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and this, in turn, has encouraged greater financial inclusion for which i commend the local credit union movement. nonetheless, the growth and development of the credit union sector has taken place within a legislative framework that does not provide for formal prudential regulation and supervision. as you know, the present legislation governing the credit union movement – the co - operative societies act – dates back to 1971 and falls short of a prudential framework to protect members ’ savings and to help safeguard the integrity of the domestic financial system. i am reminded of the insightful words of independent senator subas ramkhelawan during his contribution last december to the debate on the securities industry bill. senator ramkhelawan indicated that “ financial regulation on the whole is like the building of a fortress, and it is important in the building of a fortress that all the walls must be equally fortified, because the marauders at the gate will always look for the weakest point to infiltrate ”. bis central bankers ’ speeches we have indeed seen the marauders at the gate, breaching the fortress of regulation, both in the insurance and credit union sectors. and we are still experiencing the painful emotional and financial costs to our citizens and to our economy. accordingly, i would like to take the opportunity this morning to speak about issues related to the new proposed regulatory regime for credit unions, which is expected to come into effect sometime in the second half of 2013. • first, i will explain why the central bank should be the prudential regulator for credit unions in trinidad and tobago ; • second, i wish to highlight the key principles underlying the proposed credit union regulatory regime, and the fundamental differences between the co - operative societies acts and the draft credit union bill ; and • finally, i will address some lingering concerns of the national credit union movement. prudential regulation of the credit union sector by the central bank ladies and gentlemen, many of you would recall that the cabinet decision in july 2005 to bring credit unions under the regulatory authority of the central bank was initially met with disquiet by the credit union movement. this uneasiness, perhaps rightly so at that time, stemmed from the fear that the central bank did not really understand the unique character of credit unions and would unfairly treat them just like banks. the fact that the original proposal to bring credit unions under the regulatory authority of the central bank envisaged a division of the movement by asset size did little to ease these fears. i am | ewart s williams : trinidad and tobago ’ s secondary market for government securities opening remarks by mr ewart s williams, governor of the central bank of trinidad and tobago, at the launch of secondary market for government securities, port - of - spain, 28 january 2008. * * * an important aspect of the mandate of any central bank and particularly a central bank of a developing country is the development of an active capital market. why? because an efficient capital market is an indispensable requirement for sustainable economic transformation. the reasons for this are well - known to you, i am sure, but let me simply re - iterate a few of them. an efficient capital market : • supports the mobilization of domestic savings by providing investors with alternatives for investment and risk diversification. • permits companies and governments to raise long term resources at lower cost. • promotes efficiency and competition in the financial system. • creates an avenue for the population to participate in the corporate sector and share in its wealth. there is a more or less widely recognized sequencing for capital market development and it goes like this : • it usually starts with treasury bill issues, to fund government ’ s short term financing needs and the formation of some kind of money market in which there is the trading of short term funds – a good example is the inter - bank money market. • the second stage is usually a primary government securities market where government issues bonds to help finance capital projects. in the early stages, government securities may be issued to a captive market – for instance to pension funds and insurance companies to help them meet statutory requirements. during this stage, the distribution process tends to be non - transparent and, in a seller ’ s market, at below - market interest rates. • as the economic transformation process evolves, governments seek to promote a third stage – that is the development of a rudimentary equities market. with these basic structures in place efforts are focused on refining and improving the infrastructure related to the government securities and equities market … until, there is a move to the third stage, that is : • the development of a secondary market in government securities and a bit later, a market for corporate securities and a derivatives market. these stages very often overlap and small developing countries seldom move beyond the state of primary government bond issuance and illiquid equity markets. we in trinidad and tobago are trying to move beyond the limitations dictated by small size to create a diversified capital market to facilitate the process of economic transformation and | 0.5 |
fairly recent trend, but one that clearly stands out, is the rapid advances in credit risk measurement and credit risk management techniques, particularly in the united states and some other industrialized countries. credit scoring, for example, is becoming more common among banks. some of the largest and most sophisticated banks have developed credit risk models for internal or customer use. asset securitization, widespread already in us capital markets, is growing markedly elsewhere and the same is true for the credit derivative markets. 4. against this background, market participants claim that the basle accord is no longer up - to - date and needs to be modified. as a general response, let me point out that the basle accord is not a static framework, but is being developed and improved continuously. the best example is, of course, the amendment of january 1996 to introduce capital charges for market risk, including the recognition of proprietary in - house models upon the industry ’ s request. the basle committee neither ignores market participants ’ comments on the accord, nor denies that there may be potential for improvement. more specifically, the committee is aware that the current treatment of credit risk needs to be revisited so as to modify and improve the accord, where necessary, in order to maintain its effectiveness. the same may be true for other risks. but let me first go into credit risk. objectives 5. before going on our way, we should have a clear idea of what our destination is. one of the objectives for this undertaking is, at least for supervisors, that the capital standards should preferably be resilient to changing needs over time. that is, ideally, they should require less frequent interpretation and adjustments than is the case with the present rules. equally desirable is that capital standards should accurately reflect the ( credit ) risks they insure against, without incurring a regulatory burden that would ultimately be unproductive. substantial differences between the risks underlying the regulatory capital requirements and the actual credit risks would entail the wrong incentives. these would stimulate banks to take on riskier loans within a certain risk category in pursuit of a higher return on regulatory capital. in order to obtain a better insight into these issues, banks ’ methods to determine and measure credit risk and their internal capital allocation techniques should be investigated. in doing so, however, we should not lose sight of the functions of capital requirements [ as discussed in the preceding session ]. 6. capital requirements foster the safety and soundness of banks by limiting leverage and by providing a buffer | yesterday ]. its attractive features are that it incorporates a judgement on the effectiveness of a bank ’ s risk management, puts greater emphasis on the incentives for a bank to avoid losses exceeding the limit it has pre - determined and reduces the regulatory burden. in my opinion, however, under this approach, too, a bank ’ s choice of a capital commitment and the quality of its risk management system still need to be subject to supervisory review. and there are a number of other issues that are as yet unsolved, e. g. the comparability across firms as the choice of the pre - commitment is subjective, the role of public disclosure and the supervisory penalties, which are critical to the viability of the approach. for these reasons, international supervisors await with interest the results of the new york clearing house pilot study. other risks 14. now, let me turn to the other risks. if one leaves aside the recent amendment with respect to market risks, it is true to say that the capital accord only deals explicitly with credit risk. yet, the accord provides for a capital cushion for banks, which is meant to absorb more losses than just those due to credit risks. therefore, if the capital standards for credit risk were to be redefined, an issue that cannot be avoided is how to go about the other risks. interestingly, awareness of, for instance, operational, legal and reputational risks among banks seems to be increasing. some banks are already putting substantial efforts into data collection and quantification of these risks. not surprisingly then that the basle committee will also be considering the treatment of the risks that are at present implicitly covered by the accord, such as those just mentioned and possibly including interest rate risk. in this process, it will be important to distinguish between quantifiable and non - quantifiable risks and their respective supervisory treatment. more specifically, the committee will have to consider whether it should stick to a single all - encompassing capital standard embracing all risks, including market risks, or to a system of capital standards for particular risks, i. e. the quantifiable ones, in combination with a supervisory review of the remaining risk categories. from a theoretical point of view, one capital standard might be preferable, since risks are not additive. given the present state of knowledge, however, one all - encompassing standard for banking risks that takes account their interdependencies, still seems far away. as the trend thus far has been towards the | 1 |
because inflation was so high. also, in the longer run, what is crucial for the real income of the savers is the state of the economy. a central bank has no influence on factors which determine the structural strength of an economy and thus the real, or inflation - adjusted, interest rates. standard : that ’ s not much help to savers today. praet : in the medium to longer term, our monetary policy will certainly help savers. we ’ re doing our part to help the economy recover. this will bring the rate of inflation back to our objective and subsequently bring the level of interest rates back to normal. therefore, the low interest rates may be a short - term pain for some, but a long - term gain for all. everybody in europe has an interest in us getting out of the current situation, which is marked by low inflation and low growth. we will succeed in doing so. but the crisis was so severe that this process is taking a number of years. standard : some economists say that it ’ ll be years before interest rates are higher. praet : there are always cassandras who speak badly about everything … standard : cassandra was right about her warnings. praet : yes, but prophecies that make people scared and become self - fulfilling can be dangerous. standard : the ecb started buying government bonds on a massive scale in january 2016. have you got any proof that the quantitative easing programme is taking effect? praet : yes. the first effect is that we have given a clear signal. when we lowered interest rates, credit conditions for companies in some countries rapidly improved. now, with quantitative easing in the background, loans for firms and the government sector have become significantly cheaper overall. bis central bankers ’ speeches standard : austria is the first country in europe to have initiated a bail - in, namely in the case of hypo alpe adria. why don ’ t eu institutions give more support to [ this measure ]? after all, it ’ s something that ’ s been fought for years. praet : we support the bail - in clause in the eu ’ s bank resolution and recovery directive. however, i cannot comment on specific cases, which come under the supervision of the single supervisory mechanism. bis central bankers ’ speeches | peter praet : interview in der standard interview with mr peter praet, member of the executive board of the european central bank, in der standard, conducted by mr andras szigetvari on 10 june 2015 and published on 13 june 2015. * * * standard : mr praet, the role of the ecb has changed since the outbreak of the crisis. you are now engaging in political debate, telling countries what reforms to implement. hasn ’ t the ecb stretched its mandate in order to maintain price stability? praet : as you know, the ecb takes monetary policy decisions to achieve its objective of maintaining price stability. we make our voice heard on structural reforms when it is considered necessary in the context of our mandate under the treaty. and, as mario draghi indicated in sintra, for members of a monetary union, resilience is crucial to avoid that shocks lead to permanent economic divergence over time ‒ it therefore has direct implications for price stability. in this sense, we are different from, for example, the federal reserve in the united states, which would never engage in such a debate. we frequently get the advice that we should just concentrate on our core business ‒ monetary policy. but, in a currency union like the euro area, individual countries have lost the flexibility provided by an exchange rate of their own. they must thus become more resilient to crises and external shocks. sound governance and effective institutions are of key importance. that applies, among other things, to labour and product markets, or courts and administration. they are needed for a more efficient monetary policy in a currency union and therefore we tell governments that structural reforms are important. here, our interest is not in how countries implement these reforms, that is up to them. what interests us is if they are successful, as this impacts the monetary union as a whole. however, i would also like to make the self - critical comment that, in the past, our messages have sounded too much like a mantra. standard : what do you mean? praet : in several respects, countries are similar as they are part of a monetary union, but in many respects they differ as a result of their national conditions. so there are various combinations of structural reforms that work – there is no “ one - size - fits - all ” model. we must make this clear, otherwise there may be the impression that our citizens don ’ t have much of a choice. we must convey | 1 |
ahmet ismaili : creating values – a gateway for the future introductory remarks by mr ahmet ismaili, governor of the central bank of the republic of kosovo, at the conference " creating values – a gateway for the future ", organised by the society of certified accountants and auditors of kosovo, pristina, 8 november 2023. * * * honoured mrs. mehmeti – spanca, general auditor of the republic of kosovo honoured, mr. pllana, chairperson of the scaak board, honoured, mr. murtezaj, executive director of the tax administration of kosovo, honoured, mr. xhema, acting director of the financial intelligence unit, honoured, mr. perani, representative of the international financial corporation ( ifc ), honoured representatives of financial institutions, honoured representatives of business and professional associations, honoured panel members, respected participants, ladies and gentleman, allow me to first express my gratitude to the society of certified accountants and auditors of kosovo ( scaak ) for inviting me to gladly address you on the marking of the accounting and auditing professions week, emphasizing the importance of these professions in accurately reflecting the situation and performance of business entities, respectively to ensure independent and objective assessments on the accuracy and reliability of financial information. taking into account the importance of commercial entities in the country's economic development, a fair reflection of the situation and performance of their activity is of a critical importance in order to build a stable economy as well as a developed state and with integrity. this element is a precondition in initiatives such as capital market development as well as in other initiatives. the central bank of the republic of kosovo, according to its mandate to license, regulate, and supervise financial institutions in the republic of kosovo in the function of maintaining financial stability, is committed to providing a regulatory framework in accordance with best international standards and practices for the purpose of financial institution reporting and auditing, as well as approval of external auditors that audit these institutions. 1 / 3 bis - central bankers'speeches therefore, in cbk's supervisory role, the external auditor profession acts as a vital instrument in achieving its purpose. the cbk cooperates closely with the kosovo council for financial reporting to promote improvement of the quality of supervisory and financial reporting functions, and according to the law, the cbk has a representative in this council and the public supervision board. the cbk is also committed to building human capacities in the field of accounting and auditing through training and | certification in specialized institutions in this field. continuous qualification and professional education are key for the cbk, both for its employees and for the financial industry as a whole. special emphasis in the cbk's regulation will be given to the inclusion of the role of the certified accountant and certified internal auditor in the regulation, in addition to the requirements for external audit. the cbk is in the process of harmonizing legislation regarding standards for engagement of external auditor, both in terms of the years of engagement as well as limiting discontinuation from consecutive audits. the cbk, through its regulatory framework and supervision of financial institutions for prevention of money laundering and close cooperation with other authorities at country level, is committed to reduce informal economy and to build a long - term resilient and developed economy. challenges such as implementing new financial industry standards, with a focus on insurance, such as ifrs 17, illustrates the need for cooperation between regulatory, policy - making institutions, financial sector, the academia, and professional groups. also, in light of its commitment to improve the financial system's stability against risks related to the climate and the environment, we will engage in harmonizing the regulatory framework with european union regulations and directives and the basel standards, thus strengthening supervisory practices. application of international financial reporting standard s1 and s2 on disclosure of business entities'information for management of climate and environmental risks, as well as investment opportunities in the function of the green economy, will also be at the focus of the cbk. finally, as the cbk we expect to have more accurate financial statements and qualitative audits, in order to correctly present the real situation of the business entities'financial statements, to facilitate right decision - making, bank lending, providing insurance products and other financial services from financial institutions in order to develop the private sector and the economy of the republic of kosovo in general. increasing professional capacities and quality assurance remain our priorities, which help achievement of the cbk's objectives, but also the overall development of the country. i wish you fruitful and successful discussions in the following panels. thank you! 2 / 3 bis - central bankers'speeches 3 / 3 bis - central bankers'speeches | 1 |
peter pang : pilot platform for cross - border investment and settlement of debt securities remarks by mr peter pang, deputy chief executive of the hong kong monetary, at the press conference on pilot platform for cross - border investment and settlement of debt securities – hong kong, malaysia and euroclear bank, hong kong, 13 march 2012. * * * deputy governor muhammad ibrahim, mr anso thire, ladies and gentlemen, good afternoon. let me welcome you all to this press conference to announce the launch of the strategic alliance of the cross - border bond investment and settlement platforms in hong kong, malaysia and euroclear bank. the pilot platform to be launched on 30 march under this strategic alliance goes well beyond commercial cooperation amongst the partners. it will advance the important policy objectives of fostering bond market development and promoting financial stability at both global and regional levels. there are strong demand and supply side factors that focus global investors ’ attention on bond markets in asia. on the demand side, the european sovereign debt problems and successive downgrades of sovereign credit ratings of the advanced economies underscore the need for geographical diversification by global investors. asia is the obvious choice as it stands out as the bright spot and engine for global growth. according to imf ’ s forecast, emerging asia, with china as the core, will contribute about 57 % of the world ’ s gdp growth by 2016. augmenting this favourable demand factor is the improved credit ratings of asian sovereign issuers. there are now 14 asian economies at investment grades, of which, nine are at or above the single a rating. at the same time, the supply side factors are also highly favourable. the huge financing needs of asia will support a continuous expansion in bond issuance. according to the asian development bank, asia ’ s infrastructure financing needs alone amounted to usd 8 trillion from 2010 to 2020. equally important is the emergence of new and attractive bond asset classes. the two products that have caught most attention of global investors are the sukuks in malaysia and the rmb dim sum bonds in hong kong. this is rightly so as these products connect the global market with the vast and increasingly prominent financial systems in the islamic world and china. we have seen very encouraging development of the sukuk market in malaysia, the symbol of islamic financing. the amount of outstanding sukuks in malaysia increased substantially from myr 146 billion ( usd 41. 3 billion equivalent ) at the end of 2006 to myr 361 billion ( usd 113 | njuguna ndung ’ u : east african monetary union opening remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, during the east african legislative assembly workshop on the east african monetary union, nairobi, 4 march 2010. * * * honorable chairperson of communication, trade and investment committee of east african legislative assembly, hon. dahilo ; representative of the clerk of eala, mr. enock musiime ; honorable members of parliament from eala ; honorable members of parliament from kenya, uganda, tanzania, burundi, rwanda ; director of planning and infrastructure, eac secretariat, mr. phillip wambugu and other officials from the eac secretariat ; senior government officials from the eac ; distinguished delegates ; ladies and gentlemen : i am privileged by this invitation to participate in this important workshop on the east african monetary union being held here in nairobi. on behalf of the central bank of kenya and on my own behalf, i welcome you all to nairobi, kenya. honorable members of eala and eac national assemblies, this workshop comes at a time when east africans are anxious to appreciate the benefits from the east african community common market. the protocol on its establishment was signed in november 2009. the eac common market will ensure free movement of factors of people, services and capital across the five partner states. under the common market, goods will be freely traded when the region attains the status of a fully fledged customs union. as the honorable members are aware, the eac common market protocol has provisions that will guide elimination of capital restrictions that continue to impede free flow of capital among the eac countries. the cardinal principal of free movement of capital ties with the next level of integration that is the east african monetary union. in line with the regional integration as stipulated in the treaty provision, the 6th extraordinary summit of eac heads of state held in arusha, tanzania on 20th august 2007 underscored the need to move expeditiously towards establishing a monetary union by 2012. following that summit directive, governors of eac central banks met in kampala, uganda in january 2008 to map out a strategic framework for fast tracking the establishment of an east african monetary union by 2012. the meeting of governors of central banks in kampala decided on a comprehensive study of the east african monetary union whose major objectives were : i ) to take stock of the current state of preparedness of the eac partner states for a monetary union. among | 0 |
budget deficits to open up – this always happens when a decline in economic activity leads to a sharp drop in revenue and increased spending on the safety net – but instead is more due to the fact that these deficits generally have a very large structural component. by structural, i mean that the deficits are projected to be persistent – absent changes in tax and spending policies – even after the individual economies have recovered and the unemployment rates in these countries have fallen as low as is possible, consistent with price stability. fiscal stimulus measures undertaken to support demand have been responsible for much of the recent deterioration in the structural budget deficits. for example, in the united states, the congressional budget office estimates that the structural federal budget deficit rose by nearly $ 1 trillion between fiscal 2007 and fiscal 2009, to $ 1. 1 trillion or 7. 3 percent of potential gdp. obviously, different people have different views as to how much stimulus was needed and the form of that stimulus. but to me it is clear that an accommodative fiscal stance was the appropriate policy response given the circumstances. in the case of the united states, without substantial fiscal stimulus, the economy would have been even weaker and the unemployment rate considerably higher. given the fact that the federal funds rate could not be pushed any lower, fiscal stimulus was indeed important in stabilizing the economy. going forward, however, market participants are worried that many countries are now on unsustainable fiscal paths. by unsustainable, i mean a scenario in which persistently high deficits cause the amount of outstanding debt to rise relative to gdp indefinitely, even if the economy performs well in the future. the concern is that at some point, investors worried about the potential for default would balk, and this would lead to sharply higher interest rates and a fiscal crisis. just as there needs to be a credible exit strategy for monetary policy to anchor inflation expectations, there also needs to be a credible exit strategy from fiscal policy stimulus to anchor expectations about the risks of sovereign debt default. this is not going to be easy for several reasons. even abstracting from considerations involving political will – it is never easy to vote for higher taxes or lower spending – there is also the important issue of timing. the economic recovery is still very fragile. this means that premature fiscal retrenchment could jeopardize the recovery and push a convalescent economy into a double - dip recession. given this risk, why not just wait and see how things go | bank system, in part because they themselves had sponsored many of these off - balance - sheet vehicles. they had written very large contingent commitments to provide liquidity support to many of the funding vehicles that were under pressure. they had retained substantial economic exposure to the risk of a deterioration in house prices and to a broader economic downturn, and as a result, many suffered a sharp increase in their cost of borrowing. the funding and balance sheet pressures on banks were intensified by the rapid breakdown of securitization and structured finance markets. banks lost the capacity to move riskier assets off their balance sheets, at the same time they had to fund, or to prepare to fund, a range of contingent commitments over an uncertain time horizon. the combined effect of these factors was a financial system vulnerable to self - reinforcing asset price and credit cycles. the system appeared to be more stable across a broader range of circumstances and better able to withstand the effects of moderate stress, but it had become more vulnerable to more extreme events. and the change in the structure of the system made the crisis more difficult to manage with the traditional mix of instruments available to central banks and governments. first repair, then reform what should be done to reduce these vulnerabilities? our first and most immediate priority remains to help the economy and the financial system get through this crisis. a range of different measures of liquidity premia and credit risk premia have eased somewhat relative to the adverse peaks of mid - march. part of this improvement – this modest and tentative improvement – is the result of the range of policy actions by the federal reserve system, the u. s. treasury and other central banks. part is the consequence of the substantial adjustments already undertaken by financial institutions to reduce risk, raise capital and build liquidity. these actions by institutions and by the official sector have helped to reduce the risk of a deeper downturn in economic activity and of a systemic financial crisis. but the u. s. economy and economies worldwide are still in the process of adjusting to the aftermath of rapid asset price growth and unsustainably low risk premiums. this process will take time. as we continue to work with other central banks to ease the adjustment now under way in the u. s. economy and globally, we are working to make the financial system more resilient and to improve its capacity to deal with future crises. we are working closely with the securities and exchange commission ( sec ), with banking supervisors in the united states | 0.5 |
