unit labor cost reductions in the corporate sector reflecting higher productivity and the restraint on labor costs. thus, the outlook for prices depends on future developments in productivity and wages. three factors underpin the rise in productivity. first, resources are being used more efficiently as a result of the adjustment of excessive capital stock and labor as well as deregulation in a variety of areas, including the labor market. second, progress continues in it and technological innovation. third, as is generally observed during an initial phase of economic recovery, higher utilization of labor and equipment is increasing productivity. while the third factor is cyclical, the first two factors could spur structural changes, raising the potential production capacity of japan β s economy. many countries have experienced a situation in which prices do not necessarily increase in tandem with an upturn in economic activity. economists and central bankers have been exploring a plausible explanation of this discrepancy. from the viewpoint of conducting monetary policy, we are carefully monitoring price developments while keeping in mind the following questions. if the recovery continues, will the growth in productivity slow? or, will such growth continue thanks to deregulation and the progress in it? or, will wages rise along with the growth in productivity? in terms of developments in prices over the shorter term, we should pay attention to the effects of higher crude oil prices on the general price level. crude oil prices have been around record - high levels against the background of a rise in global demand and heightened concern about geopolitical risks. we have seen the impact of higher crude oil prices on the domestic corporate goods price | 0 |
advantages of risk transfer and lower encumbrance of underlying assets. we would support moves to put securitisation and covered bonds on a more level playing field. to conclude, we support the european commission β s current work on an eu framework for securitisation as part of the longer - term objective of growth in stable, market - based financing markets alongside bank lending. a uniform set of criteria for stc securitisation can play an essential role in de - stigmatising european securitisation, helping the market to develop on a sustainable track and attracting a broader investor base. bis central bankers β speeches | broader, real money investor base. the market also needs to be based on genuine risk transfer not regulatory arbitrage, such as synthetic sales of thin mezzanine tranches intended to maximise the reduction in regulatory capital at minimum cost. i hope the future will be transactions in which banks look to sell down the capital structure, subject to meeting risk retention requirements. transferring the entire risk on a portfolio will be the only way to achieve a reduction in the exposure measure used for the leverage ratio. and the new basel risk - weighted capital requirements announced in december also move in the direction of incentivising transfer of senior as well as mezzanine tranches of portfolios. i said i would come back to simple, transparent and comparable ( stc ) securitisation. unfortunately, we have done our best to confuse people by using a bewildering range of acronyms and terms for this project β stc, sst, sts, qualifying, high quality etc. today i the case for a better functioning securitisation market in the european union : a discussion paper, european central bank and bank of england, may 2014. joint response from the bank of england and the european central bank to the consultation document of the european commission : β an eu framework for simple, transparent and standardised securitisation β, march 2015. bis central bankers β speeches am using the stc term developed by the taskforce of global banking and securities regulators that i co - chair. but i can reassure you that these will be brought together into a single set of criteria in european legislation. i believe the intention is that they will then be applied consistently across different sectors β for example, banks, insurers and funds β and different regulations β for example capital and liquidity. i see the aims of the stc criteria as threefold. first, to help investors. an stc securitisation should meet the β what you see is what you get β principle. the structure should not have hidden traps or complications, allowing investors to focus on analysing the credit quality of the underlying assets. but, importantly, the stc criteria are not a credit opinion on those assets and stc will certainly not mean β risk free β. second, to help issuers. as well as potentially helping to broaden the range of investors, the stc criteria should make risk transfer more robust. and third, to help regulators. setting risk sensitive capital requirements for securitis | 1 |
assumption that the repo rate would be kept unchanged. a year later we can say that economic growth has exceeded both the national labour market board β s and our expectations at the same time as the monetary stance has become looser. nevertheless, labour market growth has been weaker. this shows both that forecasters can be surprised by unexpected developments in the economy and that unemployment at present is not chiefly due to insufficient demand for goods and services owing to low growth and tight monetary policy. structural policy measures needed for a better functioning labour market so, the weak employment growth is, in my opinion, not primarily a result of low demand for goods and services in the economy - the economy is growing by between 3 and 4 per cent a year - but instead has to do with the rapid structural change that puts increasingly high demands on the functioning of the labour market. i now intend to touch upon these structural problems. firstly, the employment problem is even bigger than that reflected in open unemployment data. at the beginning of the 1990s the supply of labour dropped at the same time as employment fell, which meant that the decline in employment was not fully mirrored in unemployment figures. it is a common pattern for both the size of the labour force and employment to be correlated with economic activity. when activity weakens, it leads not only to a fall in employment but also to a decrease in the number of people who say that they want to work. this is natural when people know that it β s difficult to get a job. but despite historically high economic growth, the employment rate has not recovered since its steep decline in connection with the crisis in the early 1990s. a large proportion of the working age population is still outside the labour force, which implies that there in practice is considerable hidden unemployment in addition to those openly unemployed. furthermore, the fact that open unemployment has not fallen more during the 1990s β economic boom indicates that the labour market does not function satisfactorily. another sign that the unemployment problems are structural in nature is the big differences between regions and between occupational categories. in spite of a single monetary policy for the entire swedish economy, unemployment figures in some regions are double those in others, while the proportion of people receiving benefit from their unemployment fund is twice as high in some occupational categories as in others ( see charts 3 and 4 ). these differences seem to remain over long periods, indicating low mobility in the jobs market. another possible indication of such shortcomings is that the same vacancy ratio today is combined with somewhat | of public information : morris and shin ( 2002 ) is actually pro transparency, not con, β american economic review 96, 448 - 451. very difficult in practice. the step from theory to practice is probably too great in this case, at least for now. the interest rate path an important part of the transparency concerns the central bank β s communication of its monetary policy intentions. so, how open and clear should a central bank be with regard to its own assessment of the future interest rate path? i would like to reply " as open and clear as possible β. and i believe that we at the riksbank work in this way today. but the road to this standpoint has been very long and lined with various requirements and considerations. with regard to the assumption of the future interest rate, central banks use three different approaches. the first is that the policy rate will remain unchanged throughout the forecast period. according to the second approach, the policy rate is instead assumed to follow market expectations. the third approach means that the central bank works on the basis of its own forecast for the development of the policy rate. 4 5 the riksbank has moved away from the first of the three approaches, via the second, to now publish and build its forecasts on the basis of our own view of what we consider to be a reasonable development in interest rates in the future. why did we take this step and why did we not take it before this year? well, the easiest answer is probably that β everything has its place β. a solution that at one point in time matches the requirements made of us will perhaps not work at all when conditions change. and the world around us is of course anything but static. then there is also a measure of β learning by doing β in this. from unchanged repo rate β¦ up to october 2005 our inflation forecasts were made under the assumption that the policy rate would not change during the forecast period. the advantage of this method was that it illustrated in a simple manner when there was reason to change the policy rate. if the forecasts showed that inflation two years ahead would be lower than two per cent, this was a signal that the interest rate needed to be cut. if inflation would be higher, the interest rate usually needed to be raised. this rule was easy to understand and was therefore a good educational tool. this characteristic was particularly important when the rule was introduced. it was a question of winning back confidence in monetary policy and anchoring inflation expectations around | 0.5 |
to the dollar, as other prominent reserve currencies β such as the euro, japanese yen, and british pound β are all issued by close u. s. allies, who also participated in sanctions on russia. more generally, some worry that the dollar β s role could be threatened by a move toward so - called geoeconomic fragmentation, in which trade and financial flows realign and become restricted within blocs of allied countries. the formation of a bloc that excludes the u. s. β or even explicitly seeks to counter the united states β role in the global economy β could make some countries less likely to denominate international transactions in dollars. this scenario sounds alarming, but thus far, trends that appear consistent with fragmentation largely can be explained by specific policy actions. one example is the dramatic reallocation of u. s. β china trade in recent years, as firms in each country decrease reliance on imports sourced from the other. while this shift has coincided with - 9a period of heightened geopolitical tensions, the evidence suggests a simpler explanation : firms responding to changes in relative prices, in this case caused by the imposition of reciprocal tariffs by the two countries since 2018. for example, while u. s. imports of tariff - affected goods from china have plunged, imports of goods not subject to tariffs have continued to rise. 14 despite the reallocation of trade flows across countries, at the end of the day, those trade flows continue to be invoiced mainly in dollars. a final consideration regarding the international use of the dollar relates to financial stability concerns. in times of global financial stress, investors and governments seek a safe haven to protect the value of their assets and stabilize their own financial markets. when this happens, there is almost always a β flight to the dollar β and heightened demand for u. s. dollar assets. we saw this in 2008 and again in 2020. this is the ultimate vindication that the u. s. dollar is the world β s reserve currency and is likely to remain so β in times of global stress, the world runs to the dollar, not away from it. to conclude, for the reasons i have laid out here, i do not expect to see the u. s. dollar lose its status as the world β s reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance. recent developments that some have warned could threaten that status have, if anything, strengthened it, at | monthly core pce reading will be 0. 2 percent. if those forecasts hold true, then core pce inflation in december will remain close to 2 percent, when measured on a 3 - month or 6 - month basis. pce inflation of 2 percent is our goal, but that goal cannot be achieved for just a moment in time. it must be sustained at a level of 2 percent. as i said earlier, based on economic activity and the cooling of the labor market, i am becoming more confident that we are within striking distance of achieving a sustainable level of 2 percent pce inflation. i think we are close, but i will need more information in the coming months confirming or ( conceivably ) challenging the notion that inflation is moving down sustainably toward our inflation goal. this brings me to the implications for monetary policy. the progress i have noted on inflation, combined with the data in hand on economic and financial conditions and my outlook has made me more confident than i have been since 2021 that inflation is on a path to 2 percent. while the emphasis of policy since that time has been on pushing down inflation, given the strength of the current labor market the fomc's focus now is likely to be more balanced : keeping inflation on a 2 percent path while also keeping employment near its maximum level. today, i view the risks to our employment and inflation mandates as being more closely balanced. i will be watching for sustained progress on inflation and modest cooling in the labor market that does not harm the economy. i believe policy is set properly. it is restrictive and should continue to put downward pressure on demand to allow us to continue to see moderate inflation readings. so, as i said, i believe we are on the right track to achieve 2 percent inflation. 4 / 6 bis - central bankers'speeches as long as inflation doesn't rebound and stay elevated, i believe the fomc will be able to lower the target range for the federal funds rate this year. this view is consistent with the fomc's economic projections in december, in which the median projection was three 25 - basis - point cuts in 2024. clearly, the timing of cuts and the actual number of cuts in 2024 will depend on the incoming data. risks that would delay or dampen my expectation for cuts this year are that economic activity that seems to have moderated in the fourth quarter of 2023 does not play out ; that the balance of supply and demand in the labor | 0.5 |
against the unexpected makes a lot of sense. we all need to prepare for that rainy day. it rarely makes sense to take all the credit that you are offered, whether on a credit card or when you apply for a loan. many australians with mortgages find the best way of building buffers is to put any spare money into their offset account. this makes a lot of sense. my fourth and final point is to shop around and don β t be shy to ask for a better deal ; whether for your mortgage, your electricity contract or your phone plan. there are very good deals out there if you look. we can all play a role in making our markets more competitive by being smart and informed in our choices. again, i am pleased to be here at the launch of this important strategy. congratulations to those who have worked so hard to put it together. thank you. 2 / 2 bis central bankers'speeches | philip lowe : remarks - launch of asic's national financial capability strategy 2018 remarks by mr philip lowe, governor of the reserve bank of australia, at the breakfast event to launch asic's national financial capability strategy 2018, canberra, 21 august 2018. * * * i am very pleased to be here to participate in the launch of the national financial capability strategy. all of us have to make choices about money every day. do i spend, or save? if i spend, what do i buy and how do i pay for it? if i save, where should i invest ; how much risk should i take? if i borrow, how much should i borrow and how quickly should i pay it back? in many ways these choices have become more complicated over time. we have more options than ever before β which is good β but these options can be bewildering. it is fair to say that many people find it hard to navigate their way through the myriad of possibilities out there. but we all do need to find a way to navigate through these choices. we all need to plan. for our own sake, and that of our families, we need to do this as well as we can. if we go in the wrong direction, it can have a major effect on our families and our welfare, perhaps for years. so it is really important we make well - informed financial decisions. and, we can all do with a bit of help to make sure we are going in the right direction. the strategy that is being launched today can provide that help by providing education, information and support for australians as they manage and make decisions about their money, and plan and save for the future. i would like to congratulate the government and asic for the work they have done in putting this strategy together. at the reserve bank of australia, we are also trying to play our part. as australia β s central bank, the rba has a very strong interest in people being in control of their financial lives and making well - informed choices. i say this from the perspective of the individual and the economy as a whole. at the individual level, each of us will be better placed in our lives if we make good financial choices. and at the collective level, the financial choices that the 25 million of us make about how much we spend, save and borrow can have a major bearing on the health of the overall economy. if enough of us make risky or bad choices, the whole | 1 |
##ologies and practices. these goals form the core of our medium - term strategy. the bank of albania aims to increase the impact of research results on decision - making, extend research to other departments, and adopt highest standards on ethics and rigorous research, which renders it one of the priorities of the cooperation. many of the current developments and challenges in certain countries or regions may appear as distant and alien to us, but globalisation and economic integration disregards borders and their effect and impact may spill over into our economy. the problems that persist from the financial crisis, the continuation of quantitative easing programmes and the new normal for the monetary policy affect the functioning of the central bank. on the other hand, challenges and opportunities introduced by technological development for central bank policies and decision - making, financial inclusion and financial instruments, are phenomena that affect not only the central bank but also the rest of the society. it is, therefore, necessary to study, analyse and address such phenomena based on facts and best scientific analysis. we value international cooperation in these fields as a very important contributor to coping with such challenges and undertaking visionary policies. notably, the selected format for providing technical assistance enables the output objectives of the cooperation to be tailored to the characteristics of the albanian economy and dedicated to the bank of albania and its decision - making and operational framework. the technical assistance consists of a set of activities that include all the phases and methods of learning and, at the same time, contributes to all concrete and flexible policy - making processes at the central bank. activities under the programme range from lectures to practical implementation of the knowledge and application in specific projects, in accordance with the priorities of the bank of albania. the selection of a serious partner is another important aspect for the success of this agreement. the graduate institute geneva has become an important partner for the bank of albania, contributing with its academic staff as well as collaborators it selects among renowned professors and experts of economics, finance and banking. this agreement between the bank of albania and seco, the centre of expertise for all core issues relating to economic policy, in switzerland and not only, helps the bank of albania to fulfil the objectives, to carry out its duties and to withstand future challenges. 2 / 3 bis central bankers'speeches i would like to thank once again mr maitre and the state secretariat for economic affairs for the contribution to the bank of albania. i look forward to the fruitful and successful cooperation under the new agreement thank you! 3 / 3 bis central bankers | peter pang : strategies for the development of islamic capital markets welcoming remarks by mr peter pang, deputy chief executive of the hong kong monetary authority, at the ifsb seminar on β strategies for the development of islamic capital markets β, hong kong, 27 june 2013. * * * secretary - general jaseem ahmed, your excellency abdullah salem al - turifi, distinguished speakers and delegates, ladies and gentlemen, good morning. 1. the hong kong monetary authority ( hkma ) is very honoured to host this seminar organised by the islamic financial services board ( ifsb ) with the support of the treasury markets association ( tma ). it is a great pleasure to welcome you all and a special thanks to the speakers and delegates who have travelled a long way from overseas to attend this event. 2. this year marks the 10th anniversary of the ifsb. let me take this opportunity to congratulate the board for the invaluable contributions it has made in the last decade to develop the islamic financial services industry, particularly in bringing islamic financial products to the mainstream by issuing prudential standards that are in compliance with shariah principles while being consistent with international standards, and organising international events to promote market awareness of the opportunities offered by the islamic capital markets. 3. the theme of today β s seminar β β strategies for the development of islamic capital markets β β is most timely and relevant to hong kong as we are about to introduce an enhanced legal framework as a first step to promote the sustainable development of islamic finance and we are eager to learn the other key components to form a coherent strategy. we very much look forward to the insightful views of the distinguished speakers on the latest developments of the global islamic capital markets, the prospects and opportunities that lie ahead, and further ideas to bring islamic capital markets to the mainstream. growing importance of islamic finance in the global financial scene 4. being an international financial centre, it is important for hong kong to embrace islamic finance given its rising prominence in the global financial arena. the size of the global islamic capital markets has expanded more than 10 - fold since its early phase of development in the 1980s, reaching an estimated us $ 1. 6 trillion at the end of 2012. 1 with this critical mass, islamic finance has become an integral part of the global financial system not only catering for the needs of muslims, but also attracting other investors and fund raisers, regardless of race and religion. reflecting the deepening sophistication of this market, we | 0 |
. others suffered a mild bout of indigestion and were less kind. a few are still smarting from the mere recollection. but words, whether meant in earnest, or spoken half in jest, are just precursors of greater things. i trust that, over my six years as governor, i have adequately demonstrated that i go well beyond word - smithing. in these matters, i am a disciple of the athenian statesman, still celebrated for his rhetorical prowess, demosthenes, who declared ( and here i will save you from the original attic greek ) : first in oratory is action ; second is action ; and again third is action! bis central bankers β speeches | fritz zurbrugg : comments on financial market developments introductory remarks by mr fritz zurbrugg, member of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 18 june 2015. * * * accompanying charts can be found on the swiss national bank β s website. i will begin with a review of the situation on the financial markets. i will then talk about the implementation of negative interest and its impact on the swiss money and capital markets. situation on financial markets since the beginning of the year, monetary policy has continued to be an important pacesetter on the financial markets. this applies first and foremost to switzerland, where events, especially on the foreign exchange and interest rate markets, were shaped by the discontinuation of the minimum exchange rate and the lowering of the negative interest rate on 15 january. the swiss stock market experienced a price correction, but losses were rapidly recouped. at present, the smi is at roughly the same level as the start of the year. thus swiss shares benefited from a generally favourable mood among investors. since the beginning of 2015, all the major share indices have recorded gains β albeit to varying degrees. on international bond markets, exceptional price movements have been recorded over the past few months, as shown in chart 1. until mid - april, the government bonds of a number of countries with high credit ratings traded at historically low, or even β in some cases β negative yields. with both this development and the introduction of negative interest, yields on confederation bonds declined over the entire spectrum of maturities. however, since midapril, the government bond markets have suffered substantial losses, with yields on ten - year german government bonds, for instance, rising within a very short period from about 0. 1 % to, most recently, 0. 8 %. in switzerland the increase in interest rates was significantly smaller. yields on ten - year bonds are currently around 0. 1 %, compared with β 0. 2 % in mid - april. since the beginning of the year, numerous central banks have adopted more expansionary monetary policy stances. they include, in particular, the european central bank, which in january announced an asset purchase programme in excess of market expectations as regards both the amount and duration. in the us, by contrast, monetary policy continues to point in the opposite direction. thus, most market participants expect that the us federal reserve will initiate a reversal in interest rates before the end | 0 |