plan to set up an industry - led disclosure task force on climate - relate risks in 2016. this initiative was welcomed by the g20. bis central bankers ’ speeches de nederlandsche bank and sustainable finance now, as frank elderson will elaborate on this afternoon, de nederlandsche bank believes it can – and must – contribute to sustainable development. it follows from our legal mandate. and it follows from our mission, which is to contribute to the sustainable prosperity of the netherlands by safeguarding the financial stability. to achieve this, we have begun to incorporate sustainability into our core business. we are conducting research into the carbon bubble, the energy transition and sustainable investments in the pensions industry. the outcomes will be used to advice policy makers and to guide financial institutions into incorporating sustainability more fully into their business. and we are exploring ways to integrate sustainability more fully across our own range of instruments. over the coming period, we will define the exact scope and scale in close co - operation with all our stakeholders. what we do know, however, is that we will increasingly take a forward - looking approach and assume the role of catalyst. this way, we hope to ensure that : – business models of financial institutions are sustainable over the long run ; – the interests of financial service clients are not subordinated to those of the industry ’ s shareholders ; – the organisation of social welfare does not lead to an unintended distribution of wealth and income among generations or groups ; – solid government finances contribute to solid economic development ; – no financial or economic disbalances occur ; – and finally, that the external effects of the economy – including the generation and usage of energy – are adequately priced and regulated. closing remarks ladies and gentlemen, we are at a crossroads. the challenges to our system will have serious, long - term consequences unless we act now. and sustainable development is key to securing the wellbeing and welfare of this generation and the many that will follow. de nederlandse bank is eager to play a catalysing role and use its instruments to promote sustainability. i challenge you to do the same. thank you. bis central bankers ’ speeches | ewart s williams : office of the financial services ombudsman remarks by mr ewart s williams, governor of the central bank of trinidad and tobago, at the launch of the office of the financial services ombudsman, port - of - spain, 29 april 2005. * * * good morning ladies and gentlemen. it is indeed a great pleasure to welcome you all this morning, on behalf of the central bank of trinidad and tobago, to the launch of the office of the financial services ombudsman. a special welcome to minister conrad enill, minister in the ministry of finance for taking the time to be with us on this special occasion. i would like to recognize the president of attic and the vice - president of the bankers ’ association as the major contributors to the fruition of this event, representatives from the participating insurance companies and commercial banks. i am also pleased to welcome four members of the public who had their complaints resolved as a result of the intervention of the market conduct unit of the central bank and who are here with us today to celebrate the launch of this very important office. the majority of the complaints received by that unit will now be considered by the office of the financial services ombudsman. in many ways this event is yet another manifestation of the ongoing integration of the financial sector, under the aegis of a single regulator. this morning we say goodbye to the office of the banking services ombudsman and welcome to the financial services ombudsman judy chang who graduates from being the banking services ombudsman to the financial services ombudsman. it sounds routine but, in fact, all this represents progress. i would like to thank all those who have made this possible. the idea was first broached by the attic executive who thought that the establishment of an ombudsman would be of tremendous assistance in strengthening confidence and credibility in the insurance industry. ( i am told that the idea of an ombudsman for the insurance industry has been floating around for the last ten years ). the non - attic members who have signed on to the scheme deserve a special commendation for accepting the challenge we put to them earlier this year to make the scheme as inclusive as possible. ( we have 90 percent participation among active insurance companies – that is a good participation rate ). i would like to express sincere thanks to the banks, through the bankers association, for their collaboration and their commitment to making this integrated scheme a reality. and finally | 0 |
pressure across the entire yield curve ; i. e., not only short - term interest rates but also long - term interest rates including 10 - year jgbs, as well as super - long - term interest rates of jgbs with maturities of 20 years or longer. by referring to some specific data, let me briefly explain how the intended effects have been spreading so far. yields on 10 - year jgbs already had been lowered to a record low level before the bank decided to introduce “ qqe with a negative interest rate, ” and thus the entire yield curve has been pushed down to an extremely low level ( chart 9 ). at the same time, inflation expectations have been rising on the whole from a somewhat longer - term perspective. according to various survey - based indicators, inflation expectations generally have been raised by about 0. 5 percentage point under qqe ( chart 10 ). the decline in the nominal interest rate and the rise in inflation expectations suggest that the real interest rate has been largely pushed down. in fact, after the introduction of qqe, the real interest rate has remained in negative territory. thus, as i have mentioned, the real interest rate, having declined to the record low level, stimulated domestic demand, resulting in a moderate recovery in japan ’ s economy and an improvement in the underlying trend in inflation. zero lower bound of interest rates and framework for “ qqe with a negative interest rate ” the newly introduced “ qqe with a negative interest rate ” maintains and reinforces the basic mechanism of qqe, which has produced its intended effects. for a long period of time, a common understanding has made us believe that the nominal interest rate cannot fall below the zero lower bound. however, at present, some central banks in europe, including the european central bank ( ecb ), are in fact implementing negative interest rate policies. the following two points were considered to be reasons why the nominal interest rate cannot turn negative. first, financial institutions ’ profits would be squeezed if a negative interest rate were applied to their current accounts at the central bank. if a negative interest rate were to massively squeeze financial institutions ’ profits – which i would view as an extreme case – functioning of financial intermediation could be hampered and, as a result, the intended effects of monetary easing would wane. second, a larger negative interest rate would incentivize financial institutions to withdraw more cash from their current accounts at the central bank in | - related goods 8. 0 4. 1 0. 4 - 1. 1 - 3. 6 2. 2 0. 8 - 5. 1 5. 0 - 0. 7 capital goods 12. 3 5. 3 - 2. 3 - 0. 2 - 3. 6 - 1. 5 1. 2 - 9. 1 4. 1 1. 7 real exports 6. 4 2. 2 - 1. 6 0. 5 - 1. 7 0. 1 2. 1 - 4. 5 4. 1 0. 9 notes : 1. nies, asean, etc. includes other asian countries such as india and bangladesh. 2. motor vehicles and related goods includes motor vehicles, parts of motor vehicles, and power generating machine. it - related goods includes computers and units, telecommunication machinery, semiconductors, audio and visual apparatus, and medical and optical instruments. capital goods includes metalworking machinery, construction machines, electrical power machinery, semiconductor production equipment, and ships. 3. figures for 2019 / q3 are those of july. source : bank of japan, " developments in real exports and real imports. " chart 9 business fixed investment ( ratio to nominal gdp ) - 10 - 5 ratio of nominal private non - resi. investment to nominal gdp ( left scale ) production capacity di ( right scale ) cy 2005 note : production capacity di shows figures for large enterprises of all industries. sources : cabinet office, " national accounts " ; bank of japan, " tankan ( short - term economic survey of enterprises in japan ). " excessive capacity insufficient capacity diffusion index of " excessive capacity " minus " insufficient capacity, " % pts., reversed % developments in business fixed investment plans ( large manufacturing firms ) y / y % chg. overall manufacturing y / y % chg. chart 10 general - purpose, production, and business oriented machinery average ( fy 2013 - 2018 ) fy 2018 fy 2019 mar. survey june survey sept. survey dec. survey forecast actual mar. survey motor vehicles y / y % chg. june survey sept. survey dec. survey forecast actual forecast actual basic materials y / y % chg. mar. survey june survey sept. survey dec. survey forecast actual note : figures include software investment and exclude land purchasing expenses. source : bank of japan, " tankan. " mar. survey june survey sept. survey dec. survey developments in business fixed investment plans ( large nonmanufacturing firms ) y / y % | 0.5 |
##f and our growing expertise in macroprudential oversight and policy, we have laid a solid foundation for ensuring financial stability in the future. bis central bankers ’ speeches however, we must not forget that macroprudential oversight is only one aspect of safeguarding financial stability. thank you for your attention. bis central bankers ’ speeches | ##ocate financial resources and risks, and provide an efficient financial infrastructure. however, the objective of macroprudential oversight is not just to analyse and identify risks to financial stability : it should also warn those responsible and recommend measures that will contain any risks to the proper functioning of the financial market or – better still – nip them in the bud. the financial crisis has clearly demonstrated why macroprudential oversight is important. it showed that tensions and imbalances in individual areas of the market or at individual market players may jeopardise the system as a whole. for instance, we saw that developments that appeared harmless in relation to just one institution caused considerable systemic risk when a larger number of institutions were affected. however, the crisis also demonstrated that we need suitable international agreements to identify vulnerabilities in the financial system early and combat them effectively. this is particularly important in a world in which the bis central bankers ’ speeches globalisation of the financial markets and technical progress in data processing mean that markets and market participants are increasingly interconnected. a key lesson from the crisis is therefore : a macroprudential perspective must be added to microprudential oversight. 3. objectives of macroprudential oversight however, the difficulties start with the question of what concrete goal macroprudential oversight should have. as i said earlier, the main intention behind macroprudential oversight is to reduce dangers threatening the financial system as a whole. as i see it, macroprudential oversight can take two directions : macroprudential activities may focus on increasing the resilience of individual systemically important market players. alternatively, the goal may be to reduce procyclicality. the aim of raising market players ’ resilience is virtually self - explanatory. in the event of a crisis, players have more room for manoeuvre if they are more stable. they become distressed less quickly and must, for instance, resort to fire sales less quickly ; nor do they need to curtail lending as much. but what is procyclicality and why is it worth monitoring? procyclicality in the financial system is the result of self - reinforcing feedback effects between the financial system and the real economy. financial markets may amplify the real economic cycle and thus lead to economic overheating or an overall recession. such developments are, moreover, frequently accompanied by destabilising effects for the financial system. think, for | 1 |
requirement and have required the banks in india to maintain capital charge for market risks on their ‘ available for sale ’ portfolio also with effect from march 2006. we continue to see considerable merit in pursuing a policy of gradualism in harmonising our regulations with the global standards. basel ii : benefits and major issues the complexity of basel ii arises from several options available and these are well known. consequently, many of the countries which have voluntarily adopted basel i also view these issues with considerable caution. compared to basel i, the revised framework, namely basel ii, is considered to be highly complex, making its understanding and implementation a challenge to both the regulatory and the regulated community. dangers of premature adoption since the revised framework has been designed to provide options for banks and banking systems worldwide, the basel committee on banking supervision ( bcbs ) acknowledges that moving toward its adoption in the near future may not be the first priority for all non - g10 supervisory authorities in terms of what is needed to strengthen their supervision. each national supervisor is expected to consider carefully the benefits of the revised framework in the context of its domestic banking system when developing a timetable and approach for implementation. the views of the executive board of the international monetary fund clearly indicate that premature adoption of basel ii in countries with limited capacity could inappropriately divert resources from the more urgent priorities, ultimately weakening rather than strengthening supervision. they agreed that countries should give priority first to strengthening their financial systems comprising institutions, markets and infrastructure and focus on achieving greater level of compliance with the basel core principles. against this background, the imf has cautioned that fund staff should avoid conveying the perception that countries will be criticised for not moving to adopt the basel ii framework. they have urged staff to be completely candid when asked to assess countries'readiness to move to basel ii and to indicate clearly the risks of moving too quickly and too ambitiously. varying implementation plans across jurisdictions in asia - pacific the implementation plans in regard to basel ii, as far as asia - pacific is concerned, may be broadly divided into three ranges – one, where the simplest approaches and the most advanced approaches are available at the time of first implementation ( australia, korea, singapore, new zealand ) ; second, where the simplest approaches are available initially and at least one of the most advanced approaches is available within a year or two thereafter ( hong kong, japan, indonesia, thailand ) ; and third, where the simplest approaches are allowed initially and the date of availability of the most advanced approaches is yet to be | these policies are prolonged long beyond repairing markets – and there the benefits are much less clear. let me list 4 concerns : 1. is ump the right tool once the immediate crisis is over? does it distort behavior and activity so as to stand in the way of recovery? 2. do such policies buy time or does the belief that the central bank is taking responsibility prevent other, more appropriate, policies from being implemented? put differently, when central bankers say, however reluctantly, that they are the only game in town, do they become the only game in town? 3. will exit from unconventional policies be easy? bis central bankers ’ speeches 4. what are the spillovers from such policies to other countries? for reasons of time, let me focus on the last two. exit the macroeconomic argument for prolonged unconventional policy in industrial countries is that it has low costs, provided inflation stays quiescent. hence it is worth pursuing, even if the benefits are uncertain. central bankers such as governor stein have, however, raised concerns about financial sector risks that may build with prolonged use of unconventional policy. one reason is that leverage may increase both in the financial sector and amongst borrowers as policy stays accommodative. one channel seems to be that a boost to asset liquidity leads lenders to believe that asset sales will backstop loan recovery, leading them to increase loan to value ratios. when liquidity tightens, though, too many lenders rely on asset sales, causing asset prices and loan recovery to plummet. because lenders do not account for the effects of their lending on the “ fire sale ” price, and subsequently on lending by others, they may have an excessive incentive to build leverage. leverage need not be the sole reason why exit may be volatile after prolonged unconventional policy. as feroli et. al. argue, investment managers may fear underperforming relative to others. this means they will hold a risky asset only if it promises a risk premium ( over safe assets ) that makes them confident they will not underperform holding it. a lower path of expected returns on the safe asset makes it easier for the risky asset to meet the required risk premium, and indeed draws more investment managers to buy it – the more credible the forward guidance on “ low for long ”, the more the risk taking. however, as investment managers crowd into the risky asset, the likelihood of possible fire sales increases if the interest rate environment turns. everyone may dump the | 0.5 |
strongly than usual to euro area wage growth in 2022 and 2023. see ecb ( 2022 ), ” minimum wages and their role for euro area wage growth ”, economic bulletin, issue 3. 7. a pickup in nominal wages later this year is also in line with the results in the march 2022 corporate telephone survey. see ecb ( 2022 ), “ main findings from the ecb ’ s recent contacts with non - financial companies ”, economic bulletin, issue 3. 8. to capture momentum in inflation dynamics, i focus on the cumulative change in the price level over a twelve month period. | be working with the industry to open fast access to non - bank players. 3 / 6 bis central bankers'speeches 24. in customer identification, mas has worked with the ministry of finance and govtech to introduce myinfo for the financial industry. the myinfo platform allows banks to more effectively and efficiently obtain authenticated and updated information for account opening and other applications, doing away with the tedium of manual physical authentication and resulting in time saving of as much as 80 % for banks and their customers. 25. second, we are reviewing our regulatory framework to balance the tension between encouraging innovation and managing risk. the payments services act is a forward looking and flexible framework for the regulation of payment systems and payment service providers in singapore. it gives regulatory certainty to new players to pursue innovation and growth, while at the same time providing sufficient safeguards for consumers. 26. third, we are creating more channels to promote the exchange of ideas and collaboration among financial and technology firms. since 2016, mas has partnered industry players to bring together financial and technology players from all over the world in the week - long singapore fintech festivals. turnout has more than quadrupled over the past three years with 45, 000 participants from 130 countries in 2018. it is early days yet, but the results of our efforts are encouraging. singapore is widely regarded as one of the leading fintech hubs in the world. a report by ernst & young finds that nearly 7 out of 10 singaporeans have made use of fintech solutions in 2019, making us a leader in the asia - pacific region. 27. another important development has been among our local banks themselves. they have been expanding their digital platforms to better cater to customers ’ needs, and grow markets abroad. they have partnered with fintechs to harness the capabilities of new technologies and deliver more customised solutions. for example, uob has partnered with personetics to use artificial intelligence to identify individual transaction demands and enable uob to provide customers with real - time and personalised guidance on their financial decisions. second, they have built digital banks in overseas markets, leveraging a lower - cost operating model to quickly acquire new customers. for example, dbs launched digibank in india and managed to acquire over 2. 5 million customers in its initial two years of operations. the bank has also recently replicated its digibank strategy in indonesia. dbs was ranked by euromoney as the world ’ s best digital bank last year. third, | 0 |
integration is happening at two levels : among jurisdictions and among participants 11. over the last three years, market integration has been taking place in asian financial markets. it is steadily making progress in individual asset classes, among small groups of countries, sometimes bilaterally, where there is common interest and where markets and institutions are at similar stages of development. 12. we can see evidence of market integration among jurisdictions in several areas : a. banking. asean is in discussions to complete a banking integration framework that will allow qualified asean banks to progressively expand in each other ’ s ’ jurisdictions. this initiative aims to create opportunities to strengthen regional banks in asean and improve banking services offered to local markets. even in other asian countries where cross - border bank financing is restricted, we are seeing pockets opening up. for example, since china issued cross - border rmb rules for suzhou industrial park ( sip ) and tianjin eco city ( tec ) in the middle of the year, about rmb 2 billion of loans have been approved from singapore - based banks to companies in the two industrial parks. b. equity markets. in 2012, stock exchanges and regulators in malaysia, thailand and singapore launched the asean trading link to offer easy access to each other ’ s stock markets. singapore and china have also established a direct listing framework for chinese companies last year. the framework will facilitate interested chinese companies seeking direct listing opportunities in singapore. c. debt markets. asean securities regulators have since april last year implemented common disclosure standards, which would allow issuers to issue debt securities across various asean markets with a single prospectus. under this scheme, the time required to issue in multiple markets will be the same as that for issuing in one market, reaping both cost and time savings for issuers. the cross border rmb channels with sip and tec, which i mentioned earlier, would also allow corporates in these locations to issue rmb bonds in singapore. these initiatives in the debt and equity markets will allow companies to diversify their sources of funding abroad, more easily tap investors in overseas markets as well as broaden the array of debt investment choices in local markets. d. fund management. there are two similar initiatives for mutual recognition of collective investment schemes in asia. the first, among singapore, malaysia and thailand, led by the asean securities regulators. the second, involving singapore, korea, australia and new zealand, called the asian region funds passport under the auspices of apec. these initiatives will widen the opportunities for investors and fund | mr stals discusses regional trade and financial integration in the southern african development community address by the governor of the south african reserve bank, dr chris stals, at a meeting for business people arranged by the reserve bank of zimbabwe in harare, zimbabwe on18 june 1999. reasons why international financial cooperation is important there is a worldwide trend towards an integration of financial markets. this process of globalisation is no longer restricted to the industrial countries of the world, but emerging markets, countries in transformation and the developing countries of the world are all being drawn into this process. in many parts of the world, this process of globalisation goes through an intermediate phase, and that is one of regional economic cooperation or integration. the european union, which has been developing over the past thirty years, has now reached the advanced stage of almost full financial integration. there are many other examples, such as mercosur in south america, nafta in north america, and asean in east asia, where similar initiatives for economic integration are in progress. the smaller countries of the world can easily be marginalised in this process of global financial integration, unless they form part of some regional cooperation arrangement to guide them into this highly competitive global system of integrated financial markets. the southern african development community ( sadc ) provides the opportunity for the countries of southern africa to approach the process of global financial integration through first combining forces in a regional cooperation arrangement that will, in a second phase, facilitate the real worldwide integration process. there are, of course, a number of other more localised reasons why financial integration within the southern africa region will hold advantages for all participating countries. these can be summarised as follows : • the expansion of trade between southern african states will be supported by a simultaneous integration of the financial sector. payment and settlements will be facilitated by the removal of unnecessary financial obstructions and constraints. • the extension of services across borders will be made easier. such services can include insurance, business, legal advice and assistance, engineering, architectural, medical, and other professional services. • the movement of people within the region will become easier in support of activities such as tourism, inter - governmental services, exchange of skills, and the mobility of labour. • it is of vital importance for the southern africa region that maximum use shall be made of scarce resources. the coordination and sharing of limited resources such as skills, technological infrastructure and financial systems will contribute to a higher rate of economic development for the region as a whole. what has been | 0 |