zeti akhtar aziz : enhancing corporate governance practices in the malaysian financial sector keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the official launch of the financial institutions β directors education ( fide ) forum, sasana kijang, bank negara malaysia, kuala lumpur, 12 june 2012. * * * it is my great pleasure to be here this morning at the launch of the financial institutions β directors education ( fide ) forum. the establishment of this forum, an initiative by the founding directors of the fide program will contribute to further the efforts to enhance corporate governance practices in the malaysian financial sector. many of you have made invaluable contributions to the conception and development of the fide program and its ongoing refinement. the program is not only unique and highly effective, but it is delivering palpable change and contributing to higher standards of corporate governance in our financial industry. this in turn is supporting stronger, and more resilient financial institutions. following the recent global financial crisis, corporate governance practices in the financial industry have come under significant scrutiny. there has been increased pressure on the management, boards of financial institutions and on regulators to significantly improve the governance practices in the financial industry notably on the incentive systems, accountability and controls. the problems that led to the build - up to this however, are not new. issues around misaligned incentives and an over - emphasis on short term performance which encouraged reckless risk - taking, in addition to the lack of transparency, and the pervasive conflict of interests have long been the focus of public attention especially in relation to companies with dispersed shareholding structures. these same issues however, are far more serious when they involve the financial institutions given the significant externalities inflicted on society following the failure of such financial institutions. banks in particular are especially vulnerable to the consequences of governance failures given the critical importance of public confidence to their very survival. since the crisis, substantial work on several fronts have been devoted to strengthening the resilience of financial institutions. new capital and liquidity standards have been a key focus of the global regulatory reforms and the work to transpose these global standards into national regulations are now well underway in many countries, including in malaysia. while this will deliver significantly improved frameworks for risk - taking by financial institutions, they remain, at best, poor substitutes for good governance. evidence of this can be drawn from the contrast between institutions that operated under the same regulatory framework, but that experienced very | β t stop at borders, we have furthermore decided to cooperate with the bank of japan to explore the potential future use of dlt for central banking services in a more global context. second, how could a central bank interface and interoperate with dlt - based settlement services which are not necessarily offered by the central bank itself? for example, it needs to be assessed whether β a central bank could inject and control the amount of central bank money circulating in a dlt environment β. or whether, for example, a private sector trustee 4 / 5 bis central bankers'speeches could ensure that the values circulated in a dlt - based solution are fully backed by a corresponding amount of central bank money held " off - chain β. such concepts could alter the existing central bank role as operator and impact monetary policy implementation. therefore, joint analysis by the eurosystem will be required. we are on a journey which could radically alter the financial ecosystem as we know it. the ecb is committed to be part of this journey. thank you. 5 / 5 bis central bankers'speeches | 0 |
mahendra vikramdass punchoo : the impact of basel iii reforms in the implementation of basel ii / iii in emerging market and developing economies speech by mr mahendra vikramdass punchoo, second deputy governor of the bank of mauritius, on the impact of basel iii reforms in the implementation of basel ii / iii in emerging market and developing economies, port louis, 24 july 2018. * * * the director of afritac south, ms effie psalida the resident adviser afritac south, mr ravi mohan ladies and gentlemen, a very good morning to you all. last year, in august, i delivered a speech on the same topic and at the same venue. the seminar was so successful and i recall that many participants expressed interest that such seminars feature again in the annual work programme of afritac south. i am happy that afritac south has obliged, giving this opportunity to as many participants as possible. such high - level exposures to the intricacies of basel iii do not come spontaneously to us in this part of the world given the relative unsophistication of our banking system and limited experience. that so many high - calibre technical experts should fly down to mauritius is in itself a testimony of the commitment the international monetary fund, through the presence of afritac south, has towards member countries in promoting best practices in the business of regulation and supervision of banks. under basel ii banks had too little capital and were highly leveraged. their incentive to take risks was disproportionately high. the flexibility given to these banks under the internal ratings - based approach for credit risk had led them to significantly under - estimate the risk - weighted assets so much so that banks with similar portfolio, risk profile and business models had widely dispersed risk - weighted assets. in addition, their increasing reliance on the interbank market to fund assets made them vulnerable to a liquidity squeeze. basel iii has not only improved the quality of the capital that banks are required to hold but also increased the capital requirements. higher quality capital in the form of common equity tier 1 capital and comprising mainly of equity and retained earnings, has been raised from 2 per cent to 4. 5 per cent of the risk - weighted assets while tier 1 capital has been increased to 6 per cent. to deter banks on the irb approach from taking undue advantage of the model - based approach to credit risk, basel iii has introduced a floor for risk - weighted assets. for | bulk clearing system for low - value electronic transactions, in september 2011. the next step in the modernization of the payments system will be the implementation of a national switch on which work is proceeding. β’ in april 2012, we introduced the depository system for government securities that provides for a strict deliver - versus - payment mechanism for the issue of such securities. this mechanism is aimed at eliminating settlement risks and is in accordance with the recommendations of the bank for international settlements for securities settlement. β’ we broadened the coverage of the mauritius credit information bureau to include insurance companies, non - bank deposit taking institutions, and utility providers, as well as the central bank itself. thus, a comprehensive picture of the aggregate indebtedness of the prospective borrowers is now available, and this should, under normal circumstances, curb the level of non - performing loans in the system. β’ we increased the efficiency of the financial markets through the conduct of singlematurity auctions of treasury bills and by holding frequent auctions during the week. we eliminated paper bids at auctions and moved to a platform where participants can submit their bids online. we enlarged the spectrum of instruments by introducing a 273 - day treasury bill as from october 2011. we introduced single - maturity auctions as from november 2011 to enable the government to determine its debt profile. new benchmark securities β 3 - year treasury notes and 5 - year bonds β were issued to enhance liquidity in the secondary market. we finalized preparations for trading these benchmark securities on the stock exchange to create a proper bond market for mauritius. concurrently, the issue of 2 - year and 4 - year treasury notes was discontinued in 2012. β’ the bank continued its efforts to issue new guidelines and improve existing ones, incorporating the latest developments in international best practices as recommended by international standard - setting bodies such as the basel committee on banking supervision. the latest guideline to have been issued ( august 2012 ) is the guideline on corporate governance after prolonged consultation with the industry. bis central bankers β speeches β’ the bank actively participated in both regional and continental fora such as the comesa committee of central bank governors, the committee of central bank governors of sadc, and the association of african central banks ( aacb ). since february 2012, the bank is a member of the sub - saharan regional consultative group of the financial stability board, which operates under the aegis of the bank for international settlements. in 2011, i had the honour to co - chair on behalf of fellow - governors | 0.5 |
of japan β s payment and settlement systems : β the objective of the bank of japan,..., is to issue banknotes and to carry out currency and monetary control. in addition..., the bank β s objective is to ensure the smooth settlement of funds among banks and other financial institutions, thereby contributing to the maintenance of an orderly financial system. β to fulfill this mission, the bank of japan performs a variety of functions. first, it provides the medium of settlement in the form of bank of japan notes and current account services, and constantly strives to improve efficiency and safety. its function to examine the authenticity of banknotes and prevent counterfeiting while securing the efficient circulation of banknotes lays the foundation for public confidence in banknotes. furthermore, the bank has been making various efforts to improve the efficiency and safety of the settlement system for funds and government securities by providing online services for current accounts through the boj - net system. in addition to such efforts, the bank of japan conducts on - site examinations and off - site monitoring of financial institutions that hold current accounts with it, and obtains information regarding their financial strength and risk management. if a financial institution faces a liquidity shortage that might seriously impair the smooth operation of payment systems, the bank of japan will provide liquidity as the lender of last resort, thereby preventing systemic risk from emerging. with this preamble, let me turn to the role of the bank of japan in securing efficient and safe payment systems, thereby maintaining financial system stability under innovation in information and communications technology. payment systems in japan consist of those operated by the bank of japan and private sector ones. in view of the fact that payment systems are a fundamental infrastructure for economic activity, it is always important to maintain the safety of payment systems as a whole regardless of whether technological innovation creates a new provider, a new channel or a new means of payment. in this regard, all related parties, that is, financial institutions, the steering bodies of private payment systems and the central bank, need to be in close contact and make efforts to discharge their respective responsibilities. the bank of japan provides a settlement service called boj - net. boj - net is the core settlement system for yen funds and government securities and is participated in by major financial institutions and private payment systems. we continue to make efforts to accurately grasp new waves of innovation in information and communications technology and to make our settlement systems support the advances of financial institutions and private payment systems. | future financial institutions will have to construct advanced risk management systems covering operational risk and interest rate risk in banking accounts, and also establish a high quality capital base consistent with the level of risks they carry. to establish a more efficient and stable financial system, market discipline is important. it is necessary that financial institutions constantly strive for sound management and higher profitability fully realizing that their every move is being closely monitored by the market. from this viewpoint, it becomes important for them to actively disclose their financial conditions according to appropriate accounting methods. in this regard, we have received criticism from abroad that accounting methods and disclosure standards in japan need to be improved in a number of areas. in response, i have to say that based on the lessons we learned from the bursting of the bubble we have been rapidly improving the infrastructure related to disclosure, including improvement of the standards for write - off and the provisioning of non - performing assets. also, consolidated balance sheets have been refined and markto - market accounting expanded from the viewpoint of international compatibility. in the area of corporate information disclosure, markets have begun to positively evaluate those firms that see legally required disclosure standards as minimum standards and which at their own initiative disclose management strategy and financial conditions beyond such minimum standards. i hope these movements will further prevail and take firm root in japan. how should the bank of japan respond to changes in the financial system as innovation in information and communications technology progresses? before examining this issue, let me begin by briefly reviewing the role of the bank of japan in the context of the financial system and the payment system. in general, banknotes issued by the central bank finalize the payment of transactions when handed over to transaction counterparties. similarly, current accounts with the central bank can also finalize payment, a function which is supported by public confidence in the central bank. as such, settlements through the liabilities of the central bank, namely banknotes and current accounts, possess β finality β in the sense that they completely settle payment. furthermore, various private sector clearing systems eventually complete fund settlement as well as securities settlement by directly or indirectly making use of the medium of settlement with finality conferred by the central bank. thus, each payment system is operated in a responsible manner by a respective steering body, and the central bank is responsible for maintaining the smooth and safe operation of the nation β s overall payment systems. article 1 of the bank of japan law clearly stipulates that the bank β s mission is to maintain the smooth and stable operation | 1 |
we worry as much about inflation falling below the target as we do about it rising above the target. through most of the last decade, we have succeeded in keeping inflation close to the target. and so, canadians'expectations for inflation have become anchored around 2 per cent. all this has helped to smooth out the ups and downs in the economy and to create the best possible environment for longer - term economic growth. this framework may sound simple in theory. but it is quite complex in practice. our monetary policy decisions are based on economic projections, which can always be thrown off by unforeseen events. because monetary policy actions take time to have their full impact on the economy, we must aim these actions at where we see the economy sitting 18 to 24 months into the future. in doing so, we are always looking at what is called the output gap - the difference between the actual level of production in the economy and the level of potential output. if the economy is operating above its potential capacity and inflation appears likely to be above target in the future, then we would tighten monetary policy. this would cool demand and bring inflation back down to the target. on the other hand, if the economy is operating below its potential capacity and inflation appears likely to be below target in the future, we would ease monetary policy in order to stimulate demand, close the output gap, and bring inflation back to its target. this means that we are always looking at demand and supply in the economy and trying to bring them into balance. so, in carrying out our policy, a large part of the analysis we do is concerned with the many factors that can influence demand and supply. the most important factor is, of course, the strength of domestic demand. but canada is a trading nation, and so the strength of world demand is also important to us. in particular, the united states is a major customer for canadian goods, so we closely monitor the health of the u. s. economy. economic activity is also affected by movements in exchange rates. as you well know, there has recently been a significant adjustment in the value of the u. s. dollar against major currencies, including the canadian dollar. as always, we need to understand the causes of this movement, as well as its effect on the canadian economy. furthermore, movements in exchange rates have a direct effect on the prices of traded goods and services and, therefore, on inflation. however, our research has shown that, in economies such as canada | ##rs ) would be an intriguing alternative reserve asset. 12 using sdrs appeals to a sense of fairness in that no one country would enjoy the exorbitant privilege of reserve currency status. like a multiple reserve currency system, it may reduce the aggregate incentives of countries that supply the consistent currencies of the sdr to run deficits. in addition, there appears to be no technical reason why the use of sdrs could not be expanded. however, the question must be asked : to what end? merely enhancing the role of the sdr would do little either to increase the flexibility of the system or change the incentives of surplus countries. by providing a ready swap of existing reserve currencies into a broader basket, sdr reserves could also further displace adjustment onto other freely trading currencies, thus exacerbating the imbalances in the current system. indeed, by providing instant diversification, sdr reserves could entrench some of the existing strategies of surplus countries. this would change if the proposal were taken to its logical extreme : the sdr as the single global currency. setting aside the fact that the world is not an optimum currency area ( not however, network externalities and transactions costs would work against multiple reserve currencies, as they did during bi - metallism and the pound / dollar period under the gold standard. the well - known triffin ( 1960 ) dilemma, which argued that, in order for the global economy to have sufficient liquidity, the united states had to run balance - of - payments deficits ; but such deficits could undermine confidence in convertibility. bordo ( 1993 ) rightly notes that under flexible exchange rates, the triffin dilemma disappears, as any adjustment could occur through capital flows ( for example, india has accumulated desired foreign reserves, through capital inflows, despite a current account deficit ). recall that under the gold exchange standard, 40 per cent of money supply was backed by gold. zhou ( 2009 ) ; united nations ( 2009 ). least due to the absence of free mobility of labour, goods, and capital ), this appears utopian. while the level of international co - operation has certainly increased since the crisis, it would be a stretch to assert that there is any appetite for the creation of the independent global central bank that would be required. 13 as a result, any future sdr issuance is likely to be ad hoc. 14 a substitution account greater use of sdrs might | 0.5 |
bank of england old dogs, new tricks : adapting central bank balance sheets to a world of digital currencies β remarks by andrew hauser given at federal reserve bank of new york and columbia sipa workshop on β monetary policy implementation and digital innovation β, new york 01 june 2022 bank of england speech introduction the explosion of interest in digital currencies poses deep and challenging policy questions on everything from monetary and financial stability, to privacy, competition, money laundering and social inclusion. public authorities are evaluating the arguments for and against introducing their own central bank digital currencies ( cbdcs ). 1 and in the private sector there β s a lively debate about what it might take to make so - called β stablecoins β genuinely stable. up to now, though, there β s been less discussion about how central bank balance sheets might need to adjust to support the safe and effective provision of fiat - based digital currencies. this workshop is therefore well timed. i will focus my remarks today around five main messages. 1. retail cbdcs could be a big deal for central bank balance sheets let β s start with retail cbdc β a central bank liability, in digital form, held directly by individuals, and used to make day to day payments. many of the raw ingredients of a cbdc are already familiar to central banks : individuals can already hold our liabilities, in the form of physical banknotes ; and we already provide digital liabilities, albeit to only a few depositors ( predominantly banks ). the new thing would be to combine those ingredients together, at scale. the question of whether to do so is complex, and beyond the scope of my remarks today. the uk will publish a consultation on this issue later this year. but the implications for central bank balance sheets will also depend heavily on how any cbdc is designed : on who can hold it, where it can be used, how much can be held, and whether it is interest - bearing ( table 1 ). the bank of england β s work in this area is available at : uk central bank digital currency | bank of england. bank of england source : bank of england design choices that placed the economic features of cbdc close to today β s banknotes might have relatively limited implications for central bank balance sheets, at least in normal economic conditions. choices that positioned the economic features of cbdc closer to today β s retail commercial bank deposits could have a more material impact. to give some sense of potential | european central bank : press conference β introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, and mr lucas papademos, vice - president of the european central bank, frankfurt am main, 4 february 2010. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference today. we will now report on the outcome of today β s meeting of the governing council. based on its regular economic and monetary analyses, the governing council decided to leave the key ecb interest rates unchanged. the current rates remain appropriate. taking into account all the information and analyses that have become available since our meeting on 14 january 2010, price developments are expected to remain subdued over the policyrelevant horizon. the latest information has also confirmed that euro area economic activity continued to expand around the turn of the year. looking ahead, the governing council expects the euro area economy to grow at a moderate pace in 2010. the recovery process is likely to be uneven and the outlook remains subject to uncertainty. the outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term. all in all, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. medium to longer - term inflation expectations remain firmly anchored in line with the governing council β s aim of keeping inflation rates below, but close to, 2 % over the medium term. let me now explain our assessment in greater detail, starting with the economic analysis. the latest information confirms that economic activity in the euro area continued to expand around the turn of the year. the euro area has been benefiting from a turn in the inventory cycle and a recovery in exports, as well as from the significant macroeconomic stimulus under way and the measures adopted to restore the functioning of the financial system. however, these stimuli will unwind over time, while activity is likely to be adversely affected by the ongoing process of balance sheet adjustment in the financial and non - financial sectors, both inside and outside the euro area. in addition, low capacity utilisation rates are likely to dampen investment, and unemployment in the euro area is expected to increase somewhat further, thereby lowering consumption growth. for these reasons, the euro area economy is expected to grow only at a moderate pace in 2010 and the recovery process could be uneven. the governing council continues to view the risks to this outlook as broadly balanced. on the upside, confidence | 0 |