more recently, the imf has been perceived by some countries as being irrelevant, and its activities have sparked resentment and outright hostility in other countries, including some in latin america. a major source of this hostility and perception of irrelevance is the fact that the fund has not evolved in step with the global economy. and this lack of evolution contributed to the fund's inability to prevent or even to mitigate international crises such as the asian crisis of 1997 and the argentinean crisis in 2001. in the absence of global co - operation to update the rules of the game, and an effective imf to support these rules, we have seen a drift towards regional initiatives. and rather than using the imf to efficiently pool international reserves, countries such as china have set out to accumulate very high levels of reserves. i have made several speeches in other places about the need to strengthen the surveillance function of the imf, to improve its governance, and to make it more representative of today's global economy. i won't repeat those arguments here ; if you are interested in the details of our recommendations for the imf, i'd invite you to read the lecture i gave one year ago at princeton university. the point i want to make today is that strengthening the imf could help some countries – including those in latin america – to willingly support and engage with the fund. and this would increase the chances that these countries would willingly engage in the global economy. unfortunately, in recent years, the attention of canada and the united states has focused mainly on asia. we have worked hard to help the asian economies integrate into the global economy and take their rightful place at the policy - makers'table. we've encouraged these countries to play by the rules of the game with respect to international trade, in particular, by supporting their accession to the wto. but at the same time, we have become concerned that these nations, notably china, are not always following the rules of the game with respect to monetary and exchange rate issues. rather than deal with this issue through a strengthened imf, we in the g - 7, including the united states, have often dealt with it on a country - bycountry basis. my contention is that all of us in the g - 7, particularly the united states – which truly believes in a liberal financial and trade order – should lead the effort to strengthen multilateral institutions, such as the imf. not only would a stronger imf be | stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 15 july 2015. * * * good morning. senior deputy governor wilkins and i are happy to be here with you again to answer your questions about today ’ s interest rate announcement, and our latest monetary policy report ( mpr ). let me begin with a few remarks around the issues that were most important to the governing council ’ s deliberations. since our last mpr in april, global economic developments have been quite disappointing, and these have led to a significant downgrade of our estimate of canadian economic growth for 2015. there were three factors behind this downgrade : first, canadian oil producers have lowered their long - term outlook for global oil prices, and have cut their plans for investment spending significantly more than previously announced. second, china ’ s economy is undergoing a structural transition to slower, domestic - driven growth, which is reducing canadian exports of a range of other commodities. third, canada ’ s non - resource exports have also faltered in recent months. while this is partly due to the first - quarter setback in the u. s. economy, it ’ s still a puzzle that merits further study. given the collapse in oil prices, and declines in some other key non - energy commodities, the economy is now operating on two distinct growth tracks : the resource track and the nonresource track. these tracks are not independent – the cancellation of an investment in the oil patch will often lead to a hit in the manufacturing sector, for example. but we can do some rough decompositions to illustrate the situation. i draw your attention to chart 18, on page 19 of the mpr. there we can see the sharp drop in oil and gas output, which constitutes 10 per cent of our economy, and the slowdown in non - energy commodity production, which represents a further 8 per cent. the remaining 82 per cent is seeing steady growth, although it has moderated slightly so far this year, due to the setback in the u. s and spillovers from the resource sector. as the non - resource track regains momentum, it is expected to become the dominant trend at the aggregate level. we expected this to begin in the second quarter. but it did not, because of the three factors i listed above. a major shift in a country ’ | 0.5 |
these two questions are closely interlinked and quite justified. we have to learn from the past in order to shape the future of our financial system. so this morning, i want to speak about two things : • first, i will briefly outline my understanding of the causes behind the events which unfolded on january 30, 2009 and what the clico / cib crisis has taught us ; and • then, i will discuss five major initiatives the central bank has been undertaking to avoid another crisis. these initiatives will not just protect our financial system, but also help shape its future direction. learning from the past – what the clico / cib crisis taught us ladies and gentlemen, at the outset i wish to indicate that the cl financial failure is the subject of three major investigations. first, the central bank commissioned a forensic investigation which resulted in the filing of a civil suit claiming damages against former bis central bankers ’ speeches leading cl financial executives and their related companies. second, the director of public prosecutions is investigating the prospect of laying criminal charges against these former leading executives. third, a commission of enquiry has completed its deliberations and is expected to produce a report into the circumstances behind the failure of cl financial. as you may appreciate, these investigations quite naturally constrain my public disclosures on the causes of the clico / cib crisis. i will therefore, confine my discussion to the public statements made by central bank officials at the commission of enquiry. my reading of those public statements suggests that the following could be interpreted as some of the reasons behind the failure of the cl financial group : • cl financial reflected a highly complex and opaque business model. poor corporate governance and weak risk management practices made it difficult to assess the extent of exposures and potential spillovers. it was difficult to determine who was dancing with whom, and how closely. this opacity magnified the shock to confidence as the clico / cib crisis unfolded ; • the cl financial group became highly over leveraged and heavily interconnected. both clico and cib used aggressively high interest rates to finance equally high risk investments, much of which were in illiquid assets including real estate ; • actual leverage of the cl financial group was even greater than immediately apparent. distorted incentive structures encouraged excessive related - party transactions, which were not specifically prohibited in regulation, but which carried significant contagion risks ; • liquidity risk was higher than recognized. clico and cib took on excessive maturity | the pace of recovery in the global economy. it also has led to discussions about low productivity and continued shortages in demand – a situation referred to as “ secular stagnation. ” bis central bankers ’ speeches the third is the challenge specific to japan regarding the policy target. the bank aims to achieve the price stability target of 2 percent, while at the same time raising and re - anchoring the inflation rate that the general public perceives as representing price stability to the new policy target of 2 percent. among advanced economies, only japan faces this challenge, and the bank should continue to make efforts to provide a thorough explanation about the feasibility. in january 2013, the bank set the price stability target of 2 percent and jointly committed with the government to achieve this goal. prior to this, the bank had judged that the price stability goal was in a positive range of 2 percent or lower and had set a goal at 1 percent for the time being. the bank now aims to achieve a higher target – to be precise, the upper limit of the previous goal – based on the recognition that efforts by a wide range of entities toward strengthening the competitiveness and growth potential of japan ’ s economy will make progress. i will elaborate on this point later, but the fundamentals of japan ’ s economy have been improving steadily and these developments are in line with the bank ’ s recognition. it is very likely that the bank will achieve the price stability target of 2 percent and, by maintaining that target in a stable manner, re - anchor the inflation rate that the general public perceives as representing price stability at around 2 percent. according to the bank ’ s projections for economic activity and prices made in january 2015, the year - on - year rate of increase in the consumer price index is likely to reach around 2 percent in or around fiscal 2015. i personally hold the view that, although the precise timing for reaching 2 percent can be either earlier or later to some extent, the rate will likely rise close to 2 percent as a trend as downward pressure exerted by the decline in crude oil prices eventually will dissipate on a year - on - year basis. iii. path toward achieving the price stability target of 2 percent let me explain once again the path toward achieving the price stability target that the bank has in mind. the key question is whether the inflation rate will trend upward toward 2 percent together with a sustainable economic recovery. let me discuss the sustainability of japan ’ s economic recovery from a few perspectives. first, economic | 0 |
present eu countries. the banks being acquired are mostly full - service banks, which means that the parent bank gets a larger customer base for its financial services, one of which is mortgages. another structural trend is a greater concentration of financial activities to certain centres in order to profit from cluster benefits. companies that produce the same products and services discern benefits from being located close to each other for several reasons. these might, for example, be a skilled labour force, accessibility to the market, suppliers and customers, specialised service companies, market information, market knowledge or infrastructure. they are reinforced by economies of scale that benefit large financial companies gathered together in a few locations. one such example of a financial centre is london. mortgage institutions with standardised products independent of distance to customers and borrowing in an international capital market ought to be activities that can profit from these cluster benefits. the concentration trend that we have been able to perceive over the past 15 years among swedish mortgage institutions demonstrates that these are also following this structural trend. challenge 2 - international regulations one of the intentions behind the eu's internal market and the introduction of the euro is to create a more efficient market for products and services in which competition increases and customers obtain better products at lower prices. one aspect of this is the eu's financial services action plan that is to be realised by 2005. the plan contains 42 measures that aim to remove remaining obstacles to cross - border trade in financial services and to promote financial integration in the eu. at the same time, measures are been taken to support the supply of risk capital in the eu. these action plans will help realise the vision of making the eu the most competitive, knowledge - based economic area in the world by 2010. three - quarters of the measures in the financial services action plan have already been decided. this will also affect mortgage institutions, as they are major participants in the markets for both lending and borrowing. another factor of importance is the new capital adequacy rules that are planned for introduction in 2006. put simply, capital adequacy rules are rules governing how much capital a bank is required to hold for various borrower groups for each krona lent. in the new rules, it is intended that the risk weighting will better reflect the actual credit risk. this means that the banks will be more careful in assessing the relationship between the risk of a loan and its return. it will therefore be possible to observe increased risk in the banks'interest rates. the new capital ade | end of the year, which is significantly higher than the annual rates of the pervious years. the credit balance rose by l11. 9bn or 30. 9 %. the new credit increased by 50 % meanwhile 76 % is in foreign currency. the loans / gdp ratio is still low, at about 7 %. the banking system experienced important developments during 2003 and in the beginning of 2004. the entry of two new banks of albanian capital was soon followed by the successful privatisation of the savings bank from the raiffeisen zentralbank ( rzb ) austria. now, all in all there are 16 banks in the albanian banking system. the boa has progressed in reforming the banking system towards international standards, with the aim of the developing and refining the country ’ s banking infrastructure. aips, inaugurated in early march 2004, can be considered as the backbone of the whole banking system infrastructure. the boa wishes to bring its central bank closer to that of the european central bank. therefore, changes and amendments of the bank ’ s regulations are aimed towards achieving this goal. | 0 |
dries up. i do not start from the view that leverage poses the same scale or nature of risks in the market - based finance world as it does in banking. but nor am i confident at present that it is without systemic risk. we do not have the tools to make that assessment yet. we need a better set of lenses through which to view leverage in this world in order to assess the risks that it might pose to the system as a whole – hence the work now underway in iosco and elsewhere. the use of financial leverage i. e. borrowing to gear up exposure to risk looks to be materially lower in market - based finance than in the banking world. bank of england baranova et. al. recommendations for liquidity risk management for collective investment schemes, february 2018 as reported in bank of england financial stability report, november 2017. the in - depth assessment will seek to develop the fpc ’ s understanding of how non - banks use leverage, and what financial stability benefits and risks arise from leverage. it will examine measures of leverage and its distribution throughout the non - bank financial system. all speeches are available online at www. bankofengland. co. uk / speeches retail investment funds in most jurisdictions are heavily constrained by regulation on the amount of borrowing they can do. in the uk, insurance companies are limited users of financial leverage. pension funds are active in repo markets but do not run highly leveraged positions. financial leverage for risk taking is most prevalent in the hedge fund sector, but even here it appears to be relatively low compared to banks. the risks from synthetic leverage - the leverage that is embedded in derivative contracts - is, however, much harder to measure, let alone categorise. funds make very significant use of derivative contracts. an fca survey published in 2015 suggested hedge funds have outstanding notional derivative positions 28 times greater than their net asset value. but, in many cases derivatives seem to be used to hedge and reduce rather than to gear up risk. and notional values are rarely an accurate measure of risk exposure from a derivative. so measures of total net economic leverage are preferable. that is, measures which show the extent to which derivatives increase or decrease a fund ’ s overall exposure to risk factors such as asset prices or interest rates. the issue here is not just whether we can identify how much synthetic leverage is being used to reduce rather than to take on risk. it is also to identify, at the level of the financial system | for capital requirements for exposures to smes. in general, we will always listen to arguments when people disagree with us, and we will always take into account new evidence. this includes tailoring rules that are already in place in response to our own evaluations or to evidence from industry, broader civil society and other stakeholders. this is what we did when we implemented an earlier basel regulatory package known as crr2. in that case, we implemented a new standard for banks ’ long term funding after tailoring it to be more risk sensitive for activities that are important for the uk. that was a change we made in response to evidence - based arguments we received during the consultation. we are now taking the same approach to work on solvency ii rules for insurers. debates between us and the government have got a lot of public attention. but there are many areas where we fully agree about the benefits from simplifying the regime to better reflect the needs of the uk. and with the high - level policy decisions now clear, we are focused on implementation and on delivering detailed proposals for consultation. my colleague sam woods recently set out what we are committed to doing. all of this will be on top of what we are already doing to remove unnecessary rules we inherited from our time in the eu. we have so far deleted 13 guidelines issued by eu regulators, five superseded supervisory statements and 26 technical standards onshored from the eu. this work will continue. so too will our work simplifying rules about reporting. growth and competition one of the benefits of tailoring rules to uk circumstances is that it helps to facilitate effective competition in markets we regulate. i see connections between that objective, which we already have, and our new competitiveness and growth objective. that ’ s because an efficient market is one that allocates resources to their best use, including by ensuring that there aren ’ t parts of the economy struggling to access finance that they should be able to secure. i don ’ t want to be too simplistic about it – but in general terms what is good for competition is broadly good for growth. the importance of competition means that we need to act when rules that are proportionate for large firms are not proportionate for small ones. doing so removes barriers to entry. that is why we have invested in the strong and simple project to create a simplified regime for small banks and building societies. today we are publishing our first set of policy proposals for this simpler regime. these are set | 0.5 |
that uses the base year 2013. this change is intended to update the way the evolution of the national economy is gauged, incorporating new estimation methodologies, changes in international standards and new sources of information. the bank makes these changes regularly every five years, according to the respective international standards set by the imf and the oecd. the most salient changes are depicted in a box in this report, and all the details can be seen in several documents uploaded on our website. the new data, which included a very small revision to 2014 and 2015 growth, confirmed the further weakening of the economy in the last quarter of the year, and at the same time modified the growth trajectories of the already published quarters of 2016. in particular, the economy would have slightly outperformed previous estimates for the first part of that year. by sectors, it confirmed that mining posted negative y - o - y growth throughout the whole year, while activity in areas unrelated to natural resources ( i. e. other gdp ) continued to worsen, going from growing 3 % in the first quarter to 1 % in the fourth ( figure 3 ). in the other sectors, most weak in the fourth quarter were particularly those sectors linked to investment in construction and related services, which are usually more persistent. also personal services decelerated, although it is estimated that it responded partly to the effects of the public sector strike at the end of last year ( figure 4 ). on the domestic expenditure side, y - o - y growth in final demand — minus inventory change — also showed a downsloping trend throughout the year. the biggest loss of dynamism was seen in investment in construction and other works, whose annual rate of change was - 4. 9 % in the fourth quarter ( 0. 5 % average between the first and third quarters ). private consumption, as has been the case for some years, provided support to the economy, growing by over 2 % annually throughout 2016. this was helped by growth in labor income, falling inflation and persistent low unemployment by historic standards. it is worth noting that while growth in non - durable consumption has remained stable, durable consumption growth has recovered, partly due to the appreciation of the peso in the last year and partly due to the necessary replenishment of stocks after several years of low or even negative expansion. something similar is observed in gross fixed capital formation in machinery and equipment. discounting unusual purchases of transportation equipment, this investment component has tended | stressing the importance of cooperation and exchanges of views among insurance companies, regulatory and supervisory authorities, and central banks. thank you very much. bis central bankers ’ speeches | 0 |
been the inflationary pressures facing asia. rise in oil prices towards the end of 2007 and its subsequent surge in 2008 reaching $ 120 per barrel, and the food supply shortages in economies that had approached self sufficiency, are two major problems. oil importing economies are now facing high external current accounts deficits whose stress has resulted in currency depreciation. in other economies, rise in us dollar price of oil has been offset by an appreciation of exchange rates. 19. inflationary pressures and expectation are on the rise as : ( i ) governments allow full or partial pass - through to food and oil prices, ( ii ) core inflation rises due to fiscal pressures magnified by subsidies on food, agriculture inputs and oil products, and budgetary recourse to central bank borrowings, and ( iii ) investors seek safe havens in the commodities exchange markets. the depreciating dollar can also be given its share of blame for the record high price of oil, almost double its price just one year ago ( from $ 63 / barrel to $ 119 / barrel ). given the fast pace of economic activity, it has not taken long for price changes in metals, commodities, and oil to manifest themselves in higher labor costs and increased prices of many finished goods and services. 20. financial turmoil, its fallout and contagion, is by no means the only reason for the global commodity price pressures. it has to be recognized that the current trend in global commodity prices is not a one - off distortion or a cyclical spike. the global commodity prices uptrend reflects growing population stress and is likely to now stabilize at a new and higher level. food prices hike is driven by multiple factors, key among which are : ( i ) rising population and consumption demand including the china and india factor, ( ii ) low and stagnating yields, and ( iii ) farmers switching to crop production for bio - fuels. larger debate and financing support to resolve the food crisis is likely to rejuvenate food production, albeit with a lag. 21. policy responses of central banks. as highlighted above, the first round effects of the financial market turmoil were largely contained in asia, given their limited direct exposure to the sub - prime mortgage and other asset based securities. with grimmer economic outlook and concerns regarding financial stability, both at the home front and globally, fed, boe and ecb are taking steps to ease monetary policy through liquidity support and lowering interest rates to avert | recessionary tendencies from permeating deeper. asian countries face a different set of challenges, though, like developed countries, they have the difficult task of striking an adequate balance between growth and inflation risks. 22. since economic growth was steadier in 2007, more immediate preoccupation of asia ’ s central bankers since july 2007 has been to deal with growing inflationary pressures. inflation rates in asia rose beyond projections and in case of inflation targeting regimes resulted in clear breaches. china and india, the two large economies, have resorted to monetary tightening, but primarily through raising cash reserve requirements by 700 bps and 350 bps since july 2007, respectively. these attempts to curb liquidity in the system and excessive demand pressures have not arrested the structural rise in prices. pakistan has been in a monetary tightening mode since april 2005 and has cumulatively raised the policy rate by 350 bps with the last two rounds of increase of 100 bps taking place after july 2007. meanwhile, other countries have held the policy rates steady. in only few cases, such as thailand and the philippines, growth risks outweighed inflation risk. consequently, policy rates were moderately lowered to ease monetary policy but with inflation creeping high, scope for loose monetary policy may no longer exist. 23. the complexity for central bankers in asia is that food inflation, with 40 - 50 % weightage in price indices, is a major driver of inflationary pressures. an excessive monetary tightening in this situation would end up creating complications for the economy without the desired impact on food inflation that is principally propelled by supply side constraints. at the same time, if monetary policy ignores stubbornly high food inflation, second round impacts would eventually strengthen the inflationary expectations. to resolve this dilemma, governments are resorting to fiscal subsidies to avoid full pass - through. high fiscal deficit countries cannot afford these subsidies and as such have resorted to a gradual and phased pass - through of rise in prices to consumers. 24. exchange rate appreciation emerging in a number of asian economies may offset some of the inflationary pressures. however this option is not available to some countries either because currencies are pegged or external current account deficits are high. given these limitations, it is best for countries to focus on fiscal consolidation to allow fiscal space for subsidies. however, this should be perceived as a short term policy response, while encouraging appropriate investments in the agriculture sector to raise productivity and improve functioning of the wholesale and retail markets under vigilance of local | 1 |
bank of japan's december review of monetary and economic trends in japan bank of japan, monthly economic review, 20 / 12 / 96. a moderate economic recovery continues in japan, as private demand shows increasing firmness. with respect to final demand, public sector investment has peaked, but housing investment has remained at a high level because of low interest rates. the decline in net exports has paused. business fixed investment is increasing steadily and a moderate increase also continues in personal consumption. meanwhile, inventories on the whole are at appropriate levels. in these circumstances, industrial production growth is somewhat accelerating and corporate sentiment is improving gradually. labor market conditions have improved on the whole, although the unemployment rate has remained at a high level. meanwhile, the decline in prices is slowing gradually and monetary aggregates continue to grow at 3. 0 - 4. 0 per cent. with regard to personal consumption, growth in sales of electrical appliances has been high, particularly in personal computers and cellular phones, and passenger car sales ( excluding compact cars ) have recently increased significantly. outlays for travel have remained firm and sales at department stores and supermarkets are increasing at a moderate pace. among leading indicators of business fixed investment, machinery orders are increasing steadily albeit with some quarterly fluctuations. after the decline in the third quarter 1996, they are expected to increase significantly in the fourth quarter. construction floor area has also picked up moderately. according to the bank of japan ’ s tankan - - short - term economic survey of enterprises in japan of november 1996, business fixed investment plans of principal manufacturing firms for fiscal 1996 continued to increase at the same pace as those for fiscal 1995, while those of non - manufacturing firms turned to increase for the first time in five years. as a result, business fixed investment of principal firms overall is expected to expand at a faster pace than in fiscal 1995. business fixed investment plans of small firms ( all industries ) were revised upwards substantially from the august tankan, marginally exceeding the level of the previous year for the first time in five years. this shows that the recovery in business fixed investment is spreading across a wider spectrum of industries and corporate sizes. with respect to housing investment, housing starts have continued to grow reflecting low interest rates and reasonable housing prices. it recorded a seasonally - adjusted annual rate of 1. 82 million starts in october 1996, the highest level since november 1973, partly reflecting the increase in orders in september 1996 before the expected rise in the consumption tax. regarding public - sector investment, | but potent interconnections between firms in the global financial system. policy response for most of the last year, the bank has adopted a twin track approach, as part of the tripartite partnership with the fsa and the treasury. the first track has been to provide liquidity to the market in order to give most banks time to make the necessary adjustments – including by raising capital. that has involved an increasing range of measures including long term repos on a wide range of collateral and the introduction of the special liquidity scheme which allows banks to swap illiquid assets for treasury bills for periods of up to three years. the recent dollar swaps and further extensions of the sls and eligible collateral are further steps in that direction. and we recently announced a more permanent structure of money market operations including the introduction of a discount window. the second track has been to work closely with the fsa and treasury to limit the repercussions from the failure of banks which do not have an independent future whether through arranging mergers or managing closure. northern rock was the first in line and led to a lot of criticism of the tripartite. i think we have learned a great deal over the year and have shown more skill and speed with subsequent cases including bradford and bingley recently. but in the last 6 weeks it became clear that this case by case approach was not enough either at home or internationally. despite the provision of additional liquidity to the system, market conditions got worse over the summer as worries grew about the downturn in the broader economy and its consequences for bank losses. once again the triggers for a further downward lurch came in the us. first fannie mae and freddie mac were taken into conservatorship and then, the following weekend, lehman brothers proved unable to find a buyer and filed for bankruptcy. that shook markets which had expected it to be saved by the state, if necessary, as had been the case with bear stearns earlier in the year. within a day, aig had to be rescued following rumours about the size of its losses on cds contracts and pressures grew on the remaining securities dealers. later in the week, secretary paulson announced his initial $ 700 billion plan to purchase assets to support the banking sector. it didn ’ t entirely still the doubts. the pressures were also felt in europe. at the end of september dexia, fortis and hypo real estate all had to receive emergency capital injections, mostly government supplied. in the | 0 |
is timely for regulatory authorities and policy makers to take stock and redouble our efforts to support investor education, investor protection and financial literacy. 3 / 5 bis - central bankers'speeches protecting consumers is at the heart of what we do at the central bank. we know that consumers who are well - informed and understand financial products and services are better placed to make good financial decisions and to look after their interests. these consumers are less likely to be vulnerable to harm from firms that are not securing their interests, and they are less vulnerable to frauds and scams. this is why high levels of financial literacy empower consumers to make effective and informed choices to safeguard their financial well - being. irish authorities are currently in the process of developing a national financial literacy strategy for ireland, something which we at the central bank strongly support. ireland's financial sector has an important role to play in supporting the savings and investment union and providing opportunities for retail investors to participate in capital markets. the sector has demonstrated high levels of resilience while continuing provide critical services to households and business in ireland and abroad. as with the european economy as a whole, over the last decade, the irish financial services sector has also continued evolve, in terms of its size, complexity and international connectedness. these developments are, of course, a positive for ireland, and positive for their contribution to european financial markets. we of course must be mindful that an expanding and more complex financial sector may poses risks that need to be managed. this reinforces the importance of effective regulation and supervision – to maintain financial stability and to protect consumers and investors, both within ireland, europe and globally. as i mentioned earlier, we recognise that we too must change to keep pace with the changing world. i would like to finish by outlining some of the work we are doing in this regard. as you will be aware, we have introduced the individual accountability framework ( iaf ). the iaf is all about helping underpin sound governance across the financial sector by setting out clearly what is expected of well - run firms. for both firms and the regulator it should be seen as a complement to the wider focus on governance, culture and behaviour. for the central bank our hope is that along with wider efforts, the iaf will help make firms take more ownership and responsibility for running their business and addressing any risks or deficiencies they may have. in an increasingly technological and rapidly changing world, the need for effective governance underpinned by a strong | is, therefore, important to capture not only the probability and magnitude of adverse impact of policies on inflation but also the damage that could be done both to price stability and inflation expectations in the event, even with very low probability, the risks do materialise. hence, there is a need to continue to demonstrate, in a credible fashion, by words and deeds, commitment of both monetary and fiscal authorities to stabilise inflation expectations. the government finances present a mixed picture since the presentation of the review, with greater comfort in regard to the central government ’ s borrowing programme and some discomfort at the trends in revenue deficit relative to budget estimates. the conduct of market borrowing programmes of several states continues to be a matter of concern. a distinguishing feature of the current year has been the strong growth in bank credit. non - food credit expanded by 18. 1 percent in the current financial year up to december 24, 2004. the growth in credit for housing and consumer durables continues to be a matter of some concern to the extent it reflects on credit quality, but a source of comfort is that the overall credit growth of late is reasonably well dispersed across sectors. though credit growth has shown an uptrend, money supply ( m3 ) growth has remained subdued at 7. 2 percent. by and large, the monetary trends are within the projections made in the review. the financial markets generally remained stable. though there was upward movement in interest rates in money and government securities markets in november, the interest rates have since reverted closer to levels in october 2004. the yield spread between highly rated corporate paper and government securities increased. furthermore, the spread between long term and short term government securities has declined. in the credit markets, the benchmark prime lending rates remain generally unchanged though interest rates for housing have marginally firmed up. public sector banks increased their rates for deposits of over one year. in the external sector, conditions in our forex market continue to be orderly. global developments in regard to output growth, currency markets, etc. have not been divergent from our expectations in the review and may continue to be so though uncertainties in regard to oil prices will continue, albeit in a muted fashion. since march 2004 the rupee has tended to appreciate against the us dollar and depreciate against other major currencies, primarily reflecting the weakening of us dollar. there are, however, some developments during the current year which are noteworthy. first, foreign exchange reserves increased by us $ 18. 2 billion, | 0 |
the crisis. 7. the increase in savings itself has been a consequence of the changing demographics and the welcome trend of rise in household savings. however, nearly half our population still lacks access to banking and other financial services. if we can redress that and provide this “ left behind ” population access to the entire gamut of banking services, we could raise household and overall domestic savings even further, and that will fulfill one of the necessary conditions to achieve the double - digit growth that we aspire to. 8. to make that happen, we need to deepen the penetration and expand the coverage of financial services to all sections of society and to all regions of the country in a meaningful way, particularly to those at the bottom of the economic pyramid. lack of financial awareness and literacy is one of the main reasons behind lack of access to financial products or failure to use them even when they are available. an ncaer and max new york life study shows that in india, around 60 percent of laborers surveyed indicated that they store cash at home, while borrowing from moneylenders at high interest rates – a pattern which increases their financial vulnerability. 9. financial literacy and awareness are thus integral to ensuring financial inclusion. this is not just about imparting financial knowledge and information ; it is also about changing behaviour. for the ultimate goal is to empower people to take actions that are in their own self - interest. when consumers know of the financial products available, when they are able to evaluate the merits and demerits of each product, are able to negotiate what they want, they will feel empowered in a very meaningful way. they will know enough to demand accountability and seek redressal of grievances. this, in turn, will enhance the integrity and quality of financial markets. one big lesson we have learnt in our outreach programmes is that financial literacy is not just a public good ; it is a merit good. what this means is that by deepening financial literacy, not just individuals and households, even the society at large stands to benefit. reserve bank ’ s initiatives 10. in the reserve bank, we treat financial inclusion and financial literacy as twin pillars. financial literacy stimulates the demand side – making people aware of what they can and should demand. financial inclusion acts from the supply side – providing in the financial market what people demand. while we have traditionally focused more on addressing financial exclusion through many supply - side measures so as to help “ connect people ” with the banking system, we have | ##ity seems to have improved in several markets, including – as noted earlier – the market for agency mortgage - backed securities. to the extent that these measures improve market functioning, they will have favorable effects on the ability and willingness to make credit available to the broader economy. more - liquid markets also increase the efficacy of monetary policy, which in turn improves our ability to meet the goals set for us by the congress – namely, to promote maximum employment and price stability. as you know, in response to the further weakening of economic conditions, the federal reserve has continued to ease the stance of monetary policy. the fomc reduced its target for the federal funds rate by a total of 125 basis points in january and by an additional 75 basis points at its march meeting, leaving the current target at 2 - 1 / 4 percent – 3 percentage points below its level last summer. as the committee noted in its most recent post - meeting statement, we anticipate that these actions, together with the steps we have taken to foster market liquidity, will help to promote growth over time and to mitigate the risks to economic activity. clearly, the u. s. economy is going through a very difficult period. but among the great strengths of our economy is its ability to adapt and to respond to diverse challenges. much necessary economic and financial adjustment has already taken place, and monetary and fiscal policies are in train that should support a return to growth in the second half of this year and next year. i remain confident in our economy ’ s long - term prospects. thank you. i would be pleased to take your questions. | 0 |
of retail deposits is the core factor behind the specialness of negative policy rates for banks. therefore, the share of retail deposits in a bank ’ s funding is the first relevant variable to assess. indeed, some analyses show that, when rates are at zero or below, new rate cuts will weigh more on banks ’ stock prices [ 1 ] and on their lending volumes [ 2 ] if banks are more funded through retail deposits. to be clear : this does not mean that our negative rate has had a general tightening effect. rather, we have all indication of the opposite : bank lending rates have decreased and lending has accelerated over the last three years. but it indicates that the rigidity of the cost of deposits can make cuts in negative territory less expansionary than when rates stay above zero. on the asset side, interest risk exposure works in the opposite direction : the smaller or slower the adjustment of interest income to the new rate cut, the more positive the impact on bank profitability. a longer average maturity of marketable assets implies bigger capital gains for banks. long - term fixed - rate loans allow the bank to benefit from higher net interest income until the full repayment, although loan renegotiations may limit the additional benefits. in contrast, more variable - rate or short - term loans entail a faster fall in interest income. thus, the net impact of negative rates on profitability will be different for different banks. those most reliant on deposits, providing short - term lending and holding fewer marketable assets might be the most affected. many cooperative banks may fit in this description. yet, the final impact on aggregate credit supply will depend on still other characteristics : banks with higher initial capital or margin to lower costs will be able to weather the temporary compression on profits and to better transmit the easier financial conditions to the economy. other measures implemented by the ecb over the last few years may have also offset the potential hampering impact of negative rates. the targeted ltros, for instance, have contributed to lowering the cost of funding for banks. our forward guidance on policy rates and our asset purchase programmes have increased the value of assets held by banks and to accelerate the recovery. in sum, they help to create the conditions which will allow us to normalise interest rates again. [ 1 ] ampudia and van den heuvel, 2017. [ 2 ] heider, saidi and schepens, 2017 ; de sola perea and kasongo kasham | a rational reaction for many households. in the euro area, household deposits account for one fifth of banks ’ liabilities on average. thus, a large withdrawal of retail deposits could be very problematic for banks, as they could become underfunded and more dependent on less stable financing. hence, banks have a strong interest in keeping retail deposit rates positive, even when other funding costs drop : in practice there is a zero lower bound for retail rates, so when policy rates become negative, the cost of part of the bank ’ s funding does not go down. however, after the drop in policy rates, interest revenues on assets do decrease : variable rate loans adjust to market rates, and the maturing portfolio will be replaced with assets yielding less. thus, banks ’ net interest income starts to fall. of course, banks can try to limit the impact on profitability, by taking on more risk, or getting cheaper, but less stable, funding. however, this could make them more fragile. to limit the fall in their interest income, banks could reduce lending rates to a lesser degree than with a “ normal ” interest rate reduction. of course, this would hamper the monetary transmission to the real economy. that is the opposite of what we want. fortunately, this is not the whole story, as other channels can offset this adverse impact of negative rates. when policy rates are lowered, fixed - rate marketable assets held by banks gain in value. this boosts banks ’ economic capital at the moment of the rate cut. banks also benefit from the improvement in the economy that follows the rate cut : the quality of the lending book improves, borrower risk goes down, and the demand for loans increases. in addition, variable rate loans become more affordable after a rate cut. while this reduces banks ’ interest income, it also makes repayments cheaper and should lower default rates. banks ’ characteristics matter thus, the ultimate impact of negative rates on bank profits and credit supply is difficult to estimate. not all banks would be affected to the same extent by the negative rates. the impact of negative rates on banks ’ profits will depend on the composition of their balance sheets and, more generally, on their business model. the channels through which profitability is affected – the share of retail deposits, scope for valuation gains and maturity of the loan book – can provide an indication of the direction and the extent of the effect on each bank. 3 / 5 bis central bankers'speeches the lower bound in the remuneration | 1 |
quarter of 1997 to 12. 2 per cent in the third quarter. another monetary aggregate which is of great importance for the reserve bank is the amount of liquidity available in the banking sector as reflected in the amount of loans banking institutions seek from the reserve bank ’ s discount window every day. this amount declined from a daily average level of r10. 6 billion in march 1997 to r5. 3 billion in october, indicating that the lower rate of increase in the demand for credit was no longer absorbing the increases in liquidity arising from the large net capital inflows from abroad. the banks no longer needed large amounts of reserve bank assistance for most of the time. these trends in monetary conditions were also reflected in interest rates which first rose quite substantially last year but then declined since the beginning of 1997. the rate on bankers ’ acceptances with a maturity of three months declined from 16. 2 per cent at the end of january 1997 to 14. 2 per cent on 25 october. satisfactory developments also occurred in the international financial aggregates over the past twelve months. the net inflow of foreign capital gained momentum again towards the end of 1996. during the first three quarters of this year, the total net capital inflow amounted to almost r20 billion. net purchases of bonds and equities by non - residents amounted to about r34 billion, which enabled south african residents, mainly institutional investors, to switch a further r17 billion of their south african portfolios into foreign currency denominated assets. the relatively large net capital inflows during the first three quarters of 1997 exceeded a smaller deficit on the current account of the balance of payments and enabled the reserve bank and the private banking sector to increase their holdings of short - term foreign assets. at the end of september 1997, the total gross gold and other foreign exchange reserves held by the combined banking sector amounted to an estimated r33. 6 billion, or the equivalent of about 10 weeks ’ imports. these favourable overall balance of payments developments contributed to a more stable exchange rate for the rand. after depreciating by almost 22 per cent in 1996, the nominal effective exchange rate of the rand, measured against a basket of the currencies of south africa ’ s major trading partners, depreciated by less than one per cent from 31 december 1996 to 31 october 1997. larger depreciations against the us dollar and the british pound were neutralised by appreciations against most of the european currencies and the japanese yen | and fairer, two objectives that i strongly support. in doing so, i am not opposed to changes that make sense, based on the experience we have gained from applying existing rules and approaches, or prompted by new and emerging issues. as always, we should ensure that any further changes yield significant improvement to safety and soundness at reasonable cost and seek to avoid approaches that fail to consider the tradeoffs between cost and safety. in forming my judgments about whether proposed changes in regulation meet the standard i have just laid out, i will be guided by the four principles i described in 2021, outlining my perspective on bank regulation and supervision. 1 i would like to briefly 1 / 8 bis - central bankers'speeches discuss these four principles, and then talk about how they have guided and will guide my thinking on a number of issues important to large bank supervision and regulation. the first principle is that bank regulation and supervision should be transparent, consistent, and fair. combined, these three elements, which we can think of collectively as due process, build respect for supervisory practices, and in doing so, make supervision more effective and encourage open communication between banks and supervisors. this principle applies equally to regulation. supervision cannot replace - and should never supersede - rulemaking. published regulations that have gone through the rulemaking process, with solicitation of public comment and bona fide engagement with the issues raised, are the best and clearest way for banks to understand the rules of the road and for the bank regulatory agencies to ensure banks satisfy safety - andsoundness objectives. this brings me to the second fundamental principle for regulation and supervision : striking the right balance between ensuring safety and soundness, on the one hand, and promoting acceptable and manageable risk - taking, including encouraging responsible innovation. to put it simply, this means matching regulatory and supervisory requirements to the risks presented. for the largest banks, this naturally includes an increased focus on financial stability risks. there are obvious risks from under - regulation, and it is those risks that were addressed in the wake of the financial crisis 14 years ago. but we sometimes overlook the significant costs to our economy, and risks to safety and soundness, from overregulation, where rules are not designed and calibrated to address the actual risks. in a time of rising interest rates that could constrain credit, it is especially important to ensure that regulation and supervision not add costs and burdens for banks with little or no benefits to safety and sound | 0 |
* * projected range from the bank of canada ’ s april 2020 monetary policy report statistics canada and bank of canada projections gdp last data plotted : 2022q4 these possible outcomes reflected two distinct dynamics. some economic activity and employment would return to normal levels as soon as the pandemic subsided and lockdowns were lifted — similar to what often happens following a natural disaster. other economic activity would take longer to come back. indeed, in the spring of 2020 economists around the world debated about whether the recovery would be v - shaped or l - shaped. the bank ’ s view was that each of these dynamics would likely play out in turn, resulting in a two - phased recovery : first reopening and then recuperation. why did we expect full recuperation to take longer? it was partly because of our experience with the global financial crisis of 2008 – 09. the long, drawn - out recovery that followed that crisis reflected a large and prolonged rise in unemployment and massive damage to balance sheets. as a result, the global economy took 10 years to recover to its pre - crisis trend. labour markets can be damaged by lengthy recessions. unemployment can have persistent effects on people ’ s skills and their ability to re - enter the workforce. because the pandemic began with such a huge increase in unemployment and so much uncertainty around how long the pandemic would last, this concern was front of mind. the unevenness of job losses caused by the pandemic also suggested that inequality could widen, which itself has negative economic consequences. in all, we saw powerful downdrafts on the economy in those early months — reflected in our expectation that it would take until 2023 for slack to be absorbed. the same view was evident in our projection for inflation at the time. we can see in chart 5 that our earlier projection showed inflation creeping up to our 2 % target over three years. chart 5 : consumer price index inflation, projected versus actual year - over - year percentage change, quarterly data, not seasonally adjusted % - 1 projected cpi inflation * actual cpi inflation * projected cpi inflation from the bank of canada ’ s july 2020 monetary policy report sources : statistics canada and bank of canada projections last data plotted : 2022q4 needless to say, this is not exactly how things turned out. the economy ’ s path of recovery has followed the upper edge of the range we had contemplated. employment recovered more quickly than expected. and inflation persistently ran much higher than | implied cpi path consistent with the 2 % inflation target last observation : december 2021 this surge in inflation has been more persistent than anticipated. part of it reflects a catch - up in prices after inflation dropped in 2020 ( chart 3, panel b ). it also reflects the impacts of both supply constraints and strong demand in global markets — especially for goods. we now expect that inflation will remain close to 5 % through the first half of this year. the initial policy response so now that we ’ ve talked about our journey over the last two years, let ’ s turn our attention to the policy response in those early days of the crisis. the sheer scale and complexity of this pandemic was beyond what anyone anticipated. how did the bank navigate its course? once the virus spread across the world and the first lockdowns were implemented, we clearly understood that the economic and financial impacts would be serious. just how serious was still quite uncertain. but we knew that the situation called for extremely aggressive policy responses, right from the start. our thinking was that it was better to do too much up front to strongly support the recovery than to play catch - up later. when the pandemic first hit, the top priority was to support canadian households and businesses. in addition to helping those most directly affected, our goal was to prevent second - round effects on other sectors of the economy — notably the impacts that can occur when those who have lost income cut back their spending. we were also worried about businesses delaying investments. a second problem we needed to tackle right away was the breakdown of financial markets. in an atmosphere of panic, asset values plummeted and we saw a generalized dash for cash. market liquidity suddenly evaporated — in other words, sellers had difficulty finding buyers, even for safe assets such as government bonds. this dynamic threatened to block the flow of credit for households and businesses just when they needed it most. the bank responded swiftly and aggressively to restore calm to financial markets. we provided liquidity to the financial system through several channels, including repurchase agreements and direct asset purchases in a range of financial markets. these actions, alongside similar measures taken by central banks in other countries, quickly restored market functioning worldwide. it was clear that the federal government ’ s fiscal policy would need to take primary responsibility for supporting households and businesses, because it could focus that support to manage the uneven impacts of the pandemic. many canadians who had the option of working remotely stayed employed. meanwhile, many | 1 |
as well as the opening of an account. it may subsequently emerge that there is a terrorist link. thus, success in the fight against terrorist financing depends in large measure on the overall quality of ais ’ controls against money laundering - in particular, their ability to detect suspicious transactions. the customer due diligence process this in turn depends on an institution ’ s knowledge of its customers and what is a normal pattern of account activity for a particular customer. it is crucial therefore for ais ’ to have effective systems for customer due diligence. the main essentials are already there in the hkma ’ s guideline, which requires ais to make reasonable efforts to determine the customer ’ s true identity. but the process may need to be articulated more clearly so that ais are in no doubt about what they should be doing. the fatf ’ s consultation paper is useful in spelling out the main elements of the due diligence process, namely : • to identify the direct customer ; • to verify the customer ’ s identity ; • to identify the person with beneficial ownership and control, who may be different from the direct customer ; • to verify the identity of the beneficial owner and / or the person on whose behalf a transaction is being conducted ; and • to conduct ongoing due diligence and scrutiny. a number of features stand out from this. first, the process of know your customer is a two - stage process - identification and verification. second, there is a clear obligation on institutions to look behind the corporate veil, nominee or trustee to the ultimate beneficial owner. if necessary, this means following the chain of ownership or control to the natural persons at the very end of the chain. there are obvious practical difficulties in this, which we can discuss with the industry. but the basic issue is whether it is safe for institutions to establish a banking relationship if they do not really know with whom they are dealing. the third point to note is that the due diligence process does not apply simply at the time the relationship with the customer is entered into. it must be an ongoing process using detection and reporting mechanisms that can pick up large or unusual transactions. the compliance officer appointed to take overall charge of the institution ’ s anti - money laundering efforts should play an active role in the monitoring process and should not simply be the passive recipient of ad hoc reports from front - line staff. it also follows that ais must not only know their customer but also know their customer ’ s business and the | laundering. our particular responsibility relates to ais. it is our job to verify that ais have adequate policies, procedures and controls in place to enable them to : • identify suspicious customers and transactions ; • report suspicious transactions to the joint financial intelligence unit ( “ jfiu ” ) ; and • assist the law enforcement authorities through providing an audit trail. we do this through issuing guidelines that lay down the minimum standards that institutions should incorporate in their anti - money laundering systems. we then carry out on - site examinations to check that these standards are being adhered to. this year we introduced a two - tier, risk - based approach towards examinations. in cases where ais may be at higher risk of money laundering, we conduct more in - depth examinations using specialist teams. this may involve sample testing and visits to branches to look at how controls actually work in practice and to ascertain at first hand the knowledge and awareness of staff. in more routine cases, higher level review of anti - money laundering controls is conducted, generally as part of our normal risk - based examinations. we intend to supplement our own examinations with a system of self - assessment by compliance officers of ais on risk indicators of money laundering within their own institutions and the quality of controls. this will be done using a structured self - assessment framework that we aim to release to the industry later this year. this should help the hkma to conserve its own resources and direct them where they are most needed. but it should also serve to remind ais that they have the primary responsibility for making sure that their own house is in order. the hkma guideline checking that standards are being observed is obviously important. but it is necessary to ensure that the standards themselves remain effective in dealing with risks. that is why we are currently engaged in reviewing our anti - money laundering guideline. in doing so, we are making particular reference to two main sources. the first is the paper on customer due diligence for banks issued by the basel committee in october 2001. the other is the consultation paper released by the fatf in may of this year on its review of the fatf forty recommendations that set the international standards on anti - money laundering. i would strongly recommend that all ais familiarise themselves with both documents. comments on the fatf consultation paper are due by the end of this month. the process of revising the fatf recommendations will probably not be completed until some time next year. final revisions to our own guideline | 1 |