cases, the non - banking functions are carried out in the form of bank - subsidiaries. while from a market perspective, such a model may tend to constrain growth, this model offers an interesting perspective in the β too - big - to - fail β debate. i will be touching on this aspect later but internally within india there is support from certain quarters for a β holding company β structure. the other aspect of the β too - big - to - fail β debate, as succinctly dealt in the second fsa discussion paper on turner review relates to the core - banking versus trading activities of banks. we have a kind of hybrid model with banks being allowed to undertake proprietary trading as also sell insurance products. insurance, all forms of asset management, merchant banking and broking have to be undertaken through separate subsidiaries. issues with banks β involvement with private pools of capital are being sought to be addressed through appropriate capital requirements for such exposures and the reputation risk. as the financial system exists today, there are no major segments operating in an unregulated manner. the focus of regulation, though, is primarily on deposit taking institutions and systemically important non - deposit taking institutions. the model for regulation combines both direct entity regulation as well as overarching market regulation, where applicable. what such a framework enables is to provide a mechanism for containing market - based leverage, apart from a prudential oversight. in our case, it proved to be an effective combination since banks β exposure to such entities could be regulated through absolute exposure norms or even tweaking the risk weights applicable to such exposures. the problem, i realize, would be much more involved in predominantly market based financial systems where direct bank linkages are not very obvious but even in such regimes, as has been clearly demonstrated, the indirect linkages of banks with the unregulated entities can acquire systemic proportions. that is why it would be important to ensure that the markets too should not provide leverage capabilities to such entities beyond a limit. regulation of non - banking finance companies in india has gradually evolved from a focus on acceptance of deposits to acceptance of public funds in any form. with the growth of the financial system, it gradually came to be realized that even non - deposit taking entities, which were mostly in asset financing and loan business, could pose systemic risks on account of their interactions with the formal banking system and market based financing. moreover, many such entities in this lightly regulated segment were essentially indulging in | shyamala gopinath : philosophy and practice of financial sector regulation β space for unorthodoxy speech by ms shyamala gopinath, deputy governor of the reserve bank of india, at the fsa turner review conference, london, 2 november 2009. * * * it is a privilege to be invited to share my thoughts at this conference. the contribution of fsa in setting the terms of the debate in the aftermath of the crisis has been very significant and crucial. the clarity, conviction and clinical sharpness of arguments one encounters while reading the turner review ask of us a very fundamental question β how could the world not have expected this crisis? how could the policy regimes world over, barring a few exceptions, failed to even recognize what now seems to be obvious? perhaps it had to do with the force and might of the reigning doctrinaire regarding financial markets. post crisis, there was a natural effort to understand and assess the nature of various inexactitudes which had earlier been missed and incorporate these into the policy frameworks. phrases such as systemic risk oversight and macro - prudential regulation have become the new touchstones for a repaired regulatory framework. there is a renewed effort to redefine the regulatory philosophy and principles around a different mould. the danger is in this organic mould continuing to derive its legitimacy from the pre - crisis framework. hopefully, a crisis of such magnitude would not fail to provide the necessary impetus and support for departure of a more fundamental nature. i realize the huge challenge for this, given the sheer weight of the academic work of nearly four decades in the field of finance and the entrenched orthodoxy around it. to bring out any paradigm shift would require an equally weighty intellectual case for an alternative model. yes, this crisis could provide a trigger for that process but as history shows us, paradigm shifts of such magnitude do not follow a set path. it would however be imprudent to ignore the basic lesson of the crisis, which is that the existing framework has severe pitfalls. as with any stable ecosystem, what is needed is a space for heterogeneity β the space for unorthodoxy. as identified by the un president β s commission 1, β strengthening the diversity of ideas β would be a key principle in addressing the issues underlying the crisis. india has had the fortune of having a relatively stable financial system through the past few major crises affecting the world β the asian crisis, the dotcom | 1 |
. 1 1 / 4 bis - central bankers'speeches although the rise in interest rates may be welcomed by the banks, it may also introduce potential risks. with the current uncertain inflation and geopolitical outlook, further strong and rapid interest rates hikes cannot be ruled out. just look at the rapid pace at which the federal reserve has been increasing rates in the us. in such a scenario, banks'assumptions regarding the interest rate sensitivity of deposit funding and the prepayment behaviour of mortgage customers will be tested. furthermore, we are observing a deterioration of funding conditions with increasing credit spreads on market funding and tltro funding that needs to be repaid. this might have two effects. first, it might directly put downward pressure on banks'net interest income. second, it might indirectly increase the competition for deposits. this illustrates that, in the times ahead, a deep understanding of the dynamics in interest rate management, and of the underlying assumptions, will be crucial for banks, but also for us as supervisors. next, a word about credit losses. since the invasion of ukraine, financial institutions have had to absorb credit losses on their exposures to russian, ukrainian and energy - intensive businesses. looking ahead, uncertainty dominates the economic outlook : the so - called secondorder effects of macro - economic developments on banks are difficult to anticipate or to quantify. the inflationary shock will have large and diverse income effects. on top of that, the tightening of monetary policy will increase real interest rates, and this will almost inevitably lead to lower real economic growth, and thus negatively affect banks'customers, and their ability to pay their loans. looking at the european housing market in particular, we see that it has been cooling off for several months. higher mortgage rates and a loss of household purchasing power can lead to lower lending growth and an increase in household defaults. and as a result, credit losses for banks on mortgage loans might increase. challenging times lie ahead for the corporate sector, too, especially for those corporates that are not able to adjust to the energy shock, and those that operate in cyclical sectors or in sectors that are sensitive to funding risks. a particular example of these funding risks are the risks that have accumulated as a consequence of the search for yield during the prolonged period of low interest rates. the leveraged finance portfolios of banks have expanded in recent years and their quality could quickly deteriorate when corporate earnings decrease. what makes the current economic situation extra challenging is | be given a charter which includes a strong commitment to price stability, and the freedom and sufficient scope to pursue it. this means that while central banks may not have goal independence, they should have operational or instrument independence to effectively pursue their primary objectives. in a democratic society, transparency and accountability are essential if central bank independence is to remain β acceptable to the public β. providing for a sufficient degree of transparency can help not only to increase the understanding of monetary policy which ultimately enhances central bank credibility. your honour, this conference follows a similar one held in botswana hosted by the botswana central bank from 5 to 6 february, 2007 and supported by the bis governance forum and the imf. it also comes shortly after our very successful conference held at this same venue in november last year on the theme, β central bank independence, does it hurt the treasury? β all these activities are part of the building blocks to a bigger project we have been undertaking in the sadc region aimed at developing a model central bank act. for us in zambia, efforts at perfecting the governance as well as the operational efficiency of the financial sector are being done through the financial sector development plan ( fsdp ). under the plan we have already developed corporate governance guidelines for the financial sector as a whole. many of these have a lot of relevance to the central bank as well. through the fsdp, even issues such as who should chair the board of the central bank are being discussed. lastly, let me say that we expect to learn from what other central banks have done, and what challenges they have faced in their quest for enhanced central bank governance. however, it should be noted that each country should establish a legal framework for its central bank governance, which best fits that country β s own history and institutional evolution. this should also take into account international best practice. your honour, apart from zambian delegates, this international seminar has drawn participation from several other countries including : angola, ghana, kenya, lesotho, madagascar, malawi, mauritius and mozambique. other participants are from namibia, nigeria, sweden, tanzania, swaziland and uganda. with this wide participation, i have no doubt that the seminar will be thought - provoking and highly participatory, given also the high calibre of resource persons from institutions such as the international monetary fund and the bank of international settlements. i therefore wish all of you good deliberations and a memorable stay in livingstone and zambia in general. it is now my | 0 |
. one must add to the above the emergence of vulnerabilities in a number of emdes. one of the most important among them is the protracted rise of debt owed by these countries, which has been heavily concentrated in, and thus largely driven by, their non - financial corporate sectors. although the situation varies considerably from one country to another, non - financial corporate debt in emdes as a group is at present comparable in magnitude to that of these countries β sovereigns as, by some accounts, it has risen from about 60 percent of gdp in 2006 to 86 percent in 2017, reaching an all - time maximum at levels considerably above pre - crisis levels. although the bulk of the increase is explained by china, whose corporate sector debt rose from 107 to 163 percent of gdp during the same period, a similar trend is observed in many other emdes. 8 the increased leverage of emde non - financial corporates acquires particular relevance as a source of concern for at least a couple of reasons. first, global factors ( such as low interest rates and compressed risk premia ) have been more important drivers of this development than firm - or country - specific ones. 9 second, the contribution from foreign currency - denominated debt has been sizable, at around half of the observed growth since 2010. thus far, notwithstanding the generalization of financial volatility among emdes, the presence of severe problems has been concentrated in a few of them. overall, international institutions remain relatively optimistic about the international monetary fund ( 2018 ) : β the riskiness of credit allocation : a source of financial vulnerability? β, chapter 2 of global financial stability report, april ; and world bank ( 2018 ) : β corporate debt : financial stability and investment implications β, special focus 2 of global economic prospects, june. ayala, d., m. nedeljkovic and c. saborowski ( 2017 ) : β what slice of the pie? the corporate bond market boom in emerging economies β, journal of financial stability 30 : 16 - 35. prospects for the group in coming years. for instance, in its baseline scenario, the imf is projecting growth in emdes in the medium term at close to the levels observed in 2018 - 19. 10 however, it is clear that these projections are surrounded by considerable uncertainty. furthermore, even in the absence of a major disruption to world economic activity, average potential growth in emdes over the next decade is expected to be slower than during 2013 - | . annual consolidation of all rbi instructions on customer service through a master circular on customer service in banks, amendment of the banking ombudsmen scheme in the year 2006 to make the alternate redress mechanism more efficient and easily accessible, our recent customer protection measures include : simplification of kyc measures β measures taken for simplification : 1. single document for proof of identity and proof of address there is now no requirement of submitting two separate documents for proof of identity and proof of address. if the officially valid document submitted for opening a bank account has both identity and address of the person, then there is no need for submitting any other documentary proof. apart from passport, driving licence, voters β id card and pan card, aadhaar letter issued by uidai and job card issued by nrega signed by a state government official are also accepted as proof of identity / address. these are known as officially valid documents ( ovds ) for kyc purpose. to further ease the kyc process, the information containing personal details like name, address, age, gender, etc., and photographs made available from uidai as a result of e - kyc process can also be treated as an β officially valid document β. 2. no separate proof of address is required for current address if the current address is different from the address mentioned on the proof of address submitted by the customer, a simple declaration by her / him about her / his current address would be sufficient. bis central bankers β speeches 3. relaxation regarding officially valid documents ( ovds ) for low risk customers if a person does not have any of the β officially valid documents β mentioned above, but if is categorised as β low risk β by the banks, then she / he can open a bank account by submitting any one of the following documents : ( a ) identity card with applicant β s photograph issued by central / state government departments, statutory / regulatory authorities, public sector undertakings, scheduled commercial banks, and public financial institutions ; ( b ) letter issued by a gazetted officer, with a duly attested photograph of the person. 4. periodic updation of kyc time intervals for periodic updation of kyc for existing low / medium and high risk customers have been increased from 5 / 2 years to 10 / 8 / 2 years, respectively. the requirement of positive confirmation at the interval of 3 / 2 years in respect of low / medium risk customers has been withdrawn. 5. other | 0 |
- prints ) has now been successfully concluded and a zero - production run will be conducted in the autumn before mass production starts in early 1999. ( e ) payment systems the governing council endorsed a list of eligible securities settlement systems following an assessment of such systems against standards that had previously been laid down for their use in the credit operations of the escb. the list, which indicates those securities settlement systems that will be used by the escb and the conditions for their use, will be set out in the β general documentation β, to which i have already referred. in addition, the governing council approved a report on the β assessment of eu securities settlement systems against the standards for their use in escb credit operations β. it is intended to release this report during the next couple of weeks. | peter praet : fixed income investment of insurance companies and pension funds in a low yield β but volatile β environment speech by mr peter praet, member of the executive board of the european central bank, at the 2011 european pension funds congress during the 14th euro finance week, frankfurt am main, 15 november 2011. * * * i would like to thank jurgen kirchoff, torsti silvonen and stefan wredenborg for their contributions to the preparation of this keynote speech as well as michel colinet and kajal vandenput for their helpful comments and all members of the cgfs working group on fixed income strategies of insurance companies and pension funds for the preparation of its report. ladies and gentlemen, it is a pleasure to speak here at the european pension funds congress in frankfurt, which forms an important part of the 14th euro finance week. earlier this year i was asked to chair a global working group with participating central banks from north america, europe and asia for the so - called committee on the global financial system, cgfs, which works under the bank for international settlement. our aim was to assess how the regulatory initiatives together with the low - yield environment have affected the fixed income strategies of institutional investors, such as pension funds and insurance companies, and to draw implications for the financial system. in doing so, we relied on bilateral interviews and regional roundtables, involving 70 private sector institutions. even after discounting industry complaints, there are grounds for expecting certain adjustments to the assets, liabilities and derivatives books run by insurance companies and pension funds. i would like to share the main findings of the cgfs work with you and express some of my views on the topic. our exercise is published in the form of a cgfs report, which can be found at the web - site of the bank of international settlements. 1 i will first provide some background on the role of insurance companies and pension funds, then elaborate on the main changes concerning international accounting standards and the regulatory front, before presenting some views on potential financial system implications. 1. background on the role of insurance companies and pension funds insurance companies and pension funds ( icpfs ) indeed currently find themselves at the intersection of major developments. having weathered the financial crisis on the whole comparatively well, they are now exposed to problems confronting some euro area sovereigns and banks, the low - interest rate environment, and they face upcoming changes in international regulation and accounting standards. with combined assets of some $ 40 | 0.5 |
12 i β d like to take a moment to explain why i believe such a regime would be a sensible way to implement policy during the first stages of normalization, when reserve balances will be in such ample supply. most importantly, it β s a regime in which the desk should achieve the target for the fed funds rate set by the fomc. as ioer is raised, its magnetic force will pull the fed funds rate higher. at the same time, the high level of reserve balances in the system should lead the effective rate to print below the ioer rate, at least initially during normalization. as described in addition to improving competition in money markets, by conducting a daily operation with a known, fixed rate, the fed can reduce uncertainty and absorb day - to - day variations in the supply of and demand for funds and collateral. an eligible lender that cannot earn the ioer rate and that has an unexpectedly large amount of funds to invest would be able to place the funds in the on rrp facility rather than sell them in the market at an unusually low rate. this should reduce downward pressure on money market rates. see the discussion in the minutes to the june and july fomc meetings, http : / / www. federalreserve. gov / monetarypolicy / fomcminutes20140618. htm and http : / / federalreserve. gov / monetarypolicy / fomcminutes20140730. htm. see the survey of primary dealers and the survey of market participants bis central bankers β speeches earlier, if the magnetic pull of ioer alone is insufficient, on rrps should help to form a floor on rates by providing a risk - free, overnight asset to a broad range of non - bank investors. as a result of these forces, the effective funds rate should generally print within the target range. that said, as the chair noted during her september press conference, the committee expects that the effective fed funds rate may vary within the target range and could even move outside of it on occasion. for example, the effective rate could move outside the target for a day or two around key financial reporting dates, such as quarter - ends, when some banks β marginal balance sheet costs are particularly high. however, such transitory movements should have no material effect on financial conditions or the broader economy. what matters for policy transmission is the predictability that on most days money market | of reserve balances in the system will be significantly higher during normalization than was envisioned when the 2011 principles were adopted. in light of this, as i just outlined, the fomc has judged it appropriate to operate with a framework for interest rate control that is based primarily on administered rates rather than reserve draining tools. given the unprecedented nature of this framework, the committee has made clear that it is prepared to adjust the details of its approach in light of economic and financial developments. the fomc has consistently adapted its policies as needed in recent years and will no doubt continue to do so as necessary throughout the normalization process in order to foster conditions consistent with its dual mandate. the framework for interest rate control during normalization now i β d like to talk in more detail about the plans and tools for influencing short - term interest rates that the fomc will use when it becomes appropriate to raise rates. a target range for the fed funds rate as i noted, during normalization the committee will continue to communicate the stance of policy through a target for the federal funds rate. the fed funds rate is an overnight, unsecured interest rate in the market for reserves β the rate at which banks and certain other eligible entities borrow or lend balances held at the fed. 1 the committee also agreed that it would continue to set a target range for the federal funds rate during normalization. when the fomc begins to remove accommodation, the level of reserves in the banking system will be very high and the federal reserve will be employing new tools to implement policy. against this backdrop, the committee has chosen to establish a target range, rather than a point target, in order to provide an appropriate degree of flexibility in policy implementation. a key advantage to targeting the fed funds rate is that the committee has done so successfully for many decades. as a result, it β s a familiar rate for the public in judging the stance of monetary policy, and its continued use simplifies the fed β s communications. while the committee has targeted the fed funds rate for many decades, activity in the fed funds market has changed considerably in recent years. prior to the crisis, many banks typically borrowed fed funds in order to satisfy reserve requirements or obtain short - term the effective fed funds rate is a measure of the prevailing rate in the market each day. this is calculated as a volume - weighted average of rates on trades arranged by major brokers, and is published by the new york fed. see http : / / | 1 |