been the case under the current capital regime. pillars ii and iii have not, i think, received the attention they deserve by the industry. perhaps it is because of the challenge of developing a new regulatory regime. perhaps, also, banks in the united states believe that they are already subject to supervisory oversight ( pillar ii ) and already engage in sufficient disclosure ( pillar iii ). but both pillars are critical modifications for several important reasons. as i noted, pillar ii is designed to avoid the need to design rules for everything and to give supervisors the flexibility to adjust to fit individual cases. pillar iii, by harnessing market discipline as another form of oversight, is also critical to avoiding an increase in regulation that would otherwise come as organizations become more complex. more disclosure - - especially on risk exposures - - is going to be necessary. pillars ii and iii are also extremely important for ensuring that banks here and abroad are treated consistently. in the united states and in other countries, pillar ii supervision is essential to ensuring, on an ongoing basis, that banks are implementing pillar i in a disciplined way. the pillar iii disclosures are equally important in ensuring a level playing field among internationally active banks. those banks in this country that argue that disclosure will create an uneven playing field vis - a - vis domestic nonbanks should consider whether they might not be better served by disclosure rules for their foreign bank competitors. the combination of pillars i, ii, and iii is necessary to build a structure consistent with the increasingly important process of internal capital allocation at banks and to achieve what economists call incentivecompatible regulation. by that we mean a regime in which the regulatory rules and processes induce behavior that is consistent with the banks'own systems, objectives, and processes. such a structure forces supervisors to view the internal capital - allocation process consistently with bank managers. it may well be that the supervisors'role in the oversight of economic capital determination and the markets'review of banks'risk exposure and management may be more important than the establishment of regulatory capital minimums. ii. the process as any manager knows, the process of converting a vision to reality is difficult for reasons varying from unacceptable costs to conflicting visions. we have been working to revise the basel accord - - trying to give birth to basel ii - - for half a decade. and i think it important to underline that we have made tremendous progress. many things have been decided to enhance the risk sensitivity of the revised accord and many of the proposals that needed modification | median federal funds rate projection of fomc participants, represented through fan charts, which was recently incorporated into the sep. the federal reserve could be too predictable if this type of fundamental uncertainty about the economy does not show through to uncertainty about the monetary policy path, which could imply that the federal reserve was not being sufficiently responsive to incoming data bearing on the economic outlook. let me conclude with a few words on the sep results as portrayed in the dot plots. the sep is a highly useful vehicle for providing information to market participants and others for whom fed actions are important. but we need to remind ourselves that the sep data for an individual show that person ’ s judgment of the appropriate path of future fed funds rates and the corresponding paths of other variables for which the sep includes forecasts. thus, one may say that the sep shows the basis from which each participant in the fomc discussion is likely to start. but the task of moving from that information to an interest rate decision is not simple and requires a great deal of analysis and back - andforth among fomc participants at each meeting. - 12 references bernanke, ben s. ( 2004 ). “ the logic of monetary policy, ” speech delivered at the national economists club, washington, december 2, https : / / www. federalreserve. gov / boarddocs / speeches / 2004 / 20041202 / default. htm. - - - - - - - - ( 2013a ). “ communication and monetary policy, ” speech delivered at the national economists club annual dinner, herbert stein memorial lecture, washington, november 19, https : / / www. federalreserve. gov / newsevents / speech / bernanke20131119a. htm. - - - - - - - - ( 2013b ). “ statement of hon. ben bernanke, chairman of the board of governors of the federal reserve system, washington, dc, ” in the economic outlook, hearing before the joint economic committee, congress of the united states, may 22, senate hearing 113 - 62, 113 cong. washington : government printing office, https : / / www. gpo. gov / fdsys / pkg / chrg - 113shrg81472 / pdf / chrg113shrg81472. pdf. - - - - - - - - ( 2013c ). “ transcript of chairman bernanke ’ s press | 0 |
nestor a espenilla, jr : turning vision into partnership speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the awards ceremony and appreciation lunch, manila, 11 july 2017. * * * pdic president roberto tan, national statistician lisa bersales, members of the monetary board, sector heads, fellow bspers, former central bank governor jaime c. laya, guests, a pleasant good morning to all of you. magandang umaga especially to our stakeholders and awardees. every year for the last fourteen ( 14 ) years we at the bsp have held this annual ceremony traditionally right around this time : our anniversary month … there is significance in this chosen timing. the message we wish to convey is that, not only do we value you : our stakeholders... more so, we recognize that the bsp would not have achieved all it has if it were not for your partnership. this is why we celebrate with you during our milestone month of july. the theme of our 24th anniversary here at the bsp is “ together moving forward : a new season of excellence. ” there is a journey implied, and a needed collaboration and cooperation expressed. this theme includes, not just the members of the bsp family progressing onward in unity, but this includes you too, our esteemed stakeholders, whom we honor today. i have been with the bsp – then, the central bank of the philippines – since 1981 … and as a young central banker one of my tasks was to draft technical speeches … so even thirty - six years after, i still have a passion for words. let me focus on this event ’ s keyword. stakeholder. it sounds quite ominous. its origin is consistent with this sense of foreboding. the word “ stakeholder ” first appeared in the oxford english dictionary in 1708. it referred to one holding a wager, a bet. thankfully, for us now, the word has evolved into a dynamic — even an exciting and active concept, where speculation has no role. as presently understood, stakeholders are partners and can be involved in the successes of an enterprise, from whose accomplishments they too can greatly benefit. the importance of collaboration and partnerships was stressed by governor amando m. tetangco, jr. in his two ( 2 ) terms at the bsp ’ s helm … gov. say repeatedly said that in | amando m tetangco, jr : effective lending to smes in the philippines speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the launch of the 2012 rcbc sme initiatives, makati city, 16 may 2012. * * * the officers and staff of rcbc under the leadership of president lorenzo tan ; entrepreneurs from the sme sector ; fellow advocates in promoting access to credit ; special guests, good evening. it is my pleasure to join this launch of innovative and customer - friendly initiatives of rcbc... in support of small and medium enterprises : the phone - a - loan service and the women ’ s enterprise loan program. these two programs join the internet - based loan self - assessment service introduced in 2009. indeed, rcbc deserves commendation for these services that enable smes to find out early on – by telephone or internet – if their business fits in … with rcbc ’ s sme initiatives. this is … therefore … a win - win program that saves time... for both the entrepreneurs seeking credit and the bank offering credit. the women ’ s enterprise loan program is also noteworthy for addressing the need of filipina entrepreneurs … not only for credit, … but also for incorporating other financial services, training and business networking. in other words, this program is designed to support the growth of smes managed by filipinas. this is a good decision. in the microfinance world, it has been proven... repeatedly... that women make exceptional entrepreneurs and have good credit discipline. that you are launching the women ’ s enterprise loan program on the week of the celebration of mother ’ s day … makes your program even more meaningful. ladies and gentlemen. we need our financial system to reach out to underserved and the presently unserved. together, we should work on having an inclusive financial system that brings about inclusive growth … in our country. this is the value of your sme program. as it is, the 2010 financial access survey indicated that only around 20 % of our small firms access loans from financial institutions. the figure is higher in our neighboring countries ; in malaysia, for instance, the comparable figure is 60 %. the impact of micro, small and medium enterprises on our economy and our people cannot be overemphasized. together, our msmes are estimated to employ roughly 61 % of filipino | 0.5 |
age population. growth will therefore depend, in part, on raising employment rates by increasing the flexibility of labour markets, bringing into the labour market sections of the population with relatively low participation rates ( especially women and older people ) and continuously upgrading the skills of the labour force. improving productivity growth should also be based on bolstering labour productivity. improving productivity requires first and foremost a modernisation of the business environment. policies in a number of areas could help here. the strengthening of competition in product markets can encourage innovation and the implementation of measures to reduce production costs. competition can be encouraged by removing barriers to business start - ups and reducing the complexity of the regulatory environment surrounding firms. productivity levels in business also depend on the efficiency of public administration. it is commonly agreed that inefficient staff allocation and the operational framework of public administration do not meet the requirements of the greek society and economy in an efficient manner, while reform proceeds at a relatively slow pace. in order to reap the full benefits of the introduction of information and communication technologies in public administration, training of personnel and upgrading administrative procedures are essential. creating the conditions in which economies of scale can be exploited is also important for improving productivity levels. in the past, the small scale of greek enterprises severely hindered their ability to exploit economies of scale. however, globalisation and the opening up of markets in the region have weakened this constraint. additionally, the creation of clusters of firms with similar activities can also help smaller companies benefit from economies of scale by cooperating in cost sharing, know - how transfer and specialisation of services and products. a second area which can contribute considerably to raising productivity is that of infrastructure. despite the progress made, there is ample room for improvements in the areas of both transport ( land, sea and air ) and network industries ( energy, water and communications ). finally, investment in both human and physical capital has an important role to play. with the opening up of new markets in the region, investment in physical capital has now become more attractive. of equal importance is investment in human capital through education and vocational training. whilst in greece the percentage of 20 - 24 year olds who have finished at least high school education is higher than in the eu - 15 countries ( 84. 1 %, compared with 76. 4 % ), the results of the pisa exams designed by the oecd to test knowledge and skills showed greek students performing much worse than students from the other eu - 15 countries. at the same time | welcome address by bank of greece governor yannis stournaras at a formal dinner in honour of jean - claude juncker, former president of the european commission and former prime minister of luxembourg 18 / 05 / 2022 - speeches on the occasion of his election as honorary member of the academy of athens. it is a great pleasure and privilege for the bank of greece to welcome president jean - claude juncker, on the occasion of his election as honorary member of the academy of athens. we welcome a great european statesman and a great friend of greece. a man who has contributed so much to greece staying in the eurozone in 2012 and 2015, as i have witnessed first - hand in these difficult years, first as minister of finance and then as governor of the bank of greece. a statesman who, during his long years of service in senior government positions both in luxembourg and at european institutions, proved to be one of the staunchest champions of european integration and one of the strongest leaders who handled successfully the crises that the eurozone faced over the last several years. a visionary leader who contributed enormously to the creation of our common currency, the euro, who strongly believed in it since its inception and fought hard to ensure its stability throughout these years. born in luxembourg, a country in the heart of europe, our dearest jean - claude realised at a young age that the future of europe lies in the close cooperation of its member - states and mainly in the gradual integration of national policies and rules. having left his mark on his country ’ s politics, he rose to top positions in the european union and, in this capacity, worked hard on european integration. he is one of the great europeanists, following in the footsteps of helmut kohl and francois mitterrand, with his firm conviction that european integration is the only way forward and that this path is irreversible. president juncker was one of the most consistent and influential advocates that greece could solve its fiscal problems within the eurozone, rather than outside, as some sadly wanted at the time. he strongly resisted the idea that greece should be sacrificed like iphigenia to allow the fleet to sail. this was due not only to his expressed love for greece and its heavy cultural heritage, but mainly to his strong belief in the european values and in the basic principle of keeping the eurozone together. he fervently defended greece ’ s place in the european family, by deeply understanding and recognising the efforts that the | 0.5 |
by banks that were not yet doing it, showing banks'1 / 3 bis - central bankers'speeches willingness to integrate energy performance data into their credit risk management policies. this is good news. however, as supervisors, we are also concerned about the existing stock of loans. most of the data on this are based on proxies, which makes it difficult for both banks and supervisors to design and implement proper risk management measures. obtaining real data is admittedly challenging, yet many of the banks represented here today have made notable strides. you have found a way to collect energy performance data and use them effectively. and we invite all banks that have not yet advanced on collecting such data to learn from the good practices of those banks that have made critical leaps forward. legislative changes will improve the availability of energy performance data integrating climate - related data is also vitally important in view of impending legislative changes. the revised energy performance of buildings directive1, which includes common requirements for setting up national databases on the energy performance of buildings, is an important development that should help narrow the data gap. in the spirit of the directive, further work is needed to ensure adequate data management and increase the reliability and consistency of climate - related real estate data across the european union. establishing a comprehensive european database of all buildings in the eu will take time. so banks cannot just sit back and wait. as supervisors we expect banks to manage all material risks. and this requirement is not conditional on the attainability of harmonised data. we therefore strongly encourage all efforts to improve data availability and welcome the successful strategies that some banks have implemented to address data gaps. today's agenda will focus on the collection of energy performance data for the commercial and residential real estate sectors. but this will not be the only topic. properties in areas prone to hazard events such as floods, rising sea levels or wildfires are increasingly vulnerable and could see a decrease in their collateral value. last week's devastating floods in austria, czechia, hungary, italy, poland, romania and slovakia were a stark reminder of that. therefore, later in today's programme we will discuss the challenges and potential solutions for monitoring physical risk. in the coming weeks, the ecb will publish an analytical paper focusing on whether residential mortgage rates in high climate risk areas are influenced by this risk. the paper finds evidence that climate - related risk is already priced into mortgages. in other words, we see that an average bank took climate - related risks into account as loans | secured by real estate in high climate risk areas were more expensive than loans with the same characteristics but in safer regions. however, the effect we find is economically small, so it seems that the climate - related risk is still underpriced by the average bank. let me conclude. good, reliable data are a cornerstone of sound risk management. this also holds true for managing the risks stemming from climate change. thanks to the ongoing dialogue between supervisors and banks, some major stumbling blocks have already been overcome. the good practices observed for collecting real data on energy performance 2 / 3 bis - central bankers'speeches show that, while the task is challenging, it is far from impossible. sharing your practices with peers will help more banks to improve the availability of energy performance data. so we are all looking forward to hearing about your experiences and learning from what worked well. the ongoing climate and nature crises will inevitably render our economy more susceptible to shocks. from a risk - based perspective, let me reassure you that ecb banking supervision will continue to play our part in spurring on banks to prepare for these risks. to succeed in our common goal of making banks resilient to climate and nature - related risks, it is vital that we keep up this dialogue with you – the industry – and encourage the exchange of good practices in the years to come. i would like to thank you for coming to frankfurt today to share your experiences. 1 see european commission ( 2024 ), energy performance of buildings directive. 3 / 3 bis - central bankers'speeches | 1 |
and no one did before the fact – the rise in inflation that followed. nevertheless, we have managed to chart a path through this uncertainty. the challenge ahead is to ensure that inflation continues to fall and approaches our objective in a timely way, while at the same time growth strengthens to reach sustainable levels ensuring full employment. the nature of the risks we are facing is however unusual. increasingly, volatility in growth and inflation will be driven by a pair of major structural forces such as 2 / 3 bis - central bankers'speeches geopolitical fragmentation and climate change, that we have next to no experience of. these risks are particularly difficult to quantify and forecast. they present a unique challenge for central banks – a challenge that calls for a different type of response. in this new and highly uncertain environment, we look to academics and researchers to guide us through uncharted waters. it is through path - breaking research, that policymakers'knowledge can grow. furthermore, from my perspective, it has become apparent that aggregate data are not enough, and policy makers need more granular data. micro data firstly improve our understanding of the transmission mechanism of monetary policy and secondly allow us to better understand the aggregate data and thus better forecast their evolution. the combination of methodological developments and the increased availability of granular data may facilitate much richer analysis and more informative quantitative estimation of the impact of various types of shocks and, crucially, the impact of various types of policy measures. that said, the european system of central banks is actively conducting research with the aim to deepen our understanding of how monetary policy transmits to the european economy. the bank of greece has an active research department which pursues several avenues of economic and financial research, both theoretical and empirical. in addition to its own research, the bank of greece is involved in research projects carried out within the wider context of the european system of central banks through its participation in various research networks. i would also like to point out that the bank of greece is one of the first central banks worldwide to engage in climate change and sustainability issues, having set up as early as in 2009 the climate change impacts study committee ( ccisc ). concluding, a major task of central bank research is to bridge the possible gap between academics and policy makers and to create occasions for interactions with the academic community. we trust that research is enhanced by exposure to external ideas and latest advances in the field. once again, it is a pleasure to host today's | exchange crisis a few years ago is a reminder. from the early 1990s the bank of greece, as the supervisory authority, laid down the rules and brought pressure to bear for the modernization and strengthening of the banking sector. to - day we coordinate our efforts with the commercial banks to promote the necessary adjustments in line with basel ii. the new international reporting financial standards and accounting standards, should make the banking system even more flexible, strengthen its capital base and improve its internal control and risk management systems. given also the significant presence of greek banks in the balkan countries the bank of greece has signed memoranda of understanding for cooperation with the supervisory authorities of these countries. greek firms have also risen to the task of responding to globalisation not by adopting a defensive strategy, but by embracing globalisation themselves. there have been very significant direct investments by greek firms abroad, especially in the balkans. this is particularly evident in the financial sector, where greek banks now occupy top positions in all our neighboring countries. about 5, 000 greek firms, mostly small to medium - size enterprises but also a few large ones, are now operating in the balkan countries and greece is between the three biggest investors in the region. this inevitably entails some delocalisation of part of greece ’ s manufacturing and trading units. however, so long as they retain in greece their high value added activities ( their headquarters, their commercial and their research activities etc ), this delocalisation in the long run helps both the host and the home country economy. i always try to give an example : the uk lost some 3. 5 million industrial jobs ( 50 % decrease ) between 1978 and 2003 and gained over this period some 3 million jobs in the financial sector ( 100 % increase ) ; as the value added in the latter may be 4 times higher than in industry, the total gain for the economy has been enormous and is the main explanation of the success growth story of the uk in the last couple of decades. i have repeatedly stressed the example of london as a financial center, and all factors favours athens for becoming a regional financial center, not only for the balkans but even for countries further away. likewise, athens and thessaloniki can become trading centers for companies operating in the wider area. attracting foreign firms should form a central part of our future strategy. in the foreign direct investment league, especially in manufacturing, greece unfortunately comes close to the bottom in europe. but this hides the fact that many foreign firms, either completely on their own or in | 0.5 |
one could go on and on. we may look back on y2k as a major watershed event of a new information technology era that first dawned only two or three decades ago. we have learned much from it and glimpsed in the mirror darkly how much more we must yet learn to cope with. we have vividly seen how complex and interdependent our economic affairs have become, and this new awareness is already beginning to pay off in higher levels of efficiency and effectiveness. but we have also seen the outlines of technology - driven challenges that will press in on us with increasing urgency and could prove to be very difficult to deal with effectively. the cosmos club, both through its distinguished membership and the program focus it plans for the future, will play an important role in the drama that will unfold. it has been a privilege for me to have a small part in the opening scene. | in both the february 2020 and 2021 outgoing rotation groups. earnings are weekly and were compared with all members of the outgoing rotation group in february 2020. 2 see the federal reserve banks'small business credit survey : 2021 report on employer firms ( pdf ) fielded in september – october 2020. 3 see the frbs'small business credit survey in note 2 as well as small business credit survey : 2021 report on firms owned by people of color ( pdf ) released on april 15, 2021. 4 data comparisons are for the period between february 2020 and march 2021. 3 / 3 bis central bankers'speeches | 0.5 |
include those of kydland and prescott ( 1977 ) and of barro and gordon ( 1983 ). these studies argue that, in the short term, there is the temptation for monetary policy to exploit a seemingly existing trade - off between employment and inflation through expansionary policy measures. in the long run, however, there is no such trade - off because, given the adjustment of inflation expectations, these measures would be systematically anticipated and would thus be rendered completely ineffective. the outcome would simply be higher inflation without any benefits to employment or growth. the ecb ’ s mandate and its independent status are laid down in the european treaties. these treaties were ratified by democratically elected parliaments in all member states and, in some countries, by referenda. the core elements of the monetary union – namely price stability as the primary objective of monetary policy and an independent central bank – have remained unchanged in each of the treaty revisions since first laid down in the maastricht treaty in 1992. accordingly, they were reconfirmed and re - legitimised through the ratification of the lisbon treaty by now 27 eu member states. the members of the ecb ’ s decisionmaking bodies are appointed by democratically elected politicians. in addition, provisions are in place in order to ensure the personal independence of individual monetary policy - makers. for example, the term of office for members of the executive board of the ecb is limited to eight years, and is non - renewable. together, the treaty - enshrined foundations of the monetary union combine the ecb ’ s independence with clear, democratic legitimation. price stability is in the acknowledged, very best long - term interests of the people. stable prices benefit society as a whole, rather than serving individual interests. price stability guarantees the purchasing power of income and the value of savings. it prevents arbitrary redistribution and fosters employment and growth. only when prices are stable is the price mechanism – the key tool for managing supply and demand in a market economy – transparent and efficient. these findings also have a strong tradition within german economic science. walter eucken ( 1952 ), one of the spiritual fathers of what is known as “ ordnungspolitik ” and the social market economy, rightly described price stability – as he put it at the time, the “ primacy of foreign exchange policy ” – as one of the constitutive principles of a competitive order. he envisioned a “ monetary constitution with a stabilis | ##er for monetary value ” that would avoid both inflation and deflation, and would function “ as automatically as possible ”. the eu ’ s monetary constitution reflects a consensus on stability among economists that has developed in europe over many decades. with its constitutionally guaranteed independence, the ecb acts as a stabiliser of the value of money. there is no completely automatic guarantee of a stable value of money, but the clear commitment to the primary objective of maintaining price stability acts as a compass in all decisions relating to european monetary policy. in democracies, certain tensions between independent central banks on the one hand and governments as well as economic and financial pressure groups on the other hand, do arise from time to time. given agents ’ varying time horizons, these tensions are part of the nature of the issue at hand. the deutsche bundesbank and its predecessor, the bank deutscher lander, were repeatedly subject to criticism. an early example thereof is the well - known speech by adenauer in 1956, when he branded an increase in interest rates as a “ guillotine for the man of the street ”. the ecb itself cannot claim to have been lacking advice from the political sphere. it joins a long tradition of independent central banks in this respect. several euro area governments criticised the ecb when it decided not to decrease interest rates in 2004 and to raise them at end of 2005. with the benefit of hindsight nobody would now question that the decisions of the time were appropriate. the exemplary nature of the cases cited is also revealed by the fact that criticism almost always arises in response to restrictive monetary policy measures. expansionary measures, by contrast, are virtually never criticised. this, too, reflects the differences in the time horizons envisaged by independent central banks, on the one hand, and executive branches as well as pressure groups on the other. looking ahead, the financial crisis has created considerable challenges for monetary and fiscal policy. from the very outset, the monetary policy measures taken by the eurosystem during the financial crisis were specifically designed in such a way that they could be phased out relatively easily and gradually once the environment improved. the goal of maintaining price stability never changed, and meanwhile the unwinding of these measures has started. the situation in the field of fiscal policy is more complicated. budget deficits in many countries across the globe have grown substantially on account of the crisis, although the euro area ( in terms of the average deficit across member states ) did not by any means | 1 |
the entire financial system, not just banks, but other financial institutions as well, more reliable and technologically advanced. all customers must be confident that they will get high - quality services. and know for sure that they won ’ t be cheated. this will only happen when standards and requirements for service providers are transparent, understandable and the same for all. a regulator that has zero tolerance of the non - market behavior of financial institutions will be watching over companies. i can guarantee that. what is more, financial services will be available online from all devices, be it a laptop, a smartphone, or an ipad. people will be able to get the services they need. in this regard, ukraine will be on a par with countries where financial services and fintech are developing rapidly. fourth. we want ukrainian financial services to be fully in line with european standards. this will instill more confidence in clients. and this is ukraine ’ s direct commitment under the eu - ukraine association agreement. we are gradually discharging our obligations in order to enable ukraine to integrate into the eu ’ s financial environment. and finally, the fifth goal. we are seeking to enhance trust in the financial market. there are many reasons why ukrainian sometimes take a cautious approach to financial services, and may not be always prepared to be the clients of banks, insurance companies, and pension funds. the main culprits are the financial crises ukrainians had to go through, which may have led to a negative experience or even financial losses. our task is to minimize negative experiences and to ensure reliable protection of the rights of financial services consumers. and not just by words, but by deeds. this will be the financial system ’ s contribution to restoring confidence in the state. we hope that by 2025 we ’ ll be able to : generally increase the ease of doing business in ukraine and attracting foreign investment make financial services reliable and transparent, while decreasing the cost of cashless payments provide remote access to such services and more. overall, it ’ s not an exaggeration to say that the 2025 strategy is a synonym for the continued development of the financial sector and the entire ukrainian economy. if you go through the strategy, you will see that the roadmap for specific changes we want to implement accounts for 3 / 4 bis central bankers'speeches more than half of the document. and we have already started. the nbu, for example, has as usual drawn up an action plan for the current year and reported on | andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 25 january 2024. * * * dear colleagues, the board of the national bank of ukraine has decided to keep its key policy rate at 15 % per annum. this decision comes along with the need to maintain exchange rate sustainability, keep inflation moderate in 2024, and bring it to the target range of 5 % ± 1 pp over the monetary policy horizon. despite russia continuing its aggression against ukraine, the inflationary pressure eased significantly last year, including due to the nbu's consistent monetary policy inflation slowed to 5. 1 % yoy in november and stood at this level in december. good harvests and lower global energy prices were major factors behind the decrease in the pressure on prices. the moratorium on tariff increases for certain utilities played an important role. at the same time, a decline in core inflation to 4. 9 % as of the year end also points to a sizeable contribution made by the nbu's consistent monetary policy, in particular measures to ensure exchange rate sustainability and attractiveness of hryvnia assets. these measures helped improve exchange - rate and inflation expectations. despite the expected acceleration of inflation in 2024, it will remain moderate and will return to the target range in 2025 inflation will be within the target range in the coming months. from the middle of the year, it will accelerate somewhat as effects of last year's bumper crops wane. additional pressure on prices will come from the further recovery in consumer demand, as well as the pass - through of business costs to consumer prices, in particular due to persistently high security risks and wage increases. however, inflation will remain moderate, in part due to the nbu's measures to maintain exchange rate sustainability and the attractiveness of hryvnia assets. inflation is expected to reach 8. 6 % as of the end of the year. in 2025, it will return to its target range, slowing to 5. 8 % as of the end of the year. in 2026, inflation will meet the target of 5 %. this will be primarily driven by a decline in security risks, which is assumed by the forecast. it will ensure an overall improvement in expectations, and will allow restoring the logistics and production processes. the price pressure | 0.5 |
##ted or recovers within a short period if there is any failure. 13. the sixth indicator of excellence is ‘ adaptability ’. in a fast changing world, product life cycles are becoming very short and thus adapting them for quick changes is a virtual requirement. i may at this stage indicate that while the rbi introduced the micr cheque clearing with the reader sorter based processing, it also closed it a few years ago and brought in cheque truncation. this is a good example of adaptability coupled with evolution. way forward 14. let me flag a few aspects, which apply to any payment service provider and products, and may need to be examined going forward. i. performance assessment : as i look at the landscape of retail payment systems, the question of whether we have too many products / variants could be contemplated. products that have outlived its utility could be eased out. the process of consolidation, exit route for products and players should be actively pursued. may be markets / users themselves could take care of this. it is also useful to make the systems inter - operable to harness their true potential. ii. customer grievance redressal mechanism : ( a ) the e - baat programmes and the recent media workshops that rbi has conducted reveal one striking keynote address by shri b. p. kanungo, deputy governor, reserve bank of india, at the npci national payments excellence awards function, mumbai, on may 29, 2018. inputs received from the department of payment & settlement systems are acknowledged. feature. lack of consumer awareness not just on the various payment options and features available, but even on the grievance redressal mechanisms available. this illiteracy transcends across all geographies and regions, not just rural or semi - urban, north or south and is equally true of the staff at the front desks of bank branches. are we doing enough to educate the public? should it be the responsibility of the regulator alone? the answer is no. let us all strive to build consumer awareness consciously and rigorously. an informed customer is a crucial cog in the payment ecosystem. ( b ) we get many complaints related to failure of transactions. in our country, when new users are being initiated into digital financial transactions, if their early experience is less than wholesome, they are put off, and fall back on non - digital means. it is imperative that we harness technology to ensure this. payment systems must ensure 100 % | determine capital allocation. each business unit in the enterprise would have to aim at being a profit centre within the overall risk - return framework. in essence, it would mean accountability for profit tempered by the discipline of risk – return, within a deeply embedded culture of good governance, the tone of which is set by the bank ’ s top management. from a business perspective, pricing of assets should be non - bis central bankers ’ speeches discriminatory and in line with risk rating of the customer. a lower rated customer should not get a better price than a higher rated customer. in the context of risk - return trade off, i want to flag another issue. it is common knowledge that where return is more, risk is more. however, in our anxiety to make quick bucks or what we colloquially call “ a search for yield ”, we very often tend to forget this basic tenet of finance. there can be no defense for the bank management who chose to finance the subprime borrowers in the usa. i am not sure why the boards did not question the strategy of the management while this business was growing manifold and banks were able to make huge profits by repackaging these mortgages as aaa securities through structured deals. i have a very practical suggestion for the distinguished group present here : seek a detailed analysis of the income stream. banks ought to conduct a thorough assessment of the products, services, activities or business streams that are most profitable as this is where the maximum risk must be lurking. the path and passage of risk can be truly understood only through a scrupulous income analysis. a risk management framework is incomplete without an effective system of internal controls and methodologies. as i mentioned earlier, the bank managements and, especially, the bank boards form the first line of defense for risk management. unless the bank ’ s management is geared to internalize and institutionalize a risk and control culture, any attempts to increase the resilience of banks can meet only limited success. in fact, the recent instance where a media outfit has brought out an expose on alleged irregular practices at bank branches is a clear instance of failure on the part of bank managements and boards to institutionalize an effective risk control framework and compliance culture across the organization, right up to the level of the front office staff. the management has a critical role to play in getting the right balance between the business units and risk management, both in times of stress and in good times, when there is a tendency for misaligned | 0.5 |
intend to take action to support the level of the usd? among others, this is what the ecb ’ s opponent nicolas sarkozy is calling for. what do you think of his calls to see the euro depreciate? it is a very important issue, where i call on all partners in europe, in the executive branches, to be highly responsible and to demonstrate verbal discipline. let me repeat the position of the ecb, as well as the position of the euro area as a whole : exchange rates should reflect economic fundamentals and excess volatility and disorderly movements in exchange rates are undesirable for economic growth. in emerging economies with large and growing current account surpluses, especially china, it is desirable that their effective exchange rates move so that necessary adjustments occur. concerning the dollar, i have noted with great attention that the us authorities have reaffirmed that a strong dollar is in the interest of the us economy. concerning the yen, as stated by the japanese authorities, the japanese economy is on a sustainable recovery path. these developments should be recognized by market participants and incorporated in their assessment of risks. markets should be aware of the risks of one - way bets. - will the ecb interest rates be changed in the near future? i have nothing to add or withdraw from what i have said in my last press conference after the meeting of the ecb governing council in vienna on 4 october. - with what main difficulties are you, as a person in charge of the euro area, confronted with? as far as i understand, it is difficult to avoid imbalances in the euro area, which unites countries that are at very different stages of development. it is true that there are differences among euro area countries, but i would not say that these differences are bigger than those between the different states of the usa, and certainly also not bigger than the differences in economic landscape between certain parts of the russian federation. from that standpoint there is no particular difficulty in implementing the single monetary policy at the level of our very vast economy, for the euro area as a whole, which is of the size of the usa. that being said, we call for the implementation of structural reforms in order to fully achieve the single european market and to improve the flexibility of all markets of goods and services, of the labour market and of the financial market in the euro area. - a number of countries ( including lithuania and the czech republic ) postpone the euro adoption. how | regards global imbalances, this issue is constantly studied and discussed in the central bankers ’ community ; we have discussed it just recently with our colleagues from the bank of russia, earlier in a similar gathering we organise with latin american central banks. every two months in basel i meet all my colleagues of other central banks at the level of the global economy. together with chairman ignatiev and the other colleagues we look at the best ways to prevent a disorderly unwinding of global imbalances and to pave the way for an orderly and smooth reduction of these global imbalances. - how do you assess the russian banking system, its general soundness and in particular at the current juncture? i would first of all like to clarify that – of course - the assessment of the russian banking system is the responsibility of the pertinent russian authorities. the bank of russia and the eurosystem discuss relevant financial developments and stability in both economic areas, including the occasion of our annual seminars. as you know, during 2003 - 2005 the eurosystem implemented a very important technical assistance project with the bank of russia in the field of banking supervision. this project was financed by the eu and in the bank of russia it was implemented under the captaincy of the late first deputy chairman, andrey kozlov. let me take this opportunity to express my emotions in paying tribute to andrey kozlov, who was extremely dedicated to our central banking cooperation project. he is present in all our memories. - in our country many observers are in favour of taking away banking supervision from the central bank. what is your view? the ecb governing council has indeed expressed a clear opinion in this respect. in our case, financial stability and supervision, according to the treaty the eurosystem, contributes to the smooth conduct of policies pursued by the authorities in charge of prudential supervision of credit institutions and the stability of the financial system. the position of the eurosystem is very clear : we are in favour of a significant involvement of central banks in prudential supervision. we believe that this observation is valid for any free - market economy and is quite universal. in our case, maintaining the close involvement of the central banks in prudential supervision is an important condition for allowing us to contribute adequately to monitoring the risks to financial stability in the euro area and to safeguard smooth cooperation between the central bank functions and the supervisory functions, carried out at a national level. let me add that we share this view | 1 |
can stipulate the objective which the riksbank is to aim for. it is worth emphasising, however, that it would naturally be inappropriate for the riksdag to set up objectives that the riksbank is not in a position to fulfil, like that - as we saw earlier - of “ creating jobs ” on a permanent basis. when, but only when, the riksbank ’ s objective has been established, will it be possible to monitor operations effectively. it should be realised that the delegation of monetary policy to an independent central bank is a way of generating confidence that the declared policy of the riksdag and the government will in fact be implemented. in the coming years the rule system for monetary policy will be changed. as an adherent to the maastricht treaty, sweden has undertaken to make changes in, for example, the status of the riksbank ’ s governor. he or she shall not be dismissed except on explicit grounds of serious misconduct, etc. neither is the riksbank to be given instructions from third parties, e. g. government, except in a statutory form. it also looks as though the objective of the riksbank is to be formulated in law and will be price stability. the question of eligibility to serve on the governing board will have to be reviewed. active members of parliament are delegates in sweden, which is entirely contrary to traditions in central europe. the riksbank differs from most central banks in europe in that we are formally responsible for exchange rate policy. the government sees this as a problem in eu cooperation and has therefore instituted an enquiry into exchange rate competence. in the light of what i have just said, these conclusions are not sound. the proposal to transfer responsibility for exchange rate policy from the riksbank to the government makes it more difficult for the riksbank to safeguard the value of money effectively and thereby contribute to a favourable level of interest rates and also - when this does not endanger price stability - to stimulate the economy and employment. in a world with free capital flows there is a direct link between monetary and exchange rate policies. the two policy fields may have conflicting goals. moreover, if the government, via exchange rate decisions, can affect the ability of the riksbank to fulfil the inflation target, there may be misunderstandings about where responsibility for the operation of monetary policy lies. in my opinion it may be reasonable - though this, too, is questioned by | andres sutt : macroeconomic co - ordination and fiscal policy in the expanding eurozone statement by mr andres sutt, deputy governor of eesti pank ( bank of estonia ), at the conference “ thinking euconomy - wirtschaftspolitik europaisch denken ”, berlin, 3 may 2006. * * * the enlargement of the european union with the clear message that all countries without an opt - out clause will, in the future, be also members of the emu, is a most welcome and forward - looking approach in view of an ongoing globalisation and integration processes in the world. eventually, the adoption of the single currency by all member states provides clear benefits for the union as a whole. from the macroeconomic point of view it would support further economic integration and higher growth rates by fostering trade and investments. therefore, euro area enlargement will provide tangible benefits for all european citizens over time. the main policy challenge for both the current and prospective euro area members is to ensure that the best use is made of the monetary stability provided by the framework of the european system of central banks ( escb ). from the perspective of the new member states, the issue at stake is how to maintain the economic structure supportive for sustained growth and rapid real convergence. strong fiscal stance is instrumental in this regard. convergence programs of the new member states should include ambitious medium term objectives to ensure that not only the maastricht criteria are met, but most importantly, the emergence of excessive deficit situations is avoided and the risks of taking recourse to exchange rate adjustments after joining the erm2 ( and, eventually, the euro area ) are minimized. the well functioning single market for all goods and services, including infrastructure networks, as well as pursuing the national reform programmes in the context of the reinforced lisbon agenda is the other pillar for the success of the euro area and for the new member states in particular. estonia has been a de facto member of the euro area since the inception of its independent currency in 1992. fixing the local currency to d - mark, and later to the euro meant that the monetary policy decisions were not made in estonia. estonia's currency board regime implies prudent fiscal stance that has been largely adhered to since 1992, resulting in our general government having accumulated a relatively large net asset position of around 10 percent of gdp. a solid budgetary position and early deregulation of product and capital markets implies that estonia has been | 0 |
via the flow of purchases made by the central bank. in my experience, central bankers tend to emphasise the former – and this has certainly been the way qe has been expressed at the bank of england – whereas market participants tend to emphasise the latter. this framework illustrates how ‘ stock ’ ( ‘ announcement ) and ‘ flow ’ ( implementation ) effects can be present and suggests how they interact with one another. and third, this framework illustrates how the impact of qt ( or qe ) on asset prices is state contingent – that is, it depends on the environment created by the economic situation and market conditions. this was another important conclusion of the bank survey paper. when markets are functioning well ( and substitutability between money and bonds is high ), qt has a smaller overall effect on asset prices than when markets are functioning poorly. this is in line with the strong impact of qe at times of market stress in 2009 and 2020 relative to its impact in other more benign market environments. more subtly, in better functioning markets, a greater proportion of the impact of qe comes via the announcement / ‘ stock ’ effect relative to the implementation / ‘ flow ’ effect, even though the overall impact is more moderate. what implications do these results have for any implementation of qt? my starting point is that were qt to be implemented, it would be desirable to do so in a manner consistent with keeping bank rate as the ‘ active instrument ’ of monetary policy, in line with current practice. this would represent a continuation of the conventional approach and allow central banks to rely on the large body of experience and analysis of monetary transmission starting from changes in official policy rates. our analysis is consistent with the view that qt actions will influence the economy via their impact on asset prices. as long as we undertake any gilt sales programme in a predictable and wellcommunicated manner, the impact of these sales will be ‘ priced into ’ financial prices, notably gilt yields. as i have already said, these yields are observable in real time, and it is standard practice to condition policy forecast, assessments and decisions on them. the setting of bank rate can then be calibrated knowing how asset sales have influenced the market in order to achieve the inflation target over the medium term. our model also suggests that a gradual implementation of qt – one where the announcement precedes implementation of the gilt sales in a credible and well - flagged manner – will lead to | the extent that the most important of these asset prices are set in open traded markets where the prices are observable in real time, in many cases the practical implementation of monetary policy can continue by conditioning policy rate decisions on those asset prices as well as the broader economic environment. this focus on the is curve leaves open the question of whether monetary developments can also enter the phillips curve relationship in the canonical new keynesian model, say via influencing longer - term inflation expectations by acting as some form of ‘ nominal anchor ’ to the economy. i don ’ t have the time or space to even start to address that question today. but it does seem central to some of the fears expressed by lord king two decades ago. he seemed to suggest that, were the role of money to be neglected and monetary policy become focused on shorter - term stabilisation of real economic variables, then the longer - term stability of inflation could be put at risks. with inflation already at undesirably elevated levels, the stakes are high. there is still much to do in thinking about whether and, if so, how monetary variables can help pin down the wider nominal dynamics of the economy and keep inflation at target sustainably and credibly over the medium term. so, to conclude, i return to the question asked at the outset : ‘ what did the monetarists ever do for us? ’ i doubt that monetarism will be ( re ) embraced by either the academic or central bank communities in the coming years. but – just like the romans in the famous monty python sketch – maybe our understanding of how the monetary policy transmission mechanism has, does and will work owes more to them than we typically care to admit. the views expressed in this speech are not necessarily those of the bank of england or the monetary policy committee. i would particularly like to thank ryland thomas for his considerable help with the analytical work presented in the annex and saba alam, rich harrison, jack meaning, martin seneca, rashmi harimohan, bob hills and gavin wallis for helpful discussions in the preparation of this speech. the text has also benefitted from helpful comments from andrew bailey, ben broadbent, alan castle, jonathan haskel, andrew hauser, nick mclaren, fergal shortall, dave ramsden, silvana tenreyro, daniel walker and chris yeates, for which i am most grateful. opinions ( and all remaining errors and omissions ) are my own. references bailey, | 1 |
”. absent sizeable structural reforms, the main risk would be what the report calls an “ inflationfirst ” scenario, where a rise in inflation would eventually force central banks to increase monetary policy interest rates, which in turn would prevent an acceleration of economic activity. i fully support the report ’ s emphasis on the importance of structural reforms to place the global economy on a sound footing and to make markets work better. in fact, the crisis has clearly shown the limits of the self - regulatory capabilities of markets, particularly financial markets, and their consequences on financial and, ultimately, macroeconomic stability. i also agree with the report ’ s main policy advice, centred inter alia on investments in r & d and incentives for equity financing over debt. however, in order to ensure an orderly adjustment of the global economy and to allow structural reforms to rapidly kick - start the real economy, appropriate macroeconomic policies are also needed. in this vein, i do not share the report ’ s negative assessment of the current monetary policy stance that would be “ harming the prospects of a sustainable recovery ”. this view – which appears not in line with the one expressed in other recent oecd assessments and policy bis central bankers ’ speeches suggestions – seems to me to overlook the reasons behind the current monetary stance, while focusing too much on the possible unintended consequences. in a context of very low commodity prices and long - lasting weakness of both global and domestic demand, in advanced countries disinflationary pressures and slack in the economy are still high, although with differences among the main economies. under these circumstances, a wait - and - see approach to monetary policy would be unwarranted : rather, central banks observe economic developments, ponder risks and may need to act forcefully. the current low level of policy rates is the appropriate reaction to current cyclical conditions, not an arbitrary choice of central banks ; a less accommodative stance, particularly given the high debt levels as a consequence of the crisis, could lead to a deflationary spiral with severe consequences both for the real economy and the financial sector. this holds true in particular for the euro area, where unused productive capacity and labour are greater than in other advanced economies. estimates by banca d ’ italia staff ( which do not consider further possible non - linear effects ) show that in the absence of the measures adopted by the ecb governing council between june 2014 and december 2015, both annual inflation and gdp growth in the area would be | the somewhat puzzling fall in aggregate productivity growth in the aftermath of the crisis. this holds true for non - financial companies in both advanced countries and, above all, emes. the firm - level analysis highlights a structural change in the evolution of productivity across companies and sectors : from a single cutting - edge group of “ incumbent ” companies bis central bankers ’ speeches displaying high levels – but low or negative growth rates – of productivity to the emergence of a second group of “ high - growth ” companies characterised by faster productivity growth. this finding suggests that it is critical to understand the drivers that underlie these changes. the report rightly emphasises the impact that corporate finance decisions may exert on productivity. four financial strategies are identified that make a difference between high and low productivity growth at a company level : higher spending on r & d ; lower debt - to - equity ratio ; higher free cash flow ; and more m & a deals. the analysis sheds lights on critical macro - financial linkages. what i find very instructive is that these strategies are all part and parcel of the structural policies that are called upon to trigger economic risk - taking, investment and ultimately growth. as far as financial markets are concerned, two fundamental drivers of change are technology and regulation. this is well documented in the chapter of the report on stock markets, which i find particularly insightful. here, there seems to be an issue of finding the right balance between the advantage of having more numerous and more specialised trading venues and the disadvantage of fragmenting trading liquidity. the possibility to trade a listed share in various markets promotes competition among providers of financial services. the availability of “ dark ” trading venues ( i. e. with little transparency in pre - trade information ) seems to allow institutional investors and other large players to place sizeable orders without giving rise to adverse price changes. on the other hand, it is important that such “ dark ” trading pools do not undermine a level playing field and a correct handling of conflicts of interest. putting the various types of trading venues on a more even footing is the objective of some recent regulatory initiatives in advanced countries. the availability of consolidated real - time price and volume data to market participants is another important factor. the report also considers under the notion of fragmentation issues related to the fundamental heterogeneity of economic agents and conditions. a case in point is life expectancy, which varies greatly ( both in levels and trends ) across individuals depending on socio - economic factors such as education | 1 |