is, and granted independence to their central banks. there is a vast amount of research showing that an economy performs better when the central bank is independent. central bank independence is thus important for the achievement of sustainable growth, price stability, and financial stability. hence, central bank independence is one of the considerations of domestic and foreign investors in deciding where to invest. this consideration is expressed, among other things, in the country's rating and in the costs incurred by the government and the private sector in raising capital. it is also important that the independence of the central bank be accompanied by fruitful cooperation between it and the government, including the ministry of finance. on this point i would like to mention the excellent cooperation between the minister of finance and me, and between the senior personnel in the ministry of finance and the bank. the modern approach to central bank independence is expressed in the laws relating to modern central banks in advanced countries worldwide. this is also the approach underlying the new bank of israel bill which we are drafting in conjunction with the ministry of finance and with the support of the prime minister. this law will comply with the accepted standards of central banks in advanced countries, and will also, and mainly, serve the economy, the state and its citizens in the best possible way. i hope that the government will present the new bill to the knesset in the very near future. this will be a further milestone in building the foundations of an advanced and modern economy in israel. that will be an achievement the state of israel and its citizens can be proud of as the country celebrates its 60th anniversary. | stanley fischer : a salute to the country on its 60th birthday address by professor stanley fischer, governor of the bank of israel, to the forbes conference, ramat gan, 14 april 2008. * * * in my remarks today, i would like to speak about the special period the israeli economy is currently passing through and what is required from policymakers and the business sector to get through this period of the slowdown in global growth relatively unscathed. the israeli economy is presently confronting a very complex situation. the western world, and especially the united states, is in the throes of a serious financial crisis, which is causing a significant slowdown in growth in the united states, and hence also in europe, and a decrease in the volume of world trade. the israeli economy will also certainly be affected by the slowdown in global growth. this will probably come from two directions : a ) through the influence of the financial markets. even though the financial crisis hardly touched the israeli financial system, it is having an impact. this is seen in price falls in the share market and a rise in the risk premium on the bond market. we can thus expect a reduction in consumer demand due to the β wealth effect β β the effect of a fall in the value of households β assets on their purchases β and a decline in real investments resulting from the increase in firms'costs of borrowing in the capital market. b ) through the slowdown in israeli exports, in the context of the decrease in worldwide demand, particularly in the united states, and the strengthening of the shekel against the dollar. taking the above into account, the bank of israel's forecast of the rate of growth in 2008 is 3. 2 percent. although this is lower than the rate we have been accustomed to since the middle of 2003, it is similar to the average growth rate recorded in israel over the past 25 years, and is higher than that expected in the developed countries β particularly the united states and europe. in other words, the bank β s forecast, in line with that of nearly all forecasters, is that israel β s economy will continue to grow at a good pace, despite the difficult times in which the advanced economies find themselves. the question thus arises what the policymakers β i. e., the government, especially the ministry of finance, and the bank of israel β and the business sector should be doing to minimize the harm to the economy. we should emphasize that whatever is done has to be consistent with | 1 |
dramatically : from an almost 9. 4 percent growth rate in 2008 q3 to a most likely significant decline in 2009 q1. the monetary and fiscal policies will be resorted to with a view to adjusting to the new environment. in face of the crisis, the relatively large stock of private foreign debt and the increased market volatility made some economic agents believe that the early adoption of the euro could supersede the need for economic policy adjustments. yet this is not a viable option, as adopting the euro prior to having achieved the main stages of convergence with the eu might pose serious threats in the future. the adoption of the euro today would mean to relinquish monetary policy before having ensured convergence sustainability, namely before removing all the imbalances we are facing today. the outcome would consist in monetary policy being designed by the european central bank ( ecb ). but the ecb policy might prove inadequate from the standpoint of the specific problems facing the romanian economy. the risk might occur that, in face of relatively high volatility of output and inflation, we run out of instruments to tackle the issue. i consider this as a strong enough reason not to adopt the euro prior to eliminating all major imbalances in the economy and before having made enough progress on the path to achieving convergence. we stand committed to implement the pre - announced calendar of the euro adoption. we intend to join erm ii on 1 january 2012. after the minimum two - year stay in this mechanism, the joint decision on entering the euro area will be made in 2014 and ( likely to ) become effective as of 1 january 2015. mention should be made that this is the calendar considered by most rating agencies and foreign investors, hence any large deviation ( postponement ) from this calendar would be negatively perceived and penalised accordingly. * * * i believe there will also be other lessons for countries to learn from the current financial crisis. they will learn the manner in which a banking system can be restructured so as to cope with a global financial crisis, particularly what is the impact of a so - called " bad bank " on real life. i trust countries will learn that central banks'resort to unconventional instruments bears certain costs. yet, regardless of the number of lessons learned, the experience of financial crises indicates that the social memory of crises is of short duration and that the possibility of repeating the same mistakes should never be ruled out. let me conclude my speech with the words of ivy baker priest, former | more global colleges for significant cross - border firms will become active in the near future. while colleges are a sensible approach to dealing with the global nature of the financial industry, they have their limitations, especially in a global context. in contrast to eu colleges, global colleges have no legal basis, and this hampers supervisory cooperation and information - sharing. dnb currently chairs two global colleges. in these colleges we provide for several it tools to encourage as much information - sharing and cooperation as possible, provided that the confidentiality of supervisory information is assured. conclusion ladies and gentlemen, let me conclude. the crisis has reminded us all too well that a new structure for financial supervision in europe is urgently needed. in a european context, the proposals of de larosiere group are a good point of departure, though specific amendments are required. at the end of may, the european commission will present its reaction to the de larosiere group proposals. i will give our present position. to improve macro - prudential supervision, the european systemic risk council should be set up as soon as possible. open issues about its mandate and institutional design should be resolved. regarding microprudential supervision, i am in favour of more centralised european decision - making, but only if the necessary requirements for such a leap forward are fulfilled. the central issue we need to settle on is burden - sharing at the european level. in a global context, the scope of supervision should be broadened and include all financial systemically - relevant institutions. in line with the g20 declaration, the functioning of colleges of supervisors should be supported. | 0 |
factors. structural change and pro - growth policies were coalesced synergistically with hard work ethics. in many ways, asia has maximised its comparative advantage with international trade as a major source of growth over several decades. economies were transformed from being driven by the traditional commodity based sector, to one that was driven by the manufacturing sector that produced goods for the increasingly affluent domestic markets and for the export market. this strategy and economic transformation in asia has also been facilitated by the steady inflow of foreign direct investment into the region. given the region's competitively - priced factors of production, combined with pro - business economic policies, global producers relocated their production bases to asia. in terms of robustness, this model has survived several global slowdowns. even in the face of the 1997 - 1998 asian financial crisis, the affected countries recovered rapidly and resumed strong growth. the fundamental strength of the asian economies has also been its economic flexibility to adjust to changing conditions. the challenge before us now is whether asia, going forward, will rise to the new challenges that is being presented by the rapidly changing global environment in the aftermath of the current global economic and financial crisis. while asian financial systems have shown a high degree of resilience during this global financial crisis, most asian economies have been markedly affected by the economic spillover effects of the crisis. by the second half of 2008, what was a β localised β financial crisis had spread to the rest of the world. however, the financial reforms and development of the financial systems in asia during this decade since the asian crisis have, to a significant extent, insulated our financial systems from these developments. however, the openness of the asian economies have resulted in a significantly slower growth with economic contraction occurring in several countries. in the immediate future, several favourable factors will support growth in asia. strong fundamentals, pro - growth policies and structural factors will support an early recovery. this is also being reinforced by greater regional integration. going forward into the future, the global shifts taking place calls for a new economic model, one that would leverage on regional strengths, address the current and future risks and recognise the new global opportunities. in the context of these developments, this conference will be discussing these issues and the new directions that are likely to emerge for asia. also important are the lessons that we can draw from the european experience. the agenda is for us to discuss the alternative economic models for the future, including the financial aspects and the role of policies | zeti akhtar aziz : south east asia β potential and perspectives in the new asia luncheon address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the 2010 institute of international finance ( iif ) annual membership meeting, washington dc, 8 october 2010. * * * generating growth and a long lasting recovery is the primary priority for the global economy in this aftermath of the recent crisis. the massive life support that was provided to avert a deep recession was to be temporary β to provide the opportunity to address the weakness in the system and to rebuild the capacity for a self - sustaining recovery. recent indications are that this prospect has not been realised. the emerging world has however performed well with the potential to generate such a sustained recovery. these developments have drawn significant interest to the asian emerging economies and on their changing role in the global economy and in the international financial system. it is my honour and great pleasure to speak at this 2010 institute of international finance annual membership meeting. my remarks today will focus on the challenges in managing such a sustained recovery with specific focus on the potential for emerging asia to rise to these challenges in this new global economic and financial environment. the final part of my remarks will be on the changes taking place in the international financial environment from the perspective of emerging asia. as growth in the developed world slows, weighed down by structural factors, will the global environment of increasing interdependence then dampen the prospects for the asian emerging economies? asia comprises highly diverse economies. south east asia, with a population of more than 500 million people is strategically located south of china and east of india, has been since the 13th century an important trading hub connecting asia to the west. being the most open economies in asia, and perhaps in the world, we, therefore stand to be the most vulnerable to global developments. while economic stimulus is vital for crisis containment, it will not, however, be sufficient to produce a self - sustaining recovery. the challenge is essentially the economic restructuring and transformation, the reform and rebuilding of the institutional capacity so as to remain effective in the new environment and to be well positioned to manage future shocks. as emerging economies in asia transition into this post crisis era, three important structural shifts are transforming the region. the first is the economic restructuring and the strategy to pursue more balanced sources of growth. this has involved significant shifts to new areas of comparative advantage and new areas of growth, and the greater emphasis on domestic demand as a | 0.5 |
monetary policy and the build - up of financial risk the interaction between monetary policy and the amount of risk in the economy is not confined to the details of the collateral framework. it extends also to the interest - rate setting itself. unfortunately, most macromodels are not well suited to analyse the relationship between monetary policy and the build - up of financial imbalances. they generally assume that monetary policy works via the impact of the short - term policy rate on long - term interest rates and the exchange rate, possibly amplified by the so - called credit channel. however, recent research has challenged the traditional wisdom by suggesting that in reality there are other channels at work which are relevant to understanding the interaction between monetary policy and financial imbalances. 10 first, it has been suggested that policy rates would be crucial in their own right. the reason is that financial institutions normally tend to maintain very low spare capacity on their balance sheets β for cost reasons β making wholesale funding the only readily available source of funds to finance at the margin an additional unit of investment. the close association of money market rates to policy rates implies that the central bank has a direct grip on the marginal price of financial institutions β leverage. and leverage is one of the key factors that determine the amount of risk and the extent of vulnerability present in the financial system. second, it has been suggested that monetary policy works also via the so - called β risk - taking β channel, whereby low levels of policy rates tend to induce excessive risk - taking by financial institutions. 11 these new insights can shed light on the effects that very expansionary monetary conditions can have on financial imbalances, fuelling in particular the build - up of maturity mismatches via excessively low interest rates. and these insights also make clear the hazard to which the central bank is constantly exposed. if a liquidity crisis occurs, the central bank may have to step in and provide abundant liquidity to preserve the functioning of the transmission mechanism and counteract risks to price stability emanating from systemic instability. anticipating this policy response, the private sector may in normal times under - price the value of liquidity, which in itself increases the probability of a liquidity crisis in the future. see adrian, t., and h. shin, ( 2010 ), β financial intermediaries and monetary economics β, forthcoming in handbook of monetary economics, edited by b. friedmann and m. woodford ; borio, c., and h. zhu, ( | is. no β it does of course get in all the cracks, but unfortunately, despite the ample central bank liquidity, loans in individual countries which should be granted are not being granted. the way qe works was once visualised as a marathon. how many kilometres have we run so far? we have come a long way since summer 2015. even though we have pushed back the end of the qe programme, we have already covered quite a distance. we can see the effects in lending, for instance, where figures have turned from negative to positive. but that β s still not enough. small and medium - sized businesses in particular no longer have financing as their primary problem, and that is very positive. the problems tend to be in other policy areas, for which we are not responsible. that β s why we are pushing so much for structural reforms. the ecb has a price stability objective of β below, but close to, 2 % β. is this objective still appropriate? the answer to this question is in two parts. does it make sense in times of crisis management to change your strategy? i don β t think that would foster confidence. however, it is indeed the case that it is more difficult to measure inflation today than it was 15 or 30 years ago. there are factors which we over - and underestimate when it comes to inflation. why? it is not so easy to distinguish between improvements in quality and increases in prices. that is especially true in the digital age. it has probably never been as difficult as it is today to establish how changes in consumer behaviour affect productivity and prices. we need further studies on all these issues. if you draw premature conclusions, you end up zigzagging around, which destroys confidence. confidence - building is the key precondition for us to return to a stable growth path. bis central bankers β speeches why, then, is the β close to 2 % β so important? an inflation goal of 1. 5 % would also suffice. prices are stable, so why is the ecb putting itself under pressure? we are, after all, a long way from japan - style deflation. there were deflationary risks. when these are accompanied by a recession, things get difficult. then you are permanently driving along the edge of the precipice and the risk of having an accident is greater. that β s why potential growth must be pushed up. but that is not a task for us ; | 0.5 |
more - stable inflation, by making the returns to saving and investment more predictable and by diminishing the likelihood of shocks to the financial system, should encourage economic growth. for example, the united states has experienced a higher average, and less volatile, growth rate since the mid - 1980s. this " great moderation " has been attributed by most observers, at least in part, to improved monetary policy and, by extension, to lower and more - stable inflation. 11 low and stable inflation offers other benefits as well, which may affect the growth rate of gross domestic product ( gdp ) over time. these include reducing the arbitrary redistributions of wealth and income associated with higher and more - variable inflation and shrinking the distortions to resource allocation in the tax code. 12 accordingly, and i am obviously not alone in this view, it is clear that central banks should strive to achieve low, stable inflation. of course, low inflation is at best a necessary, but not sufficient, condition for growth. in many poor economies, inflation may be less of an obstacle to development than poor governance, inadequate education, and legal systems that fail to protect property rights or to enforce commercial contracts. yet, no tradeoff forces countries to choose between lowering inflation and reforming their institutions. on the contrary, high inflation is often a sign of institutional breakdown, and reducing inflation may help to rebuild confidence in economic and political prospects. conclusion in conclusion, let us not forget that the declines in inflation over the past two decades and the resulting boost to monetary credibility we currently enjoy were earned with some economic pain, as the pace of economic activity was slowed, at times severely, to bring inflation down. with longer - run inflation expectations better anchored now throughout the world, i believe that global economic growth will be stronger and more resilient as a result. if the academic evidence does not yet unequivocally support this conclusion, perhaps it is because we are only starting to see the return to sacrifices made in the past. my generation of central bankers has the job of maintaining the victories of the previous mohsin s. khan and abdelhak s. senhadji ( 2001 ), " threshold effects in the relationship between inflation and growth, " imf staff papers, vol. 48, pp. 1 - 21. an earlier imf staff paper also found a negative, nonlinear relationship. see atish ghosh and steven phillips ( 1998 ), " warning : inflation may be harmful to your growth, " imf | , we must continue to ask difficult questions about the functioning of the regulatory framework, and whether it requires adjustments : how do we define a " community bank " for purposes of tailoring regulations to risks? what are the implications of regulatory cliff effects, like those around regulatory capital thresholds under the basel iii endgame and long - term debt proposals, where there is a new, stark line at $ 100 billion in assets? will regulatory proposals effectively impact the viability of certain institutions, particularly those clustered around regulatory thresholds? what would the loss of these smaller institutions mean for credit availability and pricing? in all of these policy decisions, banks must not be passive observers. they must ensure the that regulators and policymakers recognize and understand their important role and the impacts of considered changes to ensure their viability in the future. of course, while we often think of the banking system as being defined by a " regulatory perimeter " - a line that distinguishes institutions that are subject to direct oversight from those that are not - this line in some ways blinds us from some of the important and unintended consequences we must consider in shaping the regulatory framework. banks are an integral part of the larger financial system, and financial risks, including financial stability risks, are not unique to banks. for example, we know that the cost of capital influences not only the pricing of financial services offered by banks, but where activities occur, either within the regulatory perimeter or in nonbank entities and the shadow - banking system. i worry about the migration of risks across this line and what it means for the stability of the u. s. financial system. but i am particularly concerned about intentional regulatory actions that actually push activity to the nonbank financial system. in my view, this structural dynamic - where activities occur and how those choices are influenced by regulation - is one that banks themselves must be concerned with, as over the long - term, it will affect every decision they make about the products and services they offer. while regulatory choices can affect the scope of the regulatory perimeter, these choices can also help to mitigate the flow of risk between the permeable boundary separating regulated banks and other companies. regulators often address risks in the financial 6 / 7 bis - central bankers'speeches system by focusing on regulated banks, promoting up - front due diligence of bank partners, monitoring the risks of these relationships, and placing accountability for issues that arise on the banks themselves. a potentially underused tool that could be used to address these risks is | 0.5 |
goh chok tong : challenges and opportunities for singapore β s insurance industry speech by mr goh chok tong, senior minister and chairman of the board of directors of the monetary authority of singapore, at the national trades union congress ( ntuc ) income 40th anniversary gala dinner, singapore, 22 october 2010. * * * 1. in 1990 and 2000, i had the pleasure of celebrating with you income β s 20th and 30th anniversaries. i am very happy to see that income has grown from strength to strength as it celebrates its 40th anniversary. naturally, i am anxiously looking forward to your 50th anniversary. formation of income and adhering to sound principles 2. income was another of the many initiatives of the late dr goh keng swee. at the β modernisation of the labour movement β seminar in 1969, he mooted the idea of setting up a life insurance co - operative ( β co - op β ). a year after, income was formed. 3. dr goh believed that a life insurance co - op would advance the cause of the labour movement. such a co - op would be fulfilling a genuine social need. by getting members of the working class to take out life insurance policies at a cost they can afford, the co - op will help them alleviate hardship at times of unexpected events and build up valuable savings for old age. besides, the labour movement is an inclusive one, bridging different communities, languages and even to some extent, status. the network of trade unions and branches would provide the life insurance co - op with a clear advantage over private enterprise. 4. to ensure that the co - op would succeed, the realist in dr goh laid down a few principles for its operation. first, the co - op must be fully competitive with private enterprises and cannot expect privileged treatment from the government. second, the co - op must have effective management. third, all levels of staff should be recruited based on merit and not affiliations with the labour movement or government. it was the steadfast adherence to these sound principles that has kept income successful over the past 40 years. the growth of singapore β s insurance industry 5. at income β s 30th anniversary celebration, i had sketched out the changes in the global financial landscape, and how mas had to liberalise the domestic insurance industry. reputable foreign insurers were allowed to set up in singapore or enter into strategic alliances with existing local insurers. the hope was | remain : anonymity, susceptibility to cybercrime and it issues. but above all those, a key issue arises : the problem of competition. will the central bank change into a direct competitor to commercial banks? will it serve as a β bank of last resort β for all deposits in bad times? should it also provide credit to the real economy? might it become a real monobank, like the ones we saw a few decades ago in former socialist countries? what would the entire money - creation process look like? these questions are too important to rush around. so far it seems to me like social engineering to talk about abolishing cash fully and issuing digital currency instead. as one of my colleagues once put it : we might have a novel solution, but do we really have a problem? thank you very much for your attention. 3 / 3 bis central bankers'speeches | 0 |
, i have underlined some of the challenges facing monetary policymakers in the current postpandemic and energy - crisis environment. if we keep an open mind and continue learning the lessons of this new environment, i β m confident that we will be able to get our policy right β or if not always right, then at least as little wrong as possible β in the tough times going forward. and research, of course, will have an essential role to play in and contribute to this constantly evolving policy process. with these words, let me wish you a very productive and fruitful conference. thank you for your kind attention. olli rehn ( / en / other - pages / tag - search /? tag = olli rehn ) governor ( / en / other - pages / tag - search /? tag = governor ) speech ( / en / other - pages / tag - search /? tag = speech ) in ation ( / en / other - pages / tag - search /? tag = in ation ) monetary policy ( / en / other - pages / tag - search /? tag = monetary policy ) | also identified valuation practices as critical. the ssg reported that those firms that paid close attention to the problems associated with the valuation of financial instruments, particularly those for which markets were not deep, fared better. these more - successful firms developed in - house expertise to conduct independent valuations and refrained from relying solely on third - party assessments. federal reserve's mortgage initiatives i would now like to discuss some of the actions the federal reserve is taking to address the ongoing challenges in the mortgage market. the federal reserve's decisions regarding monetary policy and our efforts to promote financial stability affect mortgage and housing markets, of course. but, we are also working on these issues more directly on a number of fronts as we are very concerned about the high rate of mortgage foreclosures. we are contributing to initiatives already under way at the local and national level, as well as collaborating with other regulators, community groups, policy organizations, financial institutions, and public officials in an effort to identify ways to prevent unnecessary foreclosures and the associated negative effects on local communities. in doing so, we are taking advantage of the decentralized geographic structure of the federal reserve system, which consists of the board of governors in washington, d. c., and the twelve federal reserve banks that each represent a region of the country. in recent months, for example, i have had the opportunity to get a firsthand look at what is happening in various parts of the country. i have met with local community groups, bankers, housing advocates, counseling agencies, and state and local government officials in cincinnati, minneapolis, philadelphia, boston, miami, and las vegas. the reserve banks representing those areas have helped facilitate these meetings, which have enhanced my understanding of the challenges being faced across the country and of how policymakers should think about these issues at both the local and national levels. we are engaged with mortgage servicers to understand impediments they may face when modifying loans or offering other alternatives to foreclosure. we have encouraged the mortgage industry to increase their efforts to work with troubled borrowers, to develop guidelines and templates for reasonable standardized approaches to various loss - mitigation techniques, and to adopt transparent reporting standards. clear disclosures of loan modifications will not only make it easier for regulators, the mortgage industry, and community groups to assess the effectiveness of foreclosure - prevention efforts, but they will also foster greater transparency, and hence greater confidence, in the securitization | 0 |
of the debt management office should therefore be seen as a positive development that will enhance the efficiency of not only domestic debt management but also the effectiveness of monetary policy. indeed, in spite of the bank β s best endeavours in the prudent management of government β s domestic debt, not much has been achieved by way of rationalizing public expenditure and trimming the size of domestic public debt stock. some of the outstanding problems that call for urgent solutions include : Β· how to ensure that borrowed resources are productively utilised, such that economic and social rate of return is higher than the future servicing cost. Β· the restructuring of the existing public debt in favour of long - term in a way to compel better quality evaluation of the loans. Β· how the capital market can play an increasing role in the funding of the federal government fiscal operations. Β· the problem of intergenerational equity argument arising from debt over - hang. Β· how to reduce cbn funding of government and bring it in line with the government β s obligation under the west african monetary zone protocol. acceptable progress has, however, been made in this regard during the last two years. against this background, this forum has been organised to proffer practical solutions on how to tackle the problem of the burgeoning domestic debt of the federal government. participants are therefore challenged to come up with a credible framework that would prepare the road map, which will guide the nigerian government in resolving this problem. to this end, ladies and gentlemen, we have assembled today scholars, seasoned professionals and other key stakeholders in the economy to lead the discussions. i therefore urge all the participants at this forum to discuss freely and frankly in order to come up with useful ideas that will crystallize into an enduring solution to the country β s debt problem. once more, i welcome you to this forum and wish you fruitful deliberations. | to put measures in place to shore up reserves β ; β’ bop : overall our balance of payments is expected to remain positive in the short - term. hoping that oil prices continued to recover, we expect the current account balance to strengthen even further. this will be supported by improved non - oil performance as diversification efforts begin to yield results to reduce undue imports. β’ supporting domestic production : given the remarkable success that has been achieved in stimulating domestic production of goods such as rice, cassava and maize, as a result of the restrictions placed by the cbn on access to forex for 41 items, the cbn intends to vigorously ensure that this policy remains in place, and additional efforts would be made unscrupulous to block parties ( both any attempts individuals by and corporates ) that intend to find other avenues of accessing forex, in order to import these items into nigeria. the cbn β s economic intelligence and banking supervision departments will work very hard with the efcc to expose and sanction any, bank, company or fx operator that colludes with unscrupulous individuals / companies to undermine the policy on 41 items. such sanctions will include, but not limited to prohibiting the banks from maintaining any bank accounts for such institutions or persons in nigeria. given the global and domestic headwinds we face as a nation, and the volatility that is being experienced in the crude oil market, we have no other option, as leaders interested in the progress of our nation, but to work very hard to spur job creation by reviving agricultural and industrial activities in the country. if we continue to support the growth of small holders farmers, as well as help to revive palm oil refineries, rice mills, cassava and tomato processing factories, you can only imagine the amount of wealth and jobs that will be created in the country ; these could include new set of small holders farmers that will be engaged in productive activities ; new logistics companies that will transport raw materials to factories, and finished goods to the market ; new storage centres that will be built to store locally produced goods ; additional growth for our banks and financial institutions as they will be able to provide financial services to support these new businesses ; and finally, the millions of nigerians that will be employed in factories to support processing of goods. if we turn a blind eye to the opportunities that are being created as a result of our policy on 41 items, we will be spelling doom for our nation. we can no longer afford to | 0.5 |
zeti akhtar aziz : asean β towards a more integrated market keynote speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the 19th asean banking conference 2012 β asean β towards a more integrated market β, kuala lumpur, 7 november 2012. * * * as we enter a new phase of globalisation, asia β s role in the world economy is being significantly transformed both in terms of its significance and influence. asean economies are very much a part of this process. this trend has become more pronounced following the global financial crisis. five years into the crisis, the world economy continues to be challenged to hold a sustained recovery. the financial sector restructuring and reforms, and the structural adjustments being undertaken by the crisis - affected economies will not only take time to produce results, but in the more immediate term, these efforts will involve costs to the economy. while emerging markets such as those in the asean region are not insulated from these developments, the region has displayed remarkable resilience during this period. the region has benefitted from the decade of restructuring and financial reforms following the asian financial crisis. in addition, structural adjustments undertaken during this period and have resulted in more diversified economies, in which domestic sources have become increasingly important in sustaining growth performance. the region β s more favourable growth prospects are also underpinned by the relatively sound fundamentals that include strong external and fiscal positions, stable macroeconomic conditions, low unemployment and resilient financial systems. this has also enabled the region to better manage the large and volatile capital flows that we are experiencing, thereby mitigating its destabilising effects on economic activity. these strong foundations have supported asean economies through the challenging external developments that have taken place and have well positioned the region to realise its full potential as a dynamic growth centre. it is my great pleasure to be here to speak at this 19th asean banking conference, hosted this year by the association of banks in malaysia ( abm ) here in kuala lumpur. this conference takes place at an important juncture for our region, as concrete plans are being advanced to achieve an asean economic community ( aec ) by 2015. the aec blueprint, adopted by asean leaders in 2007, envisages asean to become a single market and production base that is characterised by the free movement of goods, services, investment and skilled labour, and freer the flow of capital. despite the recent global financial crisis, the drive for this vision to be realised remains resol | its market size and the abundance of natural resources. asean β s proximity to major markets such as china and india reinforces its status as an important global value chain player and a preferred production base for many multinational corporations. in 2010, foreign direct investments into the region registered an impressive growth of more than 100 % from the preceding year. the strong ties between the asean economies are also underpinned by the continued growth of intra - regional trade, which now accounts for 25 % of asean β s total trade. going forward, this trend is set to continue. the growing consumer market and the expansion of production networks in asia will continue to be a major driving force in promoting this increased intraregional trade. in addition, the measures taken to boost investment, as well as infrastructure development will reinforce this trend. regional integration : the asean model we stand today on the brink of very exciting times for asean as we draw closer to the vision of an asean economic community in 2015. if the aec vision was aspirational when it was first conceived, it is now clearly an imperative. this has prompted an increased momentum in efforts to realise an integrated asean economic community, notably by achieving increased financial integration, higher levels of intra - regional trade and greater two - way cross - border investment flows. like most regional blocs, the integration process for asean seeks to promote greater regional connectivity which will in turn expand and reinforce the region β s growth potential. the region β s integration process however, has followed its own path. given the diverse nature of our economies within asean, the integration model adopted for asean has been one that focuses on ( i ) strengthening preconditions through collective capacity building to promote more open market access among the economies in asean ; ( ii ) progressively reducing barriers to facilitate cross - border trade ; ( iii ) developing the market infrastructure and enabling environment to promote efficient and effective intermediation of cross - border financial flows ; and ( iv ) establishing the appropriate safeguards for financial system stability. progressive financial integration through this asean model has been a strategy that has augured well for the region, allowing for the greater integration at a pace that is based on readiness and strength of the financial sector. since 2007, asean has achieved considerable progress in its efforts to deepen financial integration. asean has undertaken gradual and sequenced liberalisation of identified financial services sub - sectors through the asean framework agreement on services ( afas ). five rounds of negotiations have been concluded, with the sixth round of negotiations expected to | 1 |
g gopalakrishna : the importance of customer service speech by mr g gopalakrishna, executive director of the reserve bank of india, at the β axis champions awards β, mumbai, 1 october 2013. * * * i acknowledge with thanks contribution of shri r kesavan, gm, dept. of banking supervision, rbi, central office in preparing this speech. dr. sanjiv misra, chairman axis bank, smt. shika sharma, md and ceo, sr. executives and ladies and gentlemen, i have great pleasure in being a part of an event that hosts and toasts achievers who have excelled and left an indelible impression on customers by dint of exemplary work and service. i must congratulate axis bank for instituting these awards and felicitating their personnel, which i am sure will spur them on to better their own record and possibly also inspire many more to follow the example. banking is essentially a service oriented industry and no service is deemed complete unless it is accompanied by satisfaction of the people who avail the service. customer satisfaction and customer protection are the hallmarks of banking service. regulators and supervisors across the financial world have built policy edifices on strong foundations of consumer protection and customer service. in this context, it is indeed a commendable initiative on the part of the bank to train the employee to focus on customer service and reward exemplary service rendered by employees. i am sure that the bank will reach even greater heights in customer service while simultaneously enhancing the skills of personnel in this area. attributes of customer service have changed over the years. customers are more aware, there is a predominance of masses seeking tangible action to ensure that their rights as customers are upheld. more importantly, customers are becoming increasingly aware of banking ombudsman schemes, legal channels of redressal, consumer courts etc. the same has also been made possible on account of leaps that information technology has taken over the last one decade with information on the above channels being available widely. banking penetration through use of technology and the increase in number of non β face β to β face transactions adds a different dimension to the customer care paradigm. banking has truly become 24 x 7 locally and globally as well. these attributes have brought in more challenges than we had earlier assumed and banks have been compelled to not only live up to contemporary expectations but also look at enhancing skill - sets in information technology, human resources and transactional analysis for meeting future needs. it is not without any | nout wellink : fundamentally strengthening the regulatory framework for banks remarks by mr nout wellink, president of the netherlands bank and chairman of the basel committee on banking supervision, at the korea - fsb financial reform conference : an emerging market perspective, seoul, 3 september 2010. * i. * * introduction and background let me start by thanking our korean hosts and the financial stability board for organising this conference. the timing could not have been better as the basel committee has entered the final phase of completing its reform programme. it is especially fitting that this meeting is hosted by the republic of korea, given the importance and continuing growth of the south korean economy, its membership on the basel committee, and of course its key role as current chair of the g20. as you know, the basel committee β s reform programme will be presented to the g20 leaders for their endorsement when they meet here in november. a number of commentators have questioned whether the basel committee β s reforms of global banking standards are really necessary for countries that neither β caused β the crisis nor were directly affected by it. however, i should point out that all were affected indirectly through the global economic downturn. this includes emerging market economies. to me, at least, it is clear that we all have a lot to learn from both the recent and past financial crises. history has shown that crises have emanated from all regions of the world and have a range of causes. none of us knows what will be the source of the next crisis. what we do know, however, is that in a dynamic, ever changing global economy, there will be future crises and that it will be hard to predict them in advance. moreover, as banks are at the centre of the credit intermediation process, it comes as no surprise that the deepest and most prolonged downturns occur when the banking sector ceases to perform its central role in the economy. we therefore must increase the resilience of the banking system to financial and economic shocks, in particular through higher capital and liquidity buffers, but also through a more resilient infrastructure. we also must change incentives in areas such as governance practices, compensation and the moral hazard associated with too - big - to - fail institutions. this is the best form of preparation and will contribute to increasing our long term growth and welfare. the reforms of the basel committee are intended to address these identified shortcomings by promoting a more resilient banking sector that can support more sustainable growth | 0 |
at all possible to unwind globalization without seriously affecting national economies and the global economy, the objective being some trade - off between a little gdp for greater income equality. the β big ideas β might be out there, but they β re buried in a blizzard of abstractions, qualifiers, pros - and - cons, excuses and rationalizations, the truly annoying and pathetic deflections, even counter and counter - counter arguments. the clash between economics and politics is assuming a dimension that does not augur well for the world economy. the ratios of world trade to world output have been flat since 2008, making it the longest period of stagnation since world war ii. does it suggest that globalization is no longer driving world growth? has globalization reached its limit? if the process is coming to an end, or even going in reverse, it would not be the first time since the industrial revolution, in the early 19th century. two phenomena might threaten democracy : continuing weak productivity and what has come to be known as secular stagnation, a terminology coined by larry summers. we commonly 2 / 7 bis central bankers'speeches understand democracy as a system that takes scores of voters to say β yes β before reforms are implemented. democracies also have loud voices. those are voices that wait for a fight to break out and take a swing at the guy they have always wanted to hit. whether or not the guy had anything to do with starting the fight is beside the point. it takes only a few loud voices that cherish democracy to say β no β to stop the reforms. press the β no β button for reforms, the path to economic recovery becomes unnavigable. no wonder it takes long for democracies to come out of recession. a blistering cocktail of unsettling forces is militating in most societies. the vast majority of people finds the word β austerity β abhorrent. we are not exempt. voices, particularly the louder ones, suffused with vice and folly with some form of addictive delirium, are more about β taking β than about β making β. it leaves one rather uninspired when it comes to the β mental tone β underlying people β s actions. unlike in the distant past, more precisely in what used to be called a peasant society, a man is no longer sized up by the number of children he has. he is today sized up by the number of rolex watches and number of t | harvesh seegolam : keynote address - grant agreement keynote address by mr harvesh seegolam, governor of the bank of mauritius, at the signature of grant agreement between the regional centre of excellence and the organisation for economic cooperation and development, balaclava, 18 may 2023. * * * dr. carmine di noia, our special guest from the oecd, director of finance and enterprise affairs, oecd first deputy governor of the bank of mauritius and chairperson of the fsc second deputy governor of the bank of mauritius director general, independent commission against corruption chairperson of information and communication technologies authority board members of the bank of mauritius board members of the financial services commission chief executive of the fsc chief executive officers of industry associations chief executive officers of banks and other institutions members of the rce governing board members of the press ladies and gentlemen all protocols observed good afternoon it gives me immense pleasure to address this forum today for the signature of the second grant agreement between the regional centre of excellence ( rce ) and the organisation for economic cooperation and development ( " oecd " ). i am deeply honoured to witness this momentous event as chairperson of the governing board of the rce. the gratification i have in seeing that the rce, an institution, the setting up of which was done by me in my then capacity of ce of the fsc, in 2019 is living fully to its expectations is even more overwhelming. i would like to congratulate the rce team on their dedication to establish the institution as a reference in our region. the genesis of an rce for the region is found in the 2018 / 2019 budget. at that time, the creation of a regional centre of excellence was announced with the objective of strengthening and supporting effective regulation, sound corporate governance and good conduct in the southern and eastern african regions. this was followed by the signature of a memorandum of understanding between the government of mauritius and the oecd in september 2018. the rce was launched in april 2019 and is the first of its kind institution to collaborate with the oecd on the african continent. ladies and gentlemen, 1 / 4 bis - central bankers'speeches capacity - building institutions abound in the world. but very few are tailored to the pragmatic elements that are pertinent to the work of financial regulators and law enforcement agencies. the latter often has to grapple with a number of complex objectives, ranging from macro - objectives, namely : | 0.5 |