to pay close attention to property asset prices, to regulate the market and prevent and mitigate financial risks through monetary and credit policies. distinguished guests, ladies and gentlemen, china is in the historical stage of new industrialization, urbanization and building a moderately affluent society in an all - round way. real estate development and finance have broad prospects. i hope that property developers and financial institutions can collaborate and seek common growth to make new and greater contributions to the healthy development of china ’ s real estate industry. | and expand the primary real estate financial market. second, mortgage securitization shall be pushed forward to build the secondary real estate financial market. mortgage securitization refers to conversion of mortgage loans extended by financial institutions to securities ( mainly bonds against mortgage loans as collateral ), which can be traded on the secondary market and resold to investors, thus fulfilling the purpose of financing and transferring risks of mortgage loans to myriad market investors. functioning of the secondary market not only provides stable funding sources for the primary market, but also greatly enhances security and liquidity of mortgage loans, thus achieving the objectives of diversifying and managing risks and proving a medium and long term investment instrument with relatively good credit rating for the securities market. in the u. s. mortgage - backed securities guaranteed by the federal financial intermediaries have similar credit ratings to government bonds. furthermore, because of higher yielding in the secondary market, mortgage - backed securities enjoy good popularity among medium and long term investors such as insurance and pension funds. 3. stepping up the development of real estate financial intermediaries to improve the institutional structure of real estate financial market. in line with the objective of an integrated real estate financial market, a multi - tier real estate financial institutional structure shall be put in place. various financial institutions engaged in mortgage lending, real estate financial guarantee, property trust, property leasing and property insurance shall be included in the institutional framework. first, feasibility of other financial institutions ’ entry to the real estate market ( such as insurance companies and investment fund ) shall be studied actively. second, the development and improvement of other real estate financial institutions such as trust and fund shall be encouraged. third, agencies that engage in operating real estate loans securitization and guarantee provision shall be fostered and developed to establish an institutional structure of secondary market. fourth, real estate financial insurance system with mortgage insurance at the core shall be put in place. mortgage insurance and property quality insurance shall be developed forcefully together with the existing moderate housing property insurance, real estate liability insurance, and real estate personal insurance. 4. fostering specialized intermediary service institutions actively to build the service supporting system for the real estate financial market. with the establishment and perfection of the socialist market economy, labor division will be increasingly diversified. if financial institutions are to survive, grow and succeed in the complex market environment, they have to rely on a comprehensive and efficient supporting system. at present the information supporting system needs to be worked out urgently, because in face of | 1 |
balance channel. let me explain how in principle that channel operates. as we buy assets, investors are likely to substitute the lower risk assets we buy with riskier assets such as longer - term assets, equities and possibly real estate. this has well - known effects on interest rates across the curve, on the cost of capital, on wealth – via higher equity and real estate prices – and therefore on balance sheets more generally. there are certainly question marks as how strong these effects are in the euro area. we do not have precedents and therefore empirical data for an economy such as ours, which has a different financial structure from the us or japan. but there is no question as to the sign of the effects – it is clearly positive. indeed, given our relatively greater reliance on banks as a source of finance, these balance sheet effects could work particularly through the bank lending channel. on the bank side, rising asset prices would free up capital resources for additional lending. while on the side of firms and households, an improvement in net worth, combined with a general improvement in economic prospects and hence future earnings, can expand their capacity to borrow. substitution of assets can also take place across jurisdictions, which would take the form of investors rebalancing portfolios away from euro - denominated assets towards other jurisdictions and currencies providing higher yields. bis central bankers ’ speeches for example, there is evidence that both the various large scale asset purchase programmes of the fed as well as the bank of japan ’ s quantitative and qualitative easing programme led to a significant depreciation of their respective exchange rates, even in a situation in which long - term yields were already very low, as in japan. finally, through these portfolio balance effects the central bank can also expect to have a strong signalling effect. they signal that we will use all means available to us, within our mandate, to return inflation towards our objective – and without any undue delay. this in turn helps anchor inflation expectations and thereby lower real interest rates, boosting activity and inflation. this is also a channel that was operative in the us and japan. both economic theory and international experience suggest that the magnitude of portfolio balance effects is a function of the size of the central bank ’ s balance sheet. as this effect stems from the displacement of portfolios, it is logical that the greater the purchases, the greater the displacement across asset classes. this is why the governing council has communicated its expectation that the combination of all the decided | of fatf, malaysia holds itself to the highest levels of integrity in adhering to international aml / cft / cpf standards. as we all know, crimes today transcend borders, and in response to this, malaysia has also forged and maintained strong relationships with our foreign counterparts, particularly where intelligence - sharing and investigations are concerned. additionally, our aml / cft / cpf regime is anchored by a robust surveillance system, which in turn helps ensure the effectiveness and timeliness of enforcement actions by the relevant law enforcement agencies. 1 / 4 bis - central bankers'speeches on this note, in 2023, bank negara malaysia ( bnm ) had undertaken a total of 291 supervisory and enforcement actions on financial institutions, and forfeited assets from illegal activities amounting to approximately rm 11 million. the financial intelligence unit of bnm had also shared financial intelligence with domestic law enforcement agencies and more than 50 foreign fius, with 71 % of these disclosures related to highrisk crimes. we do not, and cannot, combat financial crimes alone. indeed, our regulatory and enforcement counterparts have played an equally critical role in this respect. the malaysian anti - corruption commission, or macc, for example, has made important and significant progress in graft - busting, including the opening of a total of 776 investigation papers, resulting in 869 arrests and a total of 326 charges brought to court between january and august 2023. our counterpart, the commercial crime investigation department of the royal malaysia police has also charged a total of 4, 880 cases in court between january and april 2024. these efforts are reflective of malaysia's keen determination to combat financial crimes and preserve the integrity of our financial system. while we have made commendable progress, we should not be complacent. ml / tf / pf risks continue to evolve, and if we let our guard down, it will pose serious threats to our financial system, our economy, our society, and our country. on that note, i would like to elaborate on five strategic priorities in our effort to further strengthen our national aml / cft / cpf regime : first of these is the new national coordination committee to counter money laundering roadmap that is currently being developed as we refresh our national risk assessment. this new roadmap, like the existing one, will outline key initiatives in the areas of investigation, enforcement, coordination, and capacity building. improvements and refinements will | 0 |
the financial and non - financial sectors and high unemployment in parts of the euro area, are expected to continue to dampen the underlying growth momentum. downside risks to the economic outlook prevail. they relate in particular to a renewed intensification of tensions in euro area debt markets and their potential spillover to the euro area real economy. downside risks also relate to further increases in commodity prices. euro area annual hicp inflation was 2. 6 % in march 2012, according to eurostat ’ s flash estimate, after 2. 7 % in the previous three months. inflation is likely to stay above 2 % in 2012, mainly owing to recent increases in energy prices, as well as recently announced rises in indirect taxes. on the basis of current futures prices for commodities, annual inflation rates should fall below 2 % again in early 2013. in this context, we will pay particular attention to any signs of pass - through from higher energy prices to wages, profits and general pricesetting. however, looking ahead, in an environment of modest growth in the euro area and well - anchored long - term inflation expectations, underlying price pressures should remain limited. bis central bankers ’ speeches risks to the outlook for hicp inflation rates in the coming years are still seen to be broadly balanced, with upside risks in the near term mainly stemming from higher than expected oil prices and indirect tax increases. downside risks continue to exist owing to weaker than expected developments in economic activity. the monetary analysis indicates that the underlying pace of monetary expansion has remained subdued. the annual growth rate of m3 was 2. 8 % in february 2012, compared with 2. 5 % in january. in both january and february we observed a strengthening in the deposit base of banks. annual loan growth to the private sector has remained subdued, with the rate ( adjusted for loan sales and securitisation ) moderating in february to 1. 1 % year on year, from 1. 5 % in january. the annual growth rates of loans to non - financial corporations and loans to households ( adjusted for loan sales and securitisation ) stood at 0. 6 % and 1. 8 % respectively in february. the volume of mfi loans to non - financial corporations and households remained practically unchanged compared with the previous month. money and credit data up to february confirm a broad stabilisation of financial conditions and thereby the avoidance of an abrupt and disorderly adjustment in the balance sheets of credit institutions, as intended by our measures. funding conditions | mario draghi : ecb press conference – introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 4 april 2012. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today ’ s meeting of the governing council. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. the information that has become available since the beginning of march broadly confirms our previous assessment. inflation rates are likely to stay above 2 % in 2012, with upside risks prevailing. over the policy - relevant horizon, we expect price developments to remain in line with price stability. consistent with this picture, the underlying pace of monetary expansion remains subdued. survey indicators for economic growth have broadly stabilised at low levels in the early months of 2012, and a moderate recovery in activity is expected in the course of the year. the economic outlook remains subject to downside risks. medium - term inflation expectations for the euro area economy must continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. over the last few months we have implemented both standard and nonstandard monetary policy measures. this combination of measures has contributed to a stabilisation in the financial environment and an improvement in the transmission of our monetary policy. we need to carefully monitor further developments. it is also important to keep in mind that all our non - standard monetary policy measures are temporary in nature and that all the necessary tools are available to address upside risks to medium - term price stability in a firm and timely manner. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp contracted by 0. 3 % in the euro area in the fourth quarter of 2011. survey data confirm a stabilisation in economic activity at a low level in early 2012. we continue to expect the euro area economy to recover gradually in the course of the year. the outlook for economic activity should be supported by foreign demand, the very low short - term interest rates in the euro area, and all the measures taken to foster the proper functioning of the euro area economy. however, the remaining tensions in euro area sovereign debt markets and their impact on credit conditions, as well as the process of balance sheet adjustment in | 1 |
however, the difference resulting from this is subject to a statutory restriction on distribution. the remaining distributable profit of €1. 9 billion will today be transferred to the federal finance minister and used for budgetary financing. the bundesbank ’ s profit is higher due, in particular, to the rise in deposits of credit institutions on the liabilities side of our balance sheet. as you are aware, we currently charge a negative interest rate of – 0. 4 % for these deposits. by contrast, given the current low - interest - rate environment, there is de facto no interest income on the assets side. this applies, in particular, to our bond purchases. this means that our usual income situation has been reversed. in “ normal times ” it is the assets which generate income, notably refinancing operations with banks. now it is the opposite way 7 / 8 bis central bankers'speeches around. as i pointed out in the last two years, this creates considerable interest rate risk for the bundesbank. the interest income on the liabilities side can quickly turn into interest expenditure if the policy rates pick up. however, given the comparatively long time to maturity of its investments, we will also generate almost no income on the assets side in the longer term. the continuation of the asset purchases has driven up interest rate risk. this is why we raised our provisions for general risks by €1. 075 billion. mr thiele will give you more details on this in just a moment. but first, i would again like to stress the point i made on this occasion one year ago. it would be wrong to benchmark the monetary policy decisions against the central bank ’ s profit or loss. the sole benchmark is whether our monetary policy succeeds in preserving price stability. and as far as this is concerned, we are on the right track. if the upturn continues and prices rise accordingly, i see no reason why the ecb governing council should not end the net asset purchases in the current year. 7 conclusion and handover to mr thiele with that, i will now hand over to mr thiele, who will provide you with more details on the annual accounts. we will then be happy to answer your questions. thank you for your attention. 1 see european central bank ( 2016 ), exchange rate pass - through into euro area inflation, economic bulletin 7 / 2016, pp 27 ff. 8 / 8 bis central bankers'speeches | prof. tietmeyer discusses the relationship between economic convergence and emu speech by the president of the deutsche bundesbank, prof. hans tietmeyer, delivered to the boersen executive club in copenhagen on 14 / 3 / 97. i the boersen executive club has asked me to speak about “ economic convergence and emu ”. i shall be pleased to do so, especially as i can well imagine that you here in denmark are able to adopt a somewhat more relaxed and calmer approach to the subject of “ convergence and emu ”. there are two obvious reasons for that. firstly, denmark itself has made distinct progress in economic convergence during the past few years. that progress was documented in the european monetary institute ’ s recently published convergence report. - the danish krone has been stable internally for a good number of years. - it is unlikely that denmark will have any problem with the exchange rate criterion either. happily, participation in the erm - as in germany - has never been at issue here. - and there has been notable progress in consolidating public finance. the assessment of denmark in the european monetary institute ’ s convergence report was therefore decidedly more positive than that of germany. the second reason why you in denmark can be rather more relaxed on the subject of “ convergence and emu ” is, of course, self - evident. denmark has announced that, for the time being, it is not going to participate in the third stage of monetary union. naturally, we in germany respect denmark ’ s sovereign decision, even if we at the bundesbank are not unreservedly happy about that decision. that is because it is precisely in the initial phase that we shall need stable partners in emu. but the door is open. the terms of entry are known on all sides. what has not happened yet can, of course, take place at some point in the future. it goes without saying, however, that this is a matter for the danes themselves to decide. whatever decision denmark ultimately takes on participating in the third stage, i hope that exchange rate stability is maintained as before. it is likely that the danish krone will belong at least to the exchange rate mechanism of “ ems ii ” from the outset. that would, at any rate, imply the existence of close bilateral links between the danish krone and the euro. for the rest, it is precisely the economic and stability record of countries not wishing to belong from the outset which represents a challenge to and | 0 |
officially open this forum. | of financial literacy week and recognize its contribution to financial education, allow me to mention a few milestones that have been achieved : in 2012, zambia launched its first ever national strategy on financial education ( phase i ) which clearly identified children, youths, adults, small medium enterprises and small holder farmers as target groups. the main goal was to have a financially educated zambian population by 2030 ; in 2017, the national financial inclusion strategy was launched. the main goal of the strategy was to achieve universal access to and usage of a broad range of quality and affordable financial services that meet the needs of individuals and enterprises and targets overall financial inclusion of 80 % of the adult population by 2022 ; in 2017, under the national strategy on financial education ( phase i ) financial education was integrated into both primary and secondary school curriculum ; in 2019, phase ii of the national strategy on financial education was launched, to address the gaps identified under phase i ; and through the financial literacy campaigns, the number of financial services accounts designed for children increased to more than 20 compared to only 3 at the beginning of 2013. we strongly believe that the formulation and implementation of these national strategies have provided a robust framework that facilitates effective stakeholder engagement between the government, financial sector regulators, financial service providers and the general public. this collaboration has resulted in increased public awareness of the availability of financial products and services across the country, therefore contributing to the increase in overall financial inclusion in zambia from 37. 3 % in 2009 to 69. 4 % in 2020. as financial sector regulators and services providers, we are obliged to disseminate information about the different types of services and products that are available to the public as well as some of the risks that maybe associated with them. this information helps individuals and businesses to increase their awareness on the number of ways to save and invest their financial resources, as well as how to manage their financial affairs safely in an increasingly digitized environment. ladies and gentlemen, technology and innovation in the financial sector has played a major role in raising the level of financial inclusion in the country over the last five years. according to the finscope 2020 survey, while overall financial inclusion increased to 69. 4 percent, from 59. 3 percent in 2015, formal financial inclusion rose significantly to 61. 3 percent from 38. 2 percent. this was largely due to the uptake of mobile money, which went up exponentially by 58. 4 percent from 14. 0 percent. invited guests, the use of digital financial platforms for the | 0.5 |
garanzia, while guaranteed loans to large firms are those granted via sace ( the italian export credit agency ). the latest observation is for q1 2021. this policy dependence masks the true underlying state of the economy – particularly in terms of labour market scarring and corporate vulnerabilities – and therefore its resilience to less expansionary policies. the recovery will need to be well advanced before we can get a clear picture of the underlying damage. second, even with the ongoing monetary and fiscal policy support, our recovery is expected to be slow and incomplete in terms of both growth and inflation. in fact, the euro area economy is projected to return to its pre - crisis gdp level only in the middle of 2022 and to remain below its pre - crisis trend ( chart 9, left panel ). [ 24 ] gdp in the united states, in contrast, is projected to recover both its pre - crisis level this year and its trend thereafter ( chart 9, right panel ). the euro area and japan are the only major advanced economies where inflation is projected to remain subdued over the medium term. chart 9 diverging recoveries ( index : 2019 = 100 ) sources : ecb and federal reserve. this evidence suggests that we should avoid withdrawing policy support – either deliberately or by tolerating adverse spillovers – until the output gap is closed and we see inflation sustainably back at 2 %. for the ecb, this implies that we will have to maintain very favourable financing conditions well beyond the end of the pandemic period. the need for very accommodative policy over a longer period should in any case be uncontroversial, given that inflation remains well below our aim in our projection horizon and, according to survey measures of inflation expectations, even beyond it. towards more ambitious goals as i have made clear, europe has the capacity to overcome the pandemic and its economic consequences. so we face an important decision. we can act as a group of small, open economies, as we did after the global financial crisis, with each country competing to capture external demand. or we can behave how a large economy would, with european and national policymakers working together to raise internal demand through adequate policy stimulus. at this point in time, failure to pursue the latter option – reconnecting to the pre - crisis growth path and restoring healthy inflation levels – would increase the danger of the pandemic causing lasting damage to our economy. three risks stand out. | ). any financial institution that may be systemically significant or critical if it fails should be subject to a resolution regime and to this effect, the fsb key attributes help to address one of the key themes of “ too - big - to - fail ” in global finance by making it possible to resolve any financial institution in an orderly manner, regardless of the size and complexity of the financial institution. two key themes emerge in this overarching area of resolution of sifis ; one, resolution authority, powers and hierarchy of stakeholders and two ; the detailed mechanisms for resolution such as the collateralization, safeguards and funding of firms in resolution. for resolution to be feasible, the authorities should have the required legal powers and the operational capacity to apply them in order to ensure the continuity of functions that are bis central bankers ’ speeches significant to the economy. the mechanisms employed in resolving problematic firms should follow the “ respect of creditor hierarchy ” and “ no creditors worse off than in liquidation ” principle ’ as laid down in the fsb key attributes. in other words, resolution powers should be exercised in a way that respects the hierarchy of claims while providing flexibility to depart from the general principle of equal treatment of creditors of the same class. in particular, equity should absorb losses first, and no loss should be imposed on senior debt holders until subordinated debt has been written - off entirely. creditors should have a right to compensation where they do not receive at a minimum what they would have received in a liquidation of the firm under the applicable insolvency regime. directors and officers of the firm under resolution should be protected in law, for instance, from law suits by shareholders or creditors for actions taken when complying with decisions of the resolution authority. i hope that the first training session this morning on the institutional framework within the eu and the sharing session on thursday about the german bank restructuring act will shed light on some of these issues. second key issue is that there is a need to put in place pre - determined methods of resolution, sources of funding and identified assets acceptable as collateral against such emergency funding in a crisis. most importantly, authorities should have statutory or other policies in place so that authorities are not constrained to rely on public ownership or bail - out funds as a means of resolving firms. therefore, in support of the preparations of recovery and resolution plans and the effective implementation of resolution measures in a crisis, a framework should be developed in advance. as they say, it is already too late to dig a | 0 |
pressure points and concentrations across a broad range of relationships with many different hedge funds is not easy, but it ’ s necessary. and, the results of these tests need to inform judgments by the firm on the scale of exposure that it is willing to take to individual funds, groups of funds with similar strategies, and to hedge funds as a whole. moreover, firms need to find ways to consider assessments of their stress - level exposures to hedge funds in tandem with stress tests of their own market risks to inform an overall judgment on the extent of capital market trading - related risks that the firm is taking on - especially in relation to low probability but high impact events. third, and especially in light of the current competitive climate, we believe it is appropriate for dealers to have more exacting standards for the overall due diligence process, and to adjust credit terms on the basis of those higher standards. this is particularly important in those cases where there has been innovation in the manner in which credit is extended. for example, it is much more common today than in 1998 for hedge funds to seek arrangements that provide contingent credit and thus provide the hedge fund with protection against the need to liquidate positions too rapidly. similarly, many hedge funds are today seeking to base margining agreements, including initial margins, on the results of var calculations that incorporate the effect of netting across multiple products. while both of these developments have their basis in sound risk management principles, firms extending such credit should carefully examine the impact of these and other innovations on their potential exposures to hedge funds in stress conditions, and set the terms for such credit accordingly. a reinforced due diligence process also is critical in assessing the operational capabilities of the hedge funds, the quality of their risk management process and execution and compliance infrastructure. this may sound self evident, but it is not as common as one might think. timely access to forward looking measures of risk by hedge fund counterparties is obviously important for assessing the risks in firms ’ exposures to hedge funds as a group, and for assessing the impact of hedge funds ’ activities on a firm ’ s own positions. to the extent that information is not made available, and there seem to be a number of legitimate reasons why hedge funds may resist providing it and are sometimes successful in doing so, then it makes sense for the dealer to reduce the exposure it is willing to take to that fund. in general, credit terms should be calibrated to the quality of the information provided by the hedge fund counterpart | the board of governors on its upcoming review of whether the liscc operating committee receives information that is sufficient to reach sound supervisory decisions. one subset of this system - wide inquiry will analyze regulatory capture – specifically, how divergent views are presented to decision makers at the board. the review is expected to take several months. effective supervision means tough supervision and demands a focus on large banks that pose systemic risk. bank supervisors cannot prevent all fraud or illegal conduct or forestall all undesirable behavior in large, complex financial institutions. but we can help create more bis central bankers ’ speeches resilient, less complex, and better managed organizations that promote, rather than undermine, financial stability. v. conclusion the federal reserve will continue to improve its supervision and regulation of financial institutions. we understand the risks of doing our job poorly and of becoming too close to the firms we supervise. we work hard to avoid these risks and to be as fair, conscientious, and effective as possible. of course, we are not perfect. we cannot catch or correct every error by a financial institution, and we sometimes make mistakes. but in my view, a good measure of the effectiveness of supervision is the improved strength and stability of banks since the financial crisis. thanks in part to enhanced supervision and regulation, banks “ have the ability to meet their financial obligations and continue to make a broad variety of financial products and services available to households and businesses even in times of economic difficulty. ” 12 i can promise you that we will always strive to improve and that we will work hard to earn and retain your trust. i look forward to taking questions. scott g. alvarez, regulatory rulemakings, testimony before the committee on financial services, united states house of representatives, april 8, 2014. bis central bankers ’ speeches | 0.5 |
compared with about a third in france, britain and the united states and half in germany. italy is the only major country in which this share has increased since the onset of the crisis ( figure 2 ). by contrast, the italian capital market plays a limited role in financing enterprises. firms ’ equity endowment in italy is not unlike that in other countries. financial leverage, 1 at about 50 per cent, is broadly on a par with that of firms in japan, germany and the united kingdom and higher than in the us and france. but about four fifths of shares are held and traded outside the official markets. stock exchange listing is circumscribed to a few large firms. considering non - financial corporations only, in 2012 italy counted 230 listed firms, compared with about 700 in france and germany. the median firm in italy had a market capitalization of about €90 million, twice as much as in those two countries. the total market value of italy ’ s non - financial corporations is less than 20 per cent of gdp, compared with 75 per cent in france and 45 per cent in germany ( figure 3 ). bond financing is also limited, outstanding issues now amounting to less than 8 per cent of firms ’ total financial debt ( figure 4 ). just a few italian corporations make bond issues on the capital market ( an average of ten a year over the past decade ). here, again, italy lags significantly behind, and in recent years the gap has widened ( figure 5 ). 2 the same pattern holds for other instruments of direct or indirect recourse to the market, such as asset securitizations. this type of financial system – bank - dependent, lacking well - developed equity and bond markets, incapable in practice of offering the productive economy any resources other the ratio of financial debt to financial debt plus shareholders ’ equity at market prices. in the four years from 2009 through 2012 bond issues by italian non - financial corporate groups on the international markets were negligible, while those by french and german groups were large and growing. bis central bankers ’ speeches than bank credit – is especially disadvantageous in the present cyclical phase. it penalizes firms, especially the smaller ones, because it prevents them from coping with the tightening of credit supply by replacing bank loans with other instruments. and it penalizes banks as well, saddling them with very high costs and risks. what is more, the strains in credit supply aggravate the difficulties of firms and feed | jean - pierre roth : as the financial crisis recedes, what are the lessons for central bank efforts in the future? summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the centre international d ’ etudes monetaires et bancaires, geneva, 24 november 2009. the complete speech can be found in french on the swiss national bank ’ s website ( www. snb. ch ). * * * the financial crisis of the last two years has caused people to re - examine a number of generally accepted ideas. corrective measures are being undertaken, particularly in the area of banking regulation. for central banks, the most delicate issue will be how to contribute to macrofinancial stability without jeopardising their objective of price stability and, in turn, compromising their own credibility. as regards banking supervision, close cooperation between central banks and banking supervisory authorities is essential. the temptation to concentrate forces is strong. in switzerland, placing centralised oversight responsibility with the swiss national bank would risk weakening the snb ’ s independence from the political sphere. with respect to systemically important financial institutions, everything possible must be done to limit the likelihood and the risks of further problems. major efforts are underway in this regard at the financial stability board. to ensure that central banks have the necessary means to act in a crisis, a liberal legal framework and a safety cushion in the form of equity are needed. the snb is in a favourable position in this respect. | 0 |
system with international financial markets means that the adoption of the key elements of the basel framework is desirable ; a strong degree of commonality between new zealand ’ s banking regulations and those of the major countries enhances our financial system ’ s international credibility. thus, while there might be efficiency gains from a more streamlined regime that is free of unnecessary complexity, there would also be efficiency losses if the new zealand regime ceased to be recognised as broadly in line with international standards. this could result in a higher risk premium in bank funding costs and potentially reduced access to international capital markets. as you might expect, much of the “ demand ” for adopting basel regulations in new zealand comes from the four major australian - owned banks, who generally seek to have a regulatory framework that is closely aligned with the australian prudential regulation authority ’ s ( apra ) requirements. the fsap report acknowledged the reserve bank ’ s close cooperation with apra and recommended that we strengthen this relationship further. we will continue to develop the relationship with apra but both sides are well aware of the differences in our circumstances and our different regulatory approaches. over recent years we adopted most of the key basel initiatives even when some have been less than ideally suited to new zealand circumstances. at the same time the reserve bank has taken on additional compliance oversight roles, some of which require specialised skill sets. two examples are the oversight of banks ’ internal capital models and the non - objection process for bank capital instruments. such activities do not sit very well with the regulatory philosophy that i have described. nor are they easily handled with the limited resources of a small central bank. such an approach has however been consistent with maintaining recognition of the new zealand regulatory regime by international investors and rating agencies. the imf takes the view that our framework needs to be brought more into line with the international orthodoxy. the recent fsap report 2 on new zealand found the reserve bank ’ s prudential framework to be less than fully compliant with the basel core principles in many areas. this assessment relates more to the reserve bank ’ s intensity of supervision than to its adoption of basel standards per se. the imf recommends that the reserve bank take on significantly more resources in order to : more proactively engage with the banks ; issue more comprehensive rules and guidance on key prudential matters ; and more frequently verify and enforce compliance. can we retain our regulatory approach and still achieve the benefits of international recognition? i believe we can. notwithstanding the views of the imf, | alan bollard : agriculture, monetary policy and the economy speech by dr alan bollard, governor of the reserve bank of new zealand, to federated farmers, nelson, 18 july 2006. * * * the experience of the last decade has been that agricultural prices and agricultural production remain as important as ever to the new zealand economy. ten years ago we expected to see an economy evolving with a gradually diminishing relative role for primary production, fewer tonnes of produce, more specialised value added, less growth in labour and more value added. some of this has happened. but we have also seen growth in volume of exports and more labour participation. and we still see a direct relation between the health of primary production and the health of the new zealand economy. we have been through huge technological changes signalled by the birth of the internet. but at the same time the renewed vigour of globalisation has brought some old - fashioned features - a big increase in emerging market economies'appetite for resources on the one hand ; and fewer obstacles to getting their manufactured goods to first world markets, on the other. at a time when the future of the doha round looks so fragile, it is ironic to see the gains we are getting from past improvements in global connectedness. related to this has been a strong supply of cheap capital into the world's financial markets. the new zealand economy has been through a long period of expansion since 1999, probably the second longest period of continuing growth since world war ii. source : rbnz. when we look for the causes of this we see two main factors. first, much of the world has also been through a strong period of growth ( despite some emerging market economies'financial crises, the 9 / 11 crisis, and the fear of deflation ). second ( and related ), we have enjoyed strong commodity prices through this period, and they are closely correlated to export prices. there is some evidence that these improved prices might be expected to continue in the future. source : anz national bank, statistics new zealand. as ever, a small open primary - producing country like ours can be subject to considerable volatility, much of it beyond our control in the short - term. we know that climatic factors, especially drought, can be big enough to make a difference to the timing and magnitude of exports. however, tracking these through changes in milk production, dairy product storage, slaughter numbers, onshore and offshore inventory, can be surprisingly complex and lead to | 0.5 |
spotlight : developing a financial system for the future speech by dr. veerathai santiprabhob governor of the bank of thailand bloomberg asean business summit july 12, 2018, siam kempinski hotel, bangkok thailand distinguished guests, ladies and gentlemen, a very good morning to you all. it is my pleasure to be here today and take part in this event. first of all, i would like to thank bloomberg for organizing this exciting conference and for inviting me to share with you my thoughts on “ developing a financial system for the future. ” it is a timely and important topic as i am sure that most of us have been pondering how, in this age of disruptions, the financial system will develop to support economic growth while at the same time preserve financial stability. ladies and gentlemen, in this vuca world of high volatility, uncertainty, complexity, and ambiguity, thailand ’ s economy, like other emerging economies, is facing new challenges. monetary policy normalization in advanced economies, record - high debt levels in many parts of the world, stretched global asset valuation, and risks of an all - out trade war are posing immediate challenges to the stability of our financial systems. at the same time, technology disruption, aging society, and growing income inequality are also presenting structural challenges to many emerging economies, including thailand. against this backdrop, the bank of thailand has the duty not only to preserve and maintain economic and financial stability, but also to develop our financial system so that it can effectively unlock thailand ’ s economic potential, uplift productivity, and bring about more inclusive growth for the future. ladies and gentlemen, for the bank of thailand, maintaining economic and financial stability is a prerequisite for sustainable growth. thus far, the thai macroeconomic outlook remains favorable, with the economy expected to grow 4. 4 percent this year, the highest since 2012. additionally, 1 / 6 the thai economy has adequate buffers to withstand any immediate challenges, with ample international reserves, covering 3. 5 times our short - term external debts ; low dependency on external borrowing ; and current account surplus of around 8 – 9 percent of gdp1. moreover, our banking sector is robust, with high capital adequacy ratio and stable domestic funding. in the first quarter of 2018, the capital adequacy ratio of the banking system averaged 18 percent, among the highest in the region. to further safeguard financial stability, additional micro and macro - prudential measures were introduced, such as | the products and services are launched to the general public. technologies under reviewed include biometrics for electronic know - your - customers, machine learning for alternative credit scoring models, and blockchain applications for cross - border payments, supply chain financing, and document authentication. another way in which productivity is being enhanced is through improving regional financial connectivity. recent efforts by banks in the region to partner and adopt the thai qr code standard and blockchain applications for cross - border payments are examples of how financial innovations can help improve regional financial connectivity and facilitate smoother cross - border financial services. let me now turn to building immunity, which is a significant imperative for the future vuca world. with the vast amount of data and modern analytical tools available, resilience can be significantly improved. for example, banks can use transactional data to better forecast customers ’ credit demand and credit risks. regulatory agencies can analyze financial connectedness through network analysis to detect risk events and safeguard financial stability. the bank of thailand has employed a number of big data analytics to detect early signals of imbalances in the economy and respond pre - emptively should risks arise. additionally, in this increasingly digital environment, cyber resilience and cyber security must be a top priority and all of us must be prepared to prevent and respond effectively to cyber threats. adoption of modern technologies like biometrics and blockchains can help safeguard financial information and reduce the number and magnitude of fraudulent activities. in our part, last year the bank of thailand in collaboration with 15 thai banks and the electronic transactions development agency, set up the thailand banking sector computer emergency response team ( tb - cert ) as a platform for banks and regulators to share information on cyber incidents and build standards and capacity for it - personnel to handle new threats. furthermore, to ensure that our legal framework fits with the current digital environment and can keep up with new innovations, the bank of thailand had proposed the new payment systems act, which became effective in april of 2018. the act unifies previously fragmented payment laws and regulations and empowers the bank of thailand to oversee development of the thai payment systems and regulate new payment innovations and players. moreover, our supervisory guidelines on management of information technology risks have also 4 / 6 been updated to ensure that banks have appropriate governance structure in place and can swiftly respond in the event of cyber attacks. these developments will contribute to safer environment for both service providers and customers. on inclusivity, despite high level of financial access in | 1 |
functioning of the bond markets, and that the risk of moral hazard increased. for example, 70 per cent of respondents in the riksbank's financial market survey believe that the securities purchases have contributed negatively or very negatively to the functioning of the market. however, the costs of such negative side effects are hardly comparable to the value of avoiding a prolonged recession. the losses in the first purchasing phase are offset by gains for the state nevertheless, i would like to try to evaluate the narrower and more direct effects of our purchases of government bonds, purchases which were largely decided prior to the pandemic. in floden ( 2016 ) i tried to make such an evaluation of the initial purchases. 34 my calculations then indicated that the purchases of government bonds in phase 1 led to the government's costs for new borrowing via treasury bills and government bonds falling by approximately sek 7 billion in 20152017. the reason was that the rate on these securities was pushed down about 0. 3 percentage points below the policy rate. 34 kjellberg and ahl ( 2022 ) present this type of update, based on market prices in april 2022. their calculations indicate that the overall effects on government finances will be positive, despite the losses on the riksbank's balance sheet. in a similar assessment, the reserve bank of australia notes that while their purchases during the pandemic are now leading to substantial financial losses and probably a negative capital for the bank, the total value of purchases is nevertheless higher than the costs ( bullock, 2022 ). in a critical review of the us purchases during the pandemic, levin, lu and nelson ( 2022 ) believe that the programme was too large and extended, and they assess that the financial losses that are now incurred are not matched by other gains. 19 this effect on interest rates seems to be relevant even today ( see figure 2 ). the swedish national debt office's new borrowing in government bonds amounts to approximately sek 600 billion since 2015. if the rate on these bonds has become 0. 3 percentage points lower and the average maturity of the bonds is seven years, the cost of borrowing has decreased by sek 13 billion. in addition, the swedish national debt office has on average had a debt of approximately sek 80 billion in treasury bills. with a 0. 3 percentage point lower interest rate on this debt over eight years, a further sek 2 billion is added in reduced interest expenditure. 35 an updated calculation thus indicates that | to have pushed down the interest rate on government bonds to a certain limit. however, there are no signs that this caused households and companies to encounter lower interest rates. it is therefore very unclear whether the result was that the economy was stimulated via the interest rate channel. 15 13 the market is dominated by so - called frn - bonds, where the coupon follows stibor 3 months. 14 erikson and vestin ( 2021 ) show a similar figure. some larger companies also finance themselves through the bond market. however, when the riksbank began purchasing government bonds, this form of financing was fairly unusual and accounted for only 22 per cent of the companies'total borrowing ( see the riksbank, 2014 ). moreover, it is common for companies'bond loans to have variable interest rates. as turnover in the market is small, it is difficult to follow price developments. nevertheless, the statistics indicate that rates on corporate bonds fell less than those on government bonds in 2015 and 2016. however, the lower interest rates could reasonably contribute to a lower central government borrowing cost, something i will return to in a moment. however, this was not the purpose of the riksbank's purchases. 7 figure 4. lending rates have followed the policy rate per cent note. the riksbank's policy rate and average lending rates from monetary financial institutions to households and companies, new agreements, all interest - fixation periods. sources : statistics sweden and the riksbank. unclear whether the riksbank's purchases contributed to the krona remaining weak one of the motives behind the riksbank's acquisition of assets was to avoid the krona strengthening in a situation where inflation was already too low. in that case, inflation would have been pushed down by lower import prices and the demand for swedish export products would have fallen. this would have brought down economic activity, which would have further dampened inflationary pressures. since other central banks also had large purchase programmes, the riksbank's intention was precisely to avoid the krona becoming too strong, not to weaken it. 16 it is hardly possible to say with precision how the riksbank's acquisition of assets affected the exchange rate. the analysis is complicated by, among other things, the fact that the riksbank published decisions on the asset purchases at the same time as decisions on the policy rate. 17 one indication that the purchases had the intended effect is that the krona did not strengthen but weakened, | 1 |
mario draghi : ecb press conference – introductory statement introductory statement by mr mario draghi, president of the european central bank, frankfurt am main, 3 july 2014. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today ’ s meeting of the governing council. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. the latest information signals that the euro area economy continued its moderate recovery in the second quarter, with low rates of inflation and subdued monetary and credit growth. at the same time, inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 %. the combination of monetary policy measures decided last month has already led to a further easing of the monetary policy stance. the monetary operations to take place over the coming months will add to this accommodation and will support bank lending. as our measures work their way through to the economy, they will contribute to a return of inflation rates to levels closer to 2 %. concerning our forward guidance, the key ecb interest rates will remain at present levels for an extended period of time in view of the current outlook for inflation. moreover, the governing council is unanimous in its commitment to also using unconventional instruments within its mandate, should it become necessary to further address risks of too prolonged a period of low inflation. we are strongly determined to safeguard the firm anchoring of inflation expectations over the medium to long term. as a follow - up to the decisions taken in early june, the governing council today also decided on specific modalities for the targeted longer - term refinancing operations ( tltros ). the aim of the tltros is to enhance the functioning of the monetary policy transmission mechanism by supporting lending to the real economy. a press release on the modalities for the tltros will be published today at 3. 30 p. m. as announced last month, we have also started to intensify preparatory work related to outright purchases in the abs market to enhance the functioning of the monetary policy transmission mechanism. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp in the euro area rose by 0. 2 %, quarter on quarter, in the first quarter of this year. economic indicators, including survey results available up to june | to the value chain for the more advanced countries of the region. japan and korea are already using asean countries and china as the platform for production of goods in a cost effective way while providing design, technology, specifications and taking care of marketing and sales. malaysia is beginning to feel the pinch of labor shortages and is looking towards south asian countries for relieving this pressure. singapore and malaysia are capital surplus countries with high foreign trade - gdp ratios and limited domestic markets. they are now looking towards the middle classes of south asia whose incomes are rising fast and whose appetite for goods and services is voracious. india alone is adding about 2 million cellular phone subscribers every month while pakistan has increased the size of cellular phone market from 3 million to 8 million within just one year. this example can be multiplied for fast moving consumer goods, energy, infrastructure, services of all kinds. thus investment in these countries can be beneficial for both the capital surplus and large market size countries. central asia has huge energy resources but is geographically disadvantaged as it is landlocked. infrastructure development providing access to seaports as well as gas pipelines, hydroelectric power transmission lines can make their economies more competitive and at the same time ease the energy shortages in india and pakistan. china, because of its tremendous success, is facing or likely to face growing restraints and impediments in expanding access to the western markets for its manufactured goods. joint ventures between chinese companies and relocation in other parts of the region with low costs of production combined with availability of ample labor would be in the economic interest of both china as well as the recipient countries. india ’ s proven prowess in information technology, internet - related services, biotechnology and other intellectual fields can be used to enhance the productivity across the board in all the countries of asia. given the growing demand of skills among the asian economies the inter operability of skilled manpower across the territorial boundaries of each individual country will help meet this demand. this above scenario is doable in my view but it requires a shared vision, a long term strategy, political will and commitment, a time bound action plan, an institutional mechanism for implementation and monitoring, and a machinery for follow up, dispute resolution, and problem solving. if the foreign ministers present at islamabad this week can proceed along this road map i am quite confident that all the countries in region will be winner and nobody will be loser. historians will then rightly describe 21st century as the asian century just like the past three centuries were the american and european centuries | 0 |
two new liquidity ratios to mitigate liquidity risk. bis central bankers ’ speeches introduced a new leverage ratio to limit leverage and reinforce risk - based requirements. developed a large - exposures framework to limit the maximum loss in case of counterparty ’ s failure. last, but not least, the basel committee has improved the effectiveness of supervision by upgrading its core principles and by strengthening the supervision of systemically important banks. many of these new rules are now in place and we can say that banks are more resilient now than in 2009. but different weaknesses persist. for this reason, the basel committee is undertaking a review of the capital framework that will be finalised by the end of 2016. in particular, the methodologies used to measure banks ’ risks are being reviewed, both under the standardised approaches and under internal models. the standardised approaches are being revised to incorporate the lessons learned from the crisis so as to increase their risk sensitivity without, however, making them unduly complex. regarding the internal models, they have been criticised because of their lack of comparability, the variability of the resulting risk - weighted