. eisenschmidt and t. vlassopoulos, ( 2016 ), β the impact of negative interest rates on bank balance sheets : evidence from the euro area β, ecb mimeo. bis central bankers β speeches question whether the second leg of the transmission β from financial conditions to real activity and inflation β is still intact. of course, the fact that this easing has occurred concurrently with the economy receiving new shocks poses a fundamental identification problem. or put another way, we have to be careful to avoid assessing monetary policy by β looking out the window β. 11 this describes the process of eyeing where certain key variables are today compared with the beginning of the policy, and then concluding that the policy has succeeded or failed. but this is not how rigorous economic analysis is conducted. given that the economy is never static, one always needs to assess a counterfactual scenario ; what would have transpired without the policy action. in that context counterfactual analysis has also helped us to measure the impact of our measures along another dimension : their macroeconomic propagation. our impact assessment on gdp and inflation spans a large and diverse suite of models, reflecting alternative modelling traditions, and capturing different transmission channels, in particular in relation to the impact of asset purchases. some models mainly draw on empirical time - series methodologies, while others draw on ( semi - ) structural macro models, with an important role for financial frictions, and on macro - finance term structure models. intuitively, the various model assessments share the idea that the relevant variable in modelling the impact of the app is the expected future path of central bank asset holdings ( i. e. the evolution of the β stock β of assets ) under the programme. in some models, the full path of the central bank portfolio enters the decision problem of economic agents upon announcement of the programme. this is consistent with empirical evidence from event studies which supports the view that financial markets respond on impact to the announcement of asset purchases, and even prior to the announcement when expectations of a programme build up. at the same time, for robustness considerations some models have entertained the alternative assumption that asset purchase programmes affect the behaviour of economic agents only gradually. such effects are compatible with a situation in which financial markets learn over time the implications of the central bank β s asset purchases, or in which such purchases trigger changes in local liquidity conditions. a related distinction across those model assessments is how this expected future path of asset purchases is mapped into the macroec | on a wide array of financial assets, implying a broad - based easing of financial conditions. the primary instrument in this regard is the app, which compresses the term premia which are incorporated in risk - free interest rates and thereby encourages investors to move up in the maturity and risk ladder and shift to other, non - targeted asset classes. the negative dfr in turn discourages selling agents from hoarding the additional liquidity, speeding up the process of asset reallocation and reinforcing the downside pressure on the long end of the term structure of interest rates. second, via the direct pass - through channel, our package eases borrowing conditions in the real economy by easing banks β refinancing conditions and supporting non - financial corporates directly. this channel is perhaps most prominent in the case of the tltros, which through built - in incentive mechanisms ensures that the funding cost benefit is passed on to borrowers. it also applies to our purchases of abs and covered bonds, which encourage banks to increase their supply of loans that can be securitised, and more recently our decision to start a corporate bond purchase programme. in addition, substitution effects induced by the tltros can result in a reduction in the supply of bank bonds, which translates into lower yield on bank bonds for the financial sector as a whole. in parallel, portfolio rebalancing supports this direct pass - through channel, as lower term spreads on public securities encourage a shift in the composition of banks β portfolios toward other types of exposures with a higher risk - adjusted return, especially loans. the resulting increase in credit supply lowers its cost. third, via the signalling channel, the policy package triggers a downward revision of market expectations for future short - term interest rates, which aids portfolio rebalancing and direct pass - through effects by further flattening the risk - free curve. in the case of the dfr, our forward guidance that rates will stay at present or lower levels for an extended period of time β and beyond our net asset purchases β tilts downwards the probability distribution of the expected path of future rates. the signalling channel also helps stabilise inflation expectations, thereby preventing an unwarranted tightening in real long - term rates with negative effects on investment and consumption. impact on financial conditions how do we know that these positive effects of our policy package are indeed occurring and that they are sufficiently powerful to achieve the desired outcomes? in terms of financial conditions, the evidence | 1 |
##9. 03 50. 78 226. 36 1, 848. 21 3, 230. 81 3, 765. 36 5, 688. 13 2, 898. 31 65. 96 33. 91 147. 65 219. 56 484. 17 29. 34 134. 42 466. 85 106. 08 182. 61 337. 13 845. 09 25. 79 633. 92 553. 81 137. 87 131. 75 354. 54 908. 7 605. 45 1, 007. 1 170. 98 89. 35 362. 11 1, 050. 32 30. 6 574. 61 831. 26 222. 85 96. 85 389. 97 1, 263. 04 44. 84 463. 86 1, 115. 01 2, 597. 47 2, 692. 12 3, 285. 07 3, 312. 67 - 733. 2 - 633. 34 - 1, 073. 24 - 2, 403. 06 414. 36 766. 98 261. 25 572. 68 293. 12 770. 47 122. 44 631. 55 1, 218. 48 467. 62 630. 43 396. 52 1, 353. 9 170. 93 539. 4 1, 701. 22 596. 87 697. 61 552. 44 1, 405. 42 600. 83 4, 626. 57 645. 49 577. 2 550. 37 2, 390. 15 195. 59 611. 87 2, 095. 44 623. 13 421. 89 295. 49 1, 425. 35 95. 22 656. 82 3, 418. 49 4, 777. 28 5, 698. 39 9, 597. 24 5, 613. 34 korea indonesia thailand malaysia china philippines singapore 1, 912. 08 407. 56 697. 66 344. 15 1, 363. 72 38. 3 1, 394. 51 1, 555. 06 394. 39 854. 72 505. 42 1, 990. 39 30. 54 1, 407. 47 1, 428. 16 459. 11 679. 22 561. 76 2, 077. 37 1, 415. 34 3, 244. 27 539. 4 613. 85 552. 64 2, 640. 18 36. | the robustness of the preliminary estimates has been challenged ( bernanke ( 2007 ), ihrig et al ( 2007 ) ). irrespective of the empirical underpinning, there are serious practical problems with including global economic slack in the day - to - day decision - making process, not least because the task of finding a meaningful measure of global slack seems daunting. in the light of all these arguments, how strong is the impact of globalisation on domestic inflation dynamics β as opposed to that of an improved conduct of monetary policy? to my mind, globalisation has arguably had some visible effect, but its strength does not live up to popular expectations. nonetheless, the effects of globalisation are an issue for central bankers be it because of increased model, data and parameter uncertainty, or, more generally, because the flattening of the inflationactivity trade - off is more of a double - edged sword than a clear - cut blessing. it should suffice to say that, in the eurosystem, we understand that the currently low inflation levels do not allow for complacency on our part. instead, we will continue to do our utmost in order to keep long - run inflation expectations solidly anchored. 2. 3 new keynesian models and money the new keynesian paradigm at its current stage leaves no role for monetary variables in the inflation process. in its standard form, it does not allow for an active role for monetary indicators in monetary policymaking, either as an important variable in the monetary transmission process, or as an indicator of future inflation. does that really mean that money no longer matters β and that it should not matter for monetary policy? no, clearly not. firstly, from an empirical point of view, there is plenty of evidence that monetary aggregates contain valuable information about risks to long - run price stability and the monetary transmission process. our own research ( schumacher / scharnagl ( 2007 ) ) shows that monetary variables help predict future inflation over and above the information content of economic factors included in traditional phillips curves. additionally, recent studies ( greiber / setzer ( 2007 ) ) support the assessment that the recent surge in house prices and loose monetary conditions are related phenomena. significant bidirectional links between money and housing can be identified for both the euro area and the usa. this proves that integrating money into our analytical framework delivers important and indispensable insights for monetary policy. secondly, from a modelling perspective, | 0 |
5 de octubre de 2017 presentation of the iii seminar in economic history banco de espana luis m. linde governor good morning and welcome to the banco de espana for our iii seminar in economic history. the seminars in economic history organised by the banco de espana were launched three years ago, in 2015. the first one was held on the occasion of the retirement of pedro tedde de lorca, who for many years was the member of the directorate general of economics and statistics in charge of the economic history programme and that, by the way, has been recently elected as a member of the spanish royal academy of history. last year, in october, we celebrated the second edition of the seminar. the main purpose of these seminars is to bring together economic historians from academia and economists from the bank to engage in research into economic episodes of the past with relevance for the economic problems of today. for many years the banco de espana has devoted substantial resources to research in economic history. this tradition goes back to the mid - 1960s when a project was launched to publish, in one volume, a series of essays tracing the origin and development of the banco de espana, one of the oldest banks of issue, originally established in 1782 as β banco de san carlos β. the result was el banco de espana. una historia economica and ensayos sobre la economia espanola a mediados del siglo xix, both published in 1970. a few years later, a group of researchers : rafael anes, carlos fernandez pulgar, diego mateo del peral, pedro tedde and gabriel tortella, undertook a far - reaching project on the history of the spanish banking system. the result was la banca espanola en la restauracion, published in 1974. since then, a number of books have been published by the bank of spain, sometimes in collaboration with commercial editors. to mention just two of these books : el servicio de estudios del banco de espana, 1930 - 2000 ; and un siglo de historia del sistema financiero espanol ( in spanish and english ). moreover, the early history of the bank has been covered by three volumes written by tedde de lorca : el banco de san carlos ( 1782 - 1829 ) ; el banco espanol de san fernando, 1829 - 1856 ; and el banco de espana y el estado liberal, 1847 - 1874. the banco de espana has also shown | unemployment rates are at a high. on the prices front, sluggish demand and labour market slack are strongly influencing areawide inflation developments. the growth rate of the harmonised index of consumer prices has stood at a level below 1 % since october 2013, with figures that have generally tended to surprise on the downside. as in the case of activity, the results of the projection exercise under way will allow for calibration of the effects on the current price scenarios and, in particular, on the risk β flagged by the ecb council at its recent meetings β that the area may become immersed in a prolonged period of too - low inflation. turning to the spanish economy, we are all mindful that the crisis that broke in mid - 2008 was of unprecedented depth and extent in our recent history and caused acute losses in activity and employment. fortunately, since the second half of 2013, the spanish economy has perceptibly been experiencing a recovery, which began with positive, moderate quarter - onquarter rates of change in gdp as from 2013 q3 and which has continued in 2014 to date. this recent improvement in activity rests on a broad set of factors : some, such as the drastic correction of the external imbalance, have been helping underpin production for some time ; others, such as the progressive normalisation of the financial environment, are more recent. bis central bankers β speeches here, both the easing of grave uncertainty, which at one point threatened the current configuration of the euro area, and the restoration of confidence in our banking system following the restructuring and recapitalisation drive undertaken, which culminated in january, have proved decisive. against this background, the contributions to activity of external demand and national demand are being re - balanced. national demand is showing a brisker pace of recovery than initially envisaged, based on the increase in household consumption and investment in equipment over the past two quarters, and on some slowing in the fiscal adjustment following the revision of the adjustment path last summer. in fact, household spending, in a setting of improved confidence resulting largely from the gradual improvement in the labour market and from some recovery in disposable income, is showing moderate growth, despite the fact that the necessary reduction of household debt is still exerting something of a contractionary effect on expenditure. further, investment in capital goods is looking buoyant, in light of the improved business climate and increased investment activity by exporting firms. the contractionary course of residential investment has slowed | 0.5 |
be explained by medical underwriting of the mortgage that justifies a higher loan - to - value ratio for a younger customer if their life expectancy is impaired. again this an area that risk functions should be watching. the most important risk factor, however, is the long - term path of uk house prices. plausibly the risk of a long - term correction in uk house prices has increased as houses have become less affordable and rental yields have fallen. in england and wales the ratio of median house prices to median individual annual equity release rebooted : the future of housing equity as retirement income, rob thomas and dr louise overton, april 2017 all speeches are available online at www. bankofengland. co. uk / speeches earnings has increased from 3. 6 times in 1997 to 7. 6 times in 2016. but economist david miles makes a reasonable argument that this ratio might continue to increase and i am not going to make any predictions. i will though make a couple of observations. first, simple projections suggest that equity release mortgage books could face difficulties in scenarios of flat, as well as falling, nominal house prices. second, uk experience is that although house prices do diverge across regions, they tend to move in the same direction. so insurers might not be able to diversify away the risk to any significant extent. third, the experiences of, for example, the japanese property market between 1990 and 2010 and the italian property market between 2007 and 2017 show that it is possible for house prices in an advanced economy to fall over a period of decades ( chart 6 ). the matching adjustment the other major influence on insurers β asset allocation since the introduction of solvency ii is the matching adjustment. the rationale for the matching adjustment is that annuity writers are buy - and - hold investors with locked - in funding. provided they match the cash flows of their assets to those of their liabilities, they should rarely need to sell assets prior to maturity. they are not therefore exposed to changes in the market price of credit risk in the same way as other investors. the matching adjustment allows them to benefit from this advantage in two ways. first, they do not have to hold capital against the full risk that credit spreads will move against them in the market ; second, they are allowed to discount their annuity liabilities at higher than risk - free rates, reducing their liabilities and therefore boosting their current available capital. for uk insurers, the matching adjustment | ##s consider first the main headwinds hampering growth. most obvious is the fiscal consolidation now underway in the uk. public sector spending, as a share of nominal gdp, is projected to fall by around 8 percentage points over the next 5 years. my central view is that the direct impact of this reduced spending, via the impact of lower government procurement and smaller transfer payments, is unlikely to derail the recovery. the spending cuts will certainly dampen growth. and some households and companies directly affected by the cuts could suffer significant hardships. but the substantial stimulus from monetary policy and the lower level of sterling should ensure that the recovery continues. the impact of the fiscal consolidation may be partially mitigated if it causes businesses and households to become less uncertain about their prospects and so behave less cautiously. but the reverse is also possible. in that regard, it is perhaps notable that, following a brief revival, measures of consumer confidence have fallen back since the spring of this year. the importance of keynes β animal spirits has been demonstrated all too clearly by recent events. although the recession was triggered by a financial crisis, the speed and severity of the downturn was greatly amplified by the accompanying collapse in confidence, as companies and families pulled back on spending and increased savings. more recently, the pickup in private sector spending has occurred alongside a fall in the household saving ratio and a stabilisation in company saving. a recent survey carried out for the bank provides some evidence on households β attitudes towards the fiscal tightening. 1 90 % of survey respondents said that they thought the fiscal consolidation would have some impact on them. perhaps surprisingly, a majority of these households said they had not yet taken any actions in response to the consolidation. but it β s clearly still early days in this process and there is a chance they will react more as the impact of the austerity measures increases. this is something that the mpc will continue to monitor carefully. a second headwind tempering the pace of progress is that uk banks are still not in a position in which they can lend normally. as many of you know only too well from your own experiences, the banking crisis led to a marked tightening in credit conditions, making it difficult for businesses and households to borrow. uk banks have made significant strides over the past year in strengthening both their capital and funding positions. however, the extent to which that has led to increased access to credit appears to have varied across different sectors of our society. for large businesses, conditions do appear | 0.5 |
policies the cumulative effects over half of a decade of the extraordinary actions by the federal reserve and other central banks will need to be unwound in the coming years, as progress toward economic recovery makes it necessary to withdraw our substantial monetary accommodation. in the normalizing of its policy, just as when loosening policy, the federal reserve will take account of how its actions affect the global economy. the taper tantrum episode notwithstanding, most emes have generally weathered the winddown of our asset purchases reasonably well so far. the actual raising of policy rates could trigger further bouts of volatility, but my best estimate is that the normalization of our policy should prove manageable for the emes. we have done everything we can, within the limits of forecast uncertainty, to prepare market participants for what lies ahead. some critics of our policies have argued that, by continuing for so long with quantitative easing, the united states fueled a global boom in asset prices and credit growth that could provide the seeds of the next financial crisis, with the removal of monetary accommodation serving as an eventual trigger. but i am much more hopeful. first, the federal reserve and other central banks are going to great lengths to communicate policy intentions and strategies clearly. given this, markets should not be greatly surprised by either the timing or the pace of normalization. in fact, it bears mentioning that, following the taper tantrum, when the fed started to taper its purchases, there was little reaction from markets. second, the tightening of u. s. policy will begin only when the u. s. expansion has advanced far enough, in terms both of reducing the output gap and of moving the inflation rate closer to our 2percent goal. thus, tightening should occur only against the backdrop of a strengthening u. s. economy and in an environment of improved household and business confidence. the stronger u. s. economy should directly benefit our foreign trading partners by raising the demand for their exports, and perhaps also indirectly, by boosting confidence see draghi and constancio ( 2013 ) and bank of england ( 2013 ). the success of forward guidance, of course, depends crucially on the ability of policymakers to make informative statements about their intentions without a formal commitment device. powell ( 2013 ) notes that emes with larger current account deficits experienced both greater depreciations of their currencies and larger increases in their bond yields in mid - 2013, suggesting that, while a reassess | fischer, stanley ( 2014 ). β financial sector reform : how far are we? β speech delivered at the martin feldstein lecture at the national bureau of economic research, cambridge, mass., july 10. fleming, j. marcus ( 1962 ). β domestic financial policies under fixed and under floating exchange rates, β international monetary fund staff papers, vol. 9 ( november ), pp. 369 β 80. fratzscher, marcel ( 2012 ). β capital flows, push versus pull factors and the global financial crisis, β journal of international economics, vol. 88 ( november ), pp. 341 β 56. fratzscher, marcel, marco lo duca, and roland straub ( 2013 ). β on the international spillovers of u. s. quantitative easing ( pdf ), β working paper series 1557. frankfurt : european central bank, june. furceri, davide, stephanie guichard, and elena rusticelli ( 2011 ). β medium - term determinants of international investment positions : the role of structural policies, β oecd economics department working paper series 863. paris : organization for economic cooperation and development, may. gagnon, joseph, matthew raskin, julie remache, and brian sack ( 2011 ). β large - scale asset purchases by the federal reserve : did they work? ( pdf ) β federal reserve bank of new york, economic policy review, vol. 17 ( may ), pp. 41 β 59. glick, reuven, and sylvain leduc ( 2013 ). β the effects of unconventional and conventional u. s. monetary policy on the dollar ( pdf ), β working paper series 2013 β 11. san francisco : federal reserve bank of san francisco, may. hamilton, james d., and jing cynthia wu ( 2012 ). β the effectiveness of alternative monetary policy tools in a zero lower bound environment, β journal of money, credit and banking, vol. 44 ( february ), pp. 3 β 46. hanson, samuel, and jeremy stein ( forthcoming ). β monetary policy and long - term real rates, β journal of financial economics. hausman, joshua, and jon wongswan ( 2011 ). β global asset prices and fomc announcements, β journal of international money and finance, vol. 30 ( april ), pp. 547 β 71. hume, david ( 1742 ). β of interest, β political | 1 |
2018. aiming to prompt the convergence of inflation, in the medium term, towards rates of increase in prices that are below but close to 2 %. backing this trajectory is the foreseeable progressive widening of the output gap and the increase in labour costs observed in recent quarters. at this moment, once the eurosystem has ceased to acquire new assets under its purchase programme, the expansionary stance of the common monetary policy at the start of this year has been mainly determined by two developments : the ecb governing council β s announcement that interest rates would remain unchanged at least until the summer of 2019 ; and the reinvestment over a prolonged period ( in any event, for the time needed to prompt the sustainable convergence of inflation on its medium - term reference ) of the financial securities acquired under the ecb β s quantitative easing programme. 1. 2 the spanish economy : developments and outlook in this setting, in 2019 the spanish economy will remain on the expansionary course on which it embarked six years ago. but there will be a further easing in its growth rate, to 2. 2 %, compared with the increase of 2. 5 % estimated for 2018 ( see table 2 ). the expected slowdown is largely in response to the weaker international setting i mentioned earlier. nevertheless, the spanish economy has, in recent quarters, proven significantly resilient, slowing to a lesser degree than our main area of reference, namely the euro area. the contributing factors include, among others, the boost to household income arising from the entry into force, in the second half of 2018, of certain measures included in the draft budget for 2018. the continuation of the current upswing in 2019 will continue to rest on the expansion of domestic demand ( see chart 1 ). underpinning this will be : financial conditions that are expected to remain relatively favourable ; an improvement in the financial position of households and firms ; the gains in competitiveness observed throughout the recovery ; and the strength of the employment creation process. it is expected that employment creation will slow this year, partly owing to the lesser pace of activity, but also to the increase of more than 22 % in the national minimum wage. in any event, according to the banco de espana β s projections, the annual growth in numbers employed will stand at around 1. 6 % in 2019, providing for further reductions in the unemployment rate, to around 14 % at end - 2019 ( see chart 2 ). all told, there are grounds for a progressive slackening of | has both advantages and disadvantages, and how they each materialize differs depending on the phase and time horizon. after considering all these factors, the bank has concluded that, in the current time of high uncertainty regarding the future prospects of overseas economies, due attention is necessary to the risk that the yen β s appreciation will dampen future growth through a decline in exports and corporate profits as well as a deterioration in business sentiment. this is the very reason that the bank has embarked on monetary easing measures twice since this summer. the most debated issue at present with regard to the yen β s appreciation is the possibility that japan β s firms will accelerate their shift to overseas production, which may result in a hollowing - out of domestic industries. the trend of a rising share of overseas production among japanese firms can be basically understood as a part of firms β growth strategy to place production sites near markets that are experiencing rising demand, against the backdrop of a global shift of growth centers toward emerging economies. having said that, the timing of this global shift is also affected by foreign exchange rate developments. as you may recall, in the phase of significant yen depreciation toward the middle of the 2000s, the profitability of domestic production improved dramatically and firms started to refocus on domestic production while pausing their shift to overseas production. however, as the aftershocks of the collapse of lehman brothers and impact of the sovereign debt problem in europe have persisted, the yen has stayed at a higher level than the period before these problems emerged. given this development, firms are returning to the strategy of shifting production overseas that they had been pursuing in response to the expansion of global markets. therefore, during this period of transition in business strategy, the pace at which production is shifted overseas will generally accelerate compared to the past average. during this period, if the pace of this shift increases excessively, it may be difficult to create replacement job opportunities at home at a similar pace. moreover, if core companies and factories with long - term competitiveness move overseas, they are less likely to return home even with a correction in the yen β s appreciation. therefore, as well as the risks that i have pointed out so far, the impact of the recent appreciation of the yen on japan β s economy warrants due attention. at the same time, the appreciation of the yen also has advantages, including lower import costs for energy and materials, which increases the purchasing power of firms and households. after the earthquake, the trade balance turned negative due | 0 |
achieve full compliance with the new minimum capital requirement. we have therefore intensified monitoring of the process as we bring closure to the recapitalisation process on december 31, 2018. 21. recent developments in the banking sector reflect gains from the on - going reforms in the sector, which are expected to further increase after the recapitalization process is completed in december 2018. in addition to making profits, banks now have more assets with capital adequacy ratios well above required regulatory levels. it is therefore not surprising that the improving banking sector stability partly accounted for standard and poor β s recent upgrade of ghana β s long - term rating to β b β from β b - β with stable outlook. 22. ladies and gentlemen, while acknowledging that some critical issues remain to be addressed ; our economy has witnessed a significant turnaround in the macro indicators. the restoration of macroeconomic stability should provide some basis for improved financial intermediation to boost economic activities in the nearterm. page | 12 23. the stable macroeconomic environments occurred on the back of strong fiscal consolidation and prudent monetary policy providing an anchor to the disinflation process. in particular, improvements in interest rates are beginning to impact positively on availability of credit to households and the private sector to support growth. 24. in the course of the year, we experienced some headwinds from external sources on the domestic foreign exchange market, similar to many emerging markets. in particular, the shift to monetary policy normalisation in the u. s. led to rising yields and portfolio reversals especially in emerging markets, which triggered volatility in most currency markets. to a large extent, these pressures have moderated and the local currency has been relatively stable. the bog will continue to carefully monitor the external environment and other related factors with the goal of ensuring stability in the currency. 25. the gains achieved in macroeconomic stability, together with implementation of other policy initiatives, will provide some impetus to economic growth. banks, therefore, must position themselves to scale up their support for private sector - led growth. page | 13 what next for the banking industry after recapitalisation? 26. madam president, as we take stock of what has become a very engaging past 18 months, allow me to share some perspectives on how we see developments in the banking sector in the coming year : 27. even though we have made significant strides and seen improvements in the soundness and stability of the banking sector, there is still scope for improvement, | . the transition plans of financial intermediaries ( banks and institutional investors ) can represent a powerful tool both for managing climate risks and for steering the economy on a sustainable path. however, we are moving our first steps in this area. in what follows i will discuss two issues and draw some conclusions. 2. current vs expected emissions an intermediary can implement a net zero transition plan in many ways. to simplify, consider two opposite alternatives. the first would entail changing the composition of its portfolio by moving from high to low carbon intensity sectors / firms, identified based on their current emissions. this is the so - called β exclusion β strategy, according to the usual taxonomy of sustainable investment. 4 the second ( the so - called β best - inclass β strategy ) would entail overweighting firms that, despite being carbon intensive, have committed to an ambitious and credible decarbonization plan over the coming decades. the first approach, if applied on a vast scale, would suffer from a fallacy of composition : it would be feasible for the individual intermediary, but not at the aggregate level, short of a β miracle β in the form of a technological breakthrough allowing carbon intensive firms to transition without financial support, or a quick and radical change in households consumption patterns that causes a fall in demand for high carbon products and services. the second approach avoids this problem and appears capable of providing carbon intensive firms the finance they need to implement their transition plans. figure 1 reports data for eu listed non - financial companies, aggregated by sector. for each sector, the horizontal axis measures the current carbon intensity ; the vertical axis reports the expected decline in carbon intensity over the next decade, as envisioned in each firms β published commitments. the figure shows that firms in the more carbon intensive sectors plan to reduce their emissions relatively more aggressively. this suggests that these firms, arguably the most exposed to transition risk, will need substantial flows of finance in the coming years for their transition plans to succeed. the figure also highlights that financial firms could face a difficult choice : in the short - to - medium term financing the transition might even entail an increase in the carbon footprint of their portfolios. while this might seem at odds with a net zero pledge, it could be worth doing. consider e. g. firms operating in the business of power generation, often characterized by very high emissions. their investment choices will global sustainable investment alliance ( 2021 ), β global sustainable investment review β. be key to | 0 |
00 am 12 : 00 pm 1 : 00 pm 2 : 00 pm 3 : 00 pm 4 : 00 pm 5 : 00 pm 8 : 00 am 9 : 00 am 10 : 00 am 11 : 00 am 12 : 00 pm 1 : 00 pm 2 : 00 pm 3 : 00 pm 4 : 00 pm 5 : 00 pm 8 : 00 am 9 : 00 am 10 : 00 am 11 : 00 am 12 : 00 pm 1 : 00 pm 2 : 00 pm 3 : 00 pm 4 : 00 pm 5 : 00 pm 8 : 00 am 9 : 00 am 10 : 00 am 11 : 00 am 12 : 00 pm 1 : 00 pm 2 : 00 pm 3 : 00 pm 4 : 00 pm 5 : 00 pm 15, 000 2 / 2 / 2018 2 / 5 / 2018 trace volume ( lhs ) 2 / 6 / 2018 2 / 7 / 2018 market depth ( top 3 levels, rhs ) source : board staff calculations, based on trade reporting and compliance engine ( trace ) data from the financial industry regulatory authority ( finra ) ; brokertec. volumes are over five - minute intervals. millions of dollars millions of dollars february 2 - 7, 2018, intraday market depth and volume figure 7 average intraday volume per five - minute interval 3 : 00 to 3 : 05 pm billions of dollars dealer - to - client ( dtc ) dealer - to - dealer ( dtd ) interdealer broker ( idb ) note : key identifies regions in order from bottom to top. source : board staff calculations, based on trade reporting and compliance engine ( trace ) data from the financial industry regulatory authority ( finra ). sample is from august 1, 2017, to july 31, 2018. volumes are averaged over five - minute intervals. figure 8 average daily volume by settlement t + 0 : 4 % billions of dollars t + 1 : 83 % t + 2 t + 3 t + 4 t + 5 > t + 5 t + 0 t + 1 source : board staff calculations, based on trade reporting and compliance engine ( trace ) data from the financial industry regulatory authority ( finra ). sample is from august 1, 2017, to july 31, 2018. | of my portfolio? indeed, the special skills of banks in evaluating and taking credit and market risk is what banks have leveraged in taking part in the financial revolution spawned by the technical revolution. nonetheless, the nature of the newer products and the relationship with counterparties have meant that risks now manifest themselves in a different way and that banks can modify their risk exposures much more rapidly than ever. technology and the enhanced ability to capture and use data have changed risk taking and its management in several areas : securitization, credit scoring, and modeling for pricing and capital allocation, to name three. but no finer example of the revolutionary changes made possible by technology can be found than derivatives. banks and other creators of derivatives can now slice and dice risks associated with a wide spectrum of underlying assets. derivatives can be used to hedge risk for the bank or its customers. examples include interest rate swaps designed to make counterparties more comfortable with their interest rate exposures and credit derivatives designed to reduce correlations of risk in a loan portfolio. of course, either of these instruments can be used to take risk if the holder opts to hold the uncovered exposure, avoiding the cost of acquiring the underlying assets. moreover, a bank can change its position quickly - - limiting a loss, diversifying or hedging a risk, or closing out a position. derivatives, of course, do more than allow the taking or hedging of risk. they also permit the holders to combine and separate risks to mimic virtually any financial activity. they thus limit what regulators can prohibit, blur distinctions between instruments regulated by different regulators, and virtually eliminate functional and other distinctions among commercial banks, investment banks, insurance companies, and other financial institutions. supervising the future financial services holding company when it comes to considering how technology and new products have affected supervision - - especially of the future financial services holding company, with its wider powers - - i must begin by repeating an earlier comment : banking organizations are still in the risk business - taking it, managing it, profiting from it, and when they make the wrong decision or have bad luck, bearing losses and perhaps even failing. and the basic risks still are credit and market risks. the same expertise banks used for old - fashioned loans and their funding is still what they do for derivatives, securitizations, and credit scoring. that having been said, however, one must quickly add that the new instruments and procedures raise real questions about both managing and supervising risk by instruments and / | 0.5 |
an address by francois groepe, deputy governor of the south african reserve bank, at the actuarial society banking seminar the maslow hotel, sandton 2 august 2017 bank - wide stress testing as a risk management tool members of the actuarial society, ladies and gentlemen. thank you for the invitation to address you at this third actuarial society banking seminar. the south african reserve bank ( sarb ) would like to congratulate the actuarial society of south africa on its efforts to build expertise in banking β and on becoming a world leader in this regard. your initiative to introduce a banking fellowship coupled with allowing actuaries to qualify as banking actuaries is commendable and could make important contributions to improving the resilience and stability of the domestic banking sector. my address today will focus on stress testing and how it is being applied as a risk management tool. i would also like to share the progress the sarb has made and the methodologies it has applied in its approach to stress testing the south african banking sector. stress testing forms part of the macroprudential monitoring framework applied by the sarb in fulfilling its now - expanded mandate of protecting and enhancing financial stability, in addition to its price stability mandate. as you are all aware, the mandate of the sarb, specifically its primary objective and independence, as entrenched in the constitution, has come into sharp focus recently. the primary objective of the sarb is stated in the constitution : β protect the value of the currency in the interest of balanced and sustainable economic growth. β this objective and the independence page 1 of 9 provided to the sarb in the constitution can only be changed by a two - thirds majority of the members of parliament ; thereafter any such change would need to be ratified by the constitutional court. in this way, the courts protect the sarb against any unlawful encroachment of its independence. furthermore, the notion of a central bank as a public institution, with the goal of promoting monetary and financial stability in the interest of the general public, is remote from the traditional concept of a commercial company with a profit motive. central banks have been structured by their respective governments to suit publicinterest ends. the shareholding structures have been retained in some cases, including by the sarb and in various others, such as the central banks of belgium and switzerland. but the inconsistencies with the shareholding of private companies necessitated a realignment of the rights and powers of shareholders | to explore the areas where we can work together to build a stronger nation. but actions speak louder than words. we call on the philippine business community to take a bigger stake in the country β s development. β¦ build on the reform platform and favorable economic environment that we have worked hard with the government to create by taking the next steps where entrepreneurial dynamism drives greater economic gains. in summary, economic and fiscal achievements in 2006 have created a positive momentum for our country. a consistent implementation of reform measures by the government, particularly in the area of revenue generation and debt and expenditure management, coupled with a stable monetary environment and healthy banking sector, will support the government β s fiscal, growth and other macro and microeconomic targets for 2007. the tide is rising and i believe it will continue to do so for some time. now we must all row together in the same direction to ensure steady progress and a forward direction, even if the currents try to move us in a different direction or hinder our forward progress. we have a unique opportunity to make sure the tipping point lifts the boat, not tips it over. i am confident we are sailing in the right direction. thank you. | 0 |
. even more encouraging are the sustained increases we have witnessed in this sector. after a mediocre performance from mid - 2011 to mid - 2013, the index has now been positive for nearly 18 consecutive months, with the only aberration in february 2014 during the depths of our severe winter weather. our index is often viewed as a useful indicator of national manufacturing activity, and indeed the national ism manufacturing index has also shown solid performance over the past 18 months. the labor market has also strengthened over the year. employers added jobs at an average rate of 229, 000 per month in the first 10 months of the year, which is 18 percent higher than the rate in 2013, and it β s the highest we have seen at any point in the recovery. this acceleration in job growth has helped bring the unemployment rate down to 5. 8 percent as of october, compared with 7. 2 percent a year ago. over the course of this recovery, the unemployment rate has fallen from a peak of 10 percent in october 2009 to 5. 8 percent today. other measures of unemployment have also declined. for example, the measure called u6, which includes marginally attached workers and those working part time for economic reasons, has fallen from its peak of 17. 2 percent to 11. 5 percent. inflation, for the moment, remains well contained. the personal consumption expenditures, or pce, price index, the measure of inflation preferred by the fomc, registered a 1. 4 percent increase over the 12 months through october. it is running somewhat below the fomc β s stated longer - term target of 2 percent, but it remains above the level that should stoke concerns of sustained deflation. falling energy prices are generally good news for consumers and a favorable development for the economy going forward. in the short term, the decline in the relative price of energy will show up in lower headline inflation, but as energy prices stabilize, headline inflation will increase. policymakers tend to look through such volatile and transitory price changes to assess the underlying trend in inflation. the core pce index, which excludes food and bis central bankers β speeches energy, is a bit higher than the overall measure, increasing 1. 6 percent over the 12 months through october. other measures of inflation, including those that attempt to reduce the weight given to large outliers in any given month, all tend to suggest that inflation is running between 1. 5 percent and 2 percent. given the precision with which we can | of taking a longer - term view in setting monetary policy. we live in a 24 - hour news cycle that focuses a lot of time and energy on analyzing the tea leaves from the daily onslaught of new economic data at our disposal. yet, i believe it is a mistake for policymakers to focus too intently on the most recent numbers to justify a policy decision. our data are always noisy and often subject to substantial revision, as we just witnessed with last week β s gdp revisions and as we see regularly with the monthly employment report. instead, we must focus our attention on the underlying trends and the likely path of the economy over the intermediate to longer - term horizon. bis central bankers β speeches one reason why policymakers must think long term is that the effects of monetary policy actions on inflation and employment may not be felt for many quarters and maybe years in the future. thus, the near term path of the economy is unlikely to be altered in any significant way by today β s policy choices. we must look further ahead in assessing the appropriate stance of monetary policy. of course, there is a great deal of uncertainty about the future and that too has implications for how we should approach policy. i will begin with a brief overview of the economy as one policymaker sees it as we near the end of 2014. economic conditions over the past year, we have seen encouraging signs in the economy. the most recent estimate of annualized real gdp growth in the third quarter was 3. 9 percent, which followed strong growth in the second quarter of 4. 6 percent. taking a longer view, growth from the third quarter of last year to this year was 2. 4 percent. but this includes a negative 2. 1 percent growth rate in the first quarter of 2014 that was a consequence of a severe winter and was largely transitory in nature. we are seeing continued strength in personal consumption, especially in durable goods, as well as business fixed investment, which marked the strongest two quarter growth in investment by businesses in nearly three years. gdp growth has averaged 2. 3 percent over the 21 quarters of the recovery since mid - 2009. that is a half point below the 5 - year growth rates measured during most of the 2000s before the recession, which is, in part, why this recovery is often seen as being moderate or modest from an historical perspective. nonetheless, we have seen a sustained improvement in the manufacturing sector. the november reading from the philadelphia fed β s manufacturing business outlook survey indicated very strong growth in manufacturing activity | 1 |
' speeches also, we collaborated with the uganda bankers'association ( uba ) to develop and establish the industry esg framework for the banking sector, including an esg reporting template and indicators we are launching today. you may recall that in october 2022, we conducted a survey to understand the financial sector's approach to esg sustainability. while a strong interest was evident - with nearly all institutions responding - a lack of consistency emerged. esg's meaning varied, with a focus primarily on inclusivity and environmental issues. this highlighted the need for clear direction. to achieve measurable progress and assess the industry's impact, a unified approach with policy guidance and capacity building is crucial. the industry esg framework directly addresses this need. it promotes a holistic and harmonized approach, ensuring measurable benefits for the sector and, ultimately, economic transformation. this framework signifies our commitment to embedding esg principles within the financial sector, driving positive change. the framework will guide our sfis in embedding esg principles into their governance structures, risk management processes, product offerings, and reporting practices. it will foster transparency, accountability, and a shared understanding of our sustainability commitments. the framework offers a unified approach for esg integration across the banking sector. however, individual institutions seeking international sustainability certification are strongly encouraged to do so. this pursuit strengthens sustainability efforts and enhances the resilience of sfis. as you are aware, this esg framework we are launching today is a culmination of extensive consultations and benchmarking against international standards and best practices. it has been contextualized to the ugandan environment, laying a strong foundation for achieving the sustainability goals of the banking sector. as we forge ahead on this transformative journey, successful implementation of the esg framework requires our collective commitment and collaboration. it is imperative that we : develop an esg taxonomy : establish a credible and transparent common language defining sustainability in our sector, addressing the risk of greenwashing. continuously review the esg framework : ensure its relevance and alignment with the dynamic operating environment. standardize esg reporting : create a reporting framework that sets clear requirements for institutions based on esg maturity, aiming for standardization across all banks. with the support of our partners, including abi finance, in developing comprehensive curricula and the uganda institute of banking and financial services ( uibfs ) in training, we can gain the momentum needed for successful implementation. 2 / 3 bis | depreciation. finally, recently, the dollar has strengthened against the major currencies as a result of expectations that america will be the first among the industrialized countries to raise interest rates. financial sector the latest quarterly data available is for september 2014 and this indicates that the banking system is financially very sound and well capitalized. asset quality has improved. the nonperforming loan ratio has declined from 6. 2 percent of the loans in march 2014 to 5. 3 percent of the loans in september 2014. banks β profitability has reduced partly as a result of loan provisioning and a slight drop in the net interest margin. the banks β total regulatory capital position remains very strong at 22. 5 percent of risk weighted assets as at end of september 2014 which is almost double the statutory minimum of 12 percent. the banking systems β bis central bankers β speeches average return on assets and equity declined to 2. 2 percent and 13. 1 percent respectively in the year to september 2014 from 3. 1 percent and 18. 8 percent in the previous 12 months. private sector credit with regard to private sector credit growth, since the start of 2014, private sector credit has recovered with annual growth increasing to 13 percent as of end of september 2014. the building and construction sector, trade and household loans continued to account for the bulk of the ps credit. the three sectors together ( building and construction sector, trade and household ) accounted for over 55 % of banking systems β outstanding credit to the private sector since february 2014. annual growth of ps credit during 2014 / 15 is projected at 15 percent. bis central bankers β speeches | 0.5 |
as the global code. it is, however, ultimately incumbent upon the industry to support and promote adoption of the code across the marketplace. i β d like to highlight a variety of initiatives underway to support this adoption. first, outreach and education regarding the code is critical and has been underway via events like this and ongoing engagement with industry associations. central bank colleagues and industry market participants here and abroad have been active in reaching out locally to raise awareness of the code. new and updated education tools are already in development to help further promote the code. as awareness permeates the market, these efforts will support better understanding and adoption of the code. second, industry market participants have expressed a desire for a mechanism, such as a public register, to make public their statements of commitment. discussions with industry suggest that multiple public registers may likely be established over time. i look forward to seeing how this work evolves. it will be important to understand how the code is being adopted across the industry. to this end, the gfxc is also developing a survey to help assess how the code is being applied following its publication. this survey can provide a baseline that we can measure against over time, and can help to assess how the code is filtering into the market, going forward. gfxc, evolution of the code and last look over the past two years, the industry has been very heavily engaged in global code efforts through the mpg and the regional foreign exchange committees ( fxcs ). the past two years have shown that the work of central banks and industry in partnership, at a global level, is productive in developing and supporting best practices. as such, while both the fxwg and mpg have fulfilled their mandate to develop the code, this spirit of central bank - industry partnership will be maintained, as will the code itself, in the future by the newly formalized gfxc. the gfxc reflects a significant expansion of cross - border and public - private sector efforts. it is a forum that brings together central banks and market participants via the fxcs β currently representing sixteen regions β to encourage collaboration and communication on fx - related issues, to exchange views on trends and developments in the fx market, and to promote and maintain the fx global code. in addition, the work to develop the code has led to the development of central bank - sponsored fxcs in new regions, some of which have already launched and others that are forthcoming. fxcs, including the one sponsored | questions and answers about the financial crisis β. national bureau of economic research, working paper no. 15787, february. gorton, ibid. subprime β e. coli scare β had effectively been transmitted far and wide across financial markets. let me turn now to the interventions used to combat the financial crisis. the fed knew much less back in the autumn of 2007 than we know now about how far and wide the financial crisis was to spread and the implications this would have for the real economy. the initial response by the fed was to use its traditional liquidity tools. on august 10, 2007, the federal open market committee ( fomc ) issued a statement indicating that the discount window was available as a source of liquidity to those firms that had access to the window. a week later, the fomc cut the discount rate ( the interest rate charged on discount window loans ) by 50 basis points ( a half of a percentage point ) and extended the available term for these loans from overnight to 30 days. given that the liquidity strains were affecting many firms that did not have direct access to the discount window, a key for this intervention to be helpful was that depository institutions would pass the liquidity on to those firms that needed it the most. using the earlier forest fire analogy, it was as if the fed could not drop water directly on the burning section of the forest ; rather, it had to drop the water on an adjacent section of forest and hope that somehow the water got to where it was needed. several problems became apparent with this strategy. first, few discount loans were being taken out. there is a history of β stigma β associated with borrowing from the fed β s discount window. given the high degree of uncertainty in the financial markets in the autunm of 2007, this stigma effect likely became amplified. second, given uncertainty about their own future liquidity needs, banks developed a strong β precautionary demand β for liquidity. this implied that they were less willing to lend out liquidity to other financial firms. finally, it was becoming increasingly difficult to assess the credit risk associated with lending to other firms even if only for short terms. to use a medical analogy, the progression of a fever can be measured by a person β s temperature. the progression of problems in the interbank lending market can be measured by the spread between libor and the overnight index swap ( ois ) rates for a given term. chart 7 shows the | 0.5 |
a short history let me say something about the monetary policy actions since the start of emu. i think it is useful to distinguish four distinct phases. the first phase, which was the early stages of emu, was characterised by a combination of factors that had already been affecting the countries joining the euro area in 1998, namely downward risks to price stability. this led the governing council to reduce its monetary policy rate from 3 per cent to 2. 5 per cent in april 1999. the second phase was the period between late - 1999 and late - 2000 which was characterised by strong inflationary pressures, largely through high oil prices and relatively rapid monetary growth. the governing council undertook a series of monetary tightening measures during this period, raising interest rates by a total of 225 basis points. the third phase was the period may 2001 to june 2003 when the euro area found itself in a period of subdued economic growth following a number of global shocks. with inflationary pressures abating, the governing council reduced interest rates by a total of 275 basis points between may 2001 and june 2003. this was followed by a lengthy period of slow economic recovery and market uncertainty. expectations for economic growth remained moderate with the governing council leaving interest rates unchanged at 2 per cent until december 2005. the fourth phase was the period since then which has seen uncertainty in global markets dissipate and the outlook for economic activity improve. the governing council has raised interest rates by 25 basis points on eight occasions between december 2005 and june of this year. remarks on current monetary policy stance let me now turn to the current monetary policy stance. our assessment throughout the last year and one - half was that the outlook for economic growth had improved and that the recovery would strengthen and broaden. this indeed has been what has happened. another of our consistently repeated messages has been the need to guard against inflation risks coming from various sources, such as high and rising oil prices, increased pass - through to consumer prices, the risk of stronger than expected wage developments and, in the medium - to longer - term, strong money and credit growth. our actions, in raising rates eight times, including the most recent increase, have been consistent with these messages. with respect to the outlook for interest rates, i would emphasise that our future decisions are not predetermined and there is no pre - commitment to any future policy action. our position is clear and has been consistent over time. as we indicated last week, we will monitor developments closely and act, as necessary, | njuguna ndung β u : putting banking at the centre of the economy β s sustainable growth remarks by professor njuguna ndung β u, governor of the central bank of kenya, at the opening of the kba 3rd annual banking research conference, nairobi, 25 september 2014. * * * the chairman, kba governing council ; members of the kba governing council ; banks β chief executive officers ; distinguished participants ; ladies and gentlemen : it is my honour and pleasure to join you this morning at this very important conference that focuses on the role of the banking sector in the economy β s growth. it is therefore my singular pleasure to be invited to open the kba third annual banking research conference and to make some remarks at its commencement. first and foremost, i would like to commend the kba for its consistency in hosting the annual banking research conference. this is further evidence that the banking industry is keen on having its operations and strategic focus informed by analytical work. this being the third annual conference, the body of knowledge that the process has generated is without a doubt going to be beneficial to all stakeholders. research and its output is a β public good β. the broader benefits arising from knowledge cannot be restricted to those who have a direct interest in the research. research that improves the policy environment benefits all and indeed the economy at large. this year β s conference theme of β putting banking at the centre of the economy β s sustainable growth β is an example of this point. several papers focusing on finance and economic growth have confirmed the causal relationship. it is on that basis that i consider this conference β s theme on sustainability of this relationship to be inspiring, given that it provides an opportunity for deeper reflection taking us beyond the general finance β growth nexus. the kenyan economy has an ambitious real output growth target of at least 10 percent to enable the realization of the aspirations of vision 2030. the high and sustained growth targets will only be achieved through increased investment and increased productivity. the banking industry must intermediate and provide the funding required for the investment but even more important is long - term finance with attractive terms. ladies and gentlemen : the presentations lined up for this conference give me confidence that we are embarking on a conversation that will lead to the consolidation of the gains to the economy from the dynamism of the banking industry. let me make a quick reflection over the five areas around which the conference presentations focus ; β’ firstly, increasing support for agriculture is important and in the right | 0 |
, price stability was entirely re - established from november onwards. this reversal forced the snb to take rapid and decisive measures to ease its monetary policy. in a series of five steps between october 2008 and march 2009, we lowered the target range for the three - month swiss franc libor and brought down the market rate from 3 % to 0. 25 %. thus, by markedly loosening the monetary reins, we aimed to trigger an easing of lending conditions and discourage investment in swiss francs. the volume of lending in switzerland continued to rise, albeit at a reduced pace, but credit lines granted to swiss borrowers were now less used. to date, the state of the bank loan market reflects a drop in demand and a slight tightening of lending conditions in connection with the decline of the economy, rather than an actual credit crunch. on the other hand, we have noted a substantial deterioration in financing conditions for companies on the capital market due to the prevalent mood of uncertainty and the shortage of liquidity. this is why we decided, on 12 march, to intervene in those market segments where the imbalances were most pronounced. in this delicate phase of worsening credit market conditions, our monetary policy strategy proved to be particularly well chosen. unlike most other central banks, the snb has made it its objective to stabilise a market interest rate β the three - month swiss franc libor, which serves as a reference for numerous commercial rates β rather than a rate reflecting central banks β short - term refinancing conditions for commercial banks. by keeping the libor well under control, we have managed to shelter the swiss market from the kind of degradation of credit conditions experienced by markets abroad. thus, the three - month euro libor, which had generally been 1. 5 % higher than the three - month swiss franc libor, saw its spread widen to 2. 2 % in 2007 and 2. 7 % in 2008. our policy of stabilising the three - month swiss franc libor therefore enabled us to at least partly shield the swiss economy from the repercussions of the international financial crisis. unfortunately, the effect of relaxing monetary conditions since last autumn in order to lower the libor was largely offset by the continuing appreciation of the swiss franc against the euro. between october 2008 and march 2009, our currency rose by nearly 10 % vis - a - vis the euro, which was particularly inopportune in a phase of rapidly declining inflation rates and the | the special needs of the market in 2008, we had to lengthen the term of our loans on several occasions, extending maturity to as much as twelve months. unlike other central banks, however, we saw no need to expand the range of eligible securities, since we already apply a very liberal policy, accepting top - rated securities denominated not only in swiss francs, but also in euros, pounds sterling, us dollars and other currencies. in 2008, the average amount of our repos rose by 53 % against the year before. despite the intensification of our repo operations, tensions on the money market increased throughout the year owing to the ongoing deterioration of the economic and financial environment, and reached their peak in autumn. a particular source of difficulties was the extremely strong demand for swiss francs coming from eastern european countries, where banks had granted swiss - franc - denominated loans on a massive scale, refinancing themselves on the money markets. since these banks have no access to our loans, they found themselves in a delicate position when the swiss franc money market dried up. the increased demand for swiss francs contributed to the rise in our interest rates, which we deemed undesirable from a monetary policy perspective. to satisfy demand from eastern european banks, we sought the support of the european central bank ( ecb ), to which we remitted swiss francs under a euros against francs swap arrangement. the ecb then transferred these francs to its counterparties. similar agreements β euros against swiss francs β were subsequently concluded with the polish central bank and the hungarian central bank, enabling them to conduct analogous transactions in their respective countries. moreover, to ensure a better distribution of francs across the market, the snb itself engaged in swaps with its counterparties. by the end of 2008, our supply of swiss francs to three central banks and a certain number of other banking institutions by means of swap transactions had reached a total of chf 50 billion. thus, the demand for liquidity was considerable across the board. the total amount of our loans more than tripled, climbing from chf 31 billion at the end of 2007 to chf 101 billion at the end of 2008. in parallel, as a way of enabling banks to place their liquid means with the snb in a form other than sight deposits, and of introducing a tool which would allow us to absorb large amounts of liquidity if need be, we issued snb bills for the first time on 20 | 1 |
debentures shall be made by the government or by any agency or institution referred to in subsection ( 1 ) of section 106, whether in pursuance of authority conferred by any written law or otherwise, unless the advice of the monetary board has first been obtained upon the monetary implication of the proposed loan or issue. β bis central bankers β speeches the exter report elaborates the thinking behind these sections : β in a small country like ceylon, it is clearly advantageous to place the responsibility for co - ordinating the activities of all government credit institutions in the monetary board of the central bank. the board determines monetary and credit policy in general, and should have some means of ensuring that the policies of other credit institutions conform. β he further clarifies : β the board should be able to co - ordinate both the borrowing and the lending and investment operations of such institutions. with respect to borrowing, co - ordination is necessary in order to prevent separate government agencies from competing with each other and β spoiling β the market, especially in the early stages of its development, and to make possible the formulation of a properly diversified pattern of interest rates and maturities for the entire government borrowing program. β those sections of the mla that i referred to, and the relevant annotations in exter β s report, strongly suggest that the central bank should play a dynamic role in the formulation of fiscal policy, particularly in relation to a significant part of fiscal policy β s sphere of influence, namely that of borrowing and lending. in that context, it may be safely argued that, whilst the overwhelming responsibility for monetary policy has to be assumed by the central bank, a sizeable part of the responsibility in relation to fiscal policy is also cast upon the central bank. fourth : exter explains the unique position of the governor, and the need for the governor to be independent. this position is assured by the fact that the governor is appointed for a 6 year term and cannot be removed from office, unless he has done any act, which in the opinion of the governor general, ( now, the president ), is of a fraudulent or illegal character, or is against the interest of the central bank. fifth : exter discusses the limitations of the central bank : once again, let me quote : β a central bank influences the economic life of a nation principally by monetary action. while such action can be tremendously effective under certain conditions, its limitations should be frankly recognized. thus, through its control | sizeable injection of long term foreign funds was given to the economy. it was only such an infusion that would allow us to maintain stability, as well as be able to have the much needed funds to keep the infrastructure development effort going. some financially savvy members of the opposition too, realized the significance of such a fund infusion into the economy, and tried their utmost to scuttle that effort. but, fortunately, we were able to defeat those endeavours, and raise the all important bond, and tide over the risky period. the infusion of the new funds immediately brought stability to the economy and also acted as an important stimulus for growth, with the new additional resources quickly filtering down into the economy. hence, as a result of the move, the fiscal framework was supported with the moderation of interest rates ; the monetary framework was facilitated with the stabilization of prices ; and exchange rate was supported by the buttressing of international reserves. mr. chairman, i believe that, some day when sri lanka β s economic history is being written, this 2007 infusion of us $ 500 million through the international sovereign bond, would be marked as a major β turning point β in our economic landscape. i also believe that the benefits of this land mark move has been of an enduring and permanent nature, as evidenced by the fact that, over the next 5 Β½ years, the government has been able to raise a further us $ 3 Β½ billion from international bonds, with the coupon rates tightening considerably each year. another benefit that this initiative entailed, was that it paved the way for several banks and corporates to also issue international bonds, thereby accessing savings from outside the country. by doing that, we had also been able to bridge the chronic savings / investment gap that has been regularly referred to by a never ending stream of experts since independence, as a major deficiency that was hampering growth in our economy. case study 3 : intervention to stabilize a systemically important bank the third case study that i would like to illustrate is the instance where the central bank and the ministry of finance teamed up to stabilize a systemically important bank that was facing a liquidity crisis in late 2008 / early 2009. mr. chairman, if we take our minds back to that period, in late 2008, we would recollect that the external environment, internationally and locally, had become even more hostile and highly uncertain. internationally, the global financial crisis had taken a major toll, with hundreds | 1 |
of internal auditors'professional standards focus on adding value by meeting the needs of management and the board. internal auditors add value by being effective independent assessors of the quality of the internal control framework and processes. auditors lose their independence when they perform management consulting roles for which they later will have to render an opinion. internal audit is one of the few corporate functions that has both the ability and the responsibility to look across all of the management silos within the corporation and make sure that the system of internal controls has no gaps and that the control framework is continually reviewed to keep up with corporate strategic initiatives, reorganizations, and process changes. when an auditor becomes part of management, the independent view is lost. external audit let's turn to the topic of quality assurance in the external audit process. as supervisors, we must take steps to encourage a high standard of professionalism among auditors. in some cases, this may mean undertaking an enforcement action against an accountant. the agencies are finalizing the accountant debarment rule, which will be one more tool we can use to correct errant behavior. however, before we do that, we should look at the lessons learned from some recent audit failures. the typical fact pattern in these failures indicates that some auditors are focusing on the form rather than the substance of transactions when making critical audit judgments. moreover, when looking at assurance services, such as the fdicia 112 auditor attestations, some auditors have a tendency to gloss over internal control deficiencies or simply ignore significant control deficiencies because they are " immaterial. " it is not meaningful for auditors to apply a financial statement concept of materiality to an attestation engagement on internal controls. from a supervisory perspective, we would consider the existence of a series of such immaterial deficiencies to be useful information in assessing the quality of the internal and external audit process. we need to change this mindset in the auditing community. some of this can be done through dialogue with the american institute of certified public accountants and the public company accounting oversight board, which we are doing. once auditors start to routinely report known deficiencies in internal controls, we should begin to eliminate the gap between what we expect an audit or attestation engagement to include and actual services provided by auditors. however, if we continue to find significant internal control deficiencies in safety and soundness examinations that the auditor knows about but fails to disclose, because they are judged to be | desks for particular asset classes, instead of at the firm level. the proposal would also introduce a standardized approach that is well - aligned with the modeled approach, for use where the modeled approach is not feasible. these changes would raise market risk capital requirements by correcting for gaps in the current rules. requiring banks to model market risk at the level of individual trading desks better reflects the observation that correlations across risks can change dramatically in times of stress. requiring banks to use a standardized approach for hard - - 8to - model risks is appropriate, in light of the weaknesses that were exposed in the 2008 financial crisis, when many firms did not have acceptable models for their risks. in addition, the proposal appropriately charges more capital for positions that are less liquid, in order to better capture the risks of illiquid trading positions. third, for operational losses β such as trading losses or litigation expenses β the proposed rules would replace an internal modeled operational risk requirement with a standardized measure. the proposal would approximate a firm β s operational risk charge based on the firm β s activities, and adjust the charge upward based on a firm β s historical operational losses to add risk sensitivity and provide firms with an incentive to mitigate their operational risk. one important question involves the size of institutions that the new risk - based capital rules should apply to, and i will recommend that the enhanced capital rules apply to banks and bank holding companies with $ 100 billion or more in assets. a threshold of $ 100 billion would subject more banks to our most risk - sensitive capital rules compared to the current framework, which applies to firms that are internationally active or have $ 700 billion or more in assets. this expanded scope is appropriate for two reasons. first, the proposed rules are less burdensome for banks to implement than the current requirements, since they don β t require a bank to develop a suite of internal credit risk and operational risk models to calculate regulatory capital. second, our recent experience shows that even banks of this size can cause stress that spreads to other institutions and threatens financial stability. the risk of contagion implies that we need a greater degree of resilience for these firms than we previously thought, as the losses posed to society by the failure of a given firm are greater, and the probability that another firm may be a - 9victim to another firm β s failure are higher. the enhancements to the capital rules should improve the resilience of these firms. importantly, the proposed adjustments would require banks with | 0.5 |
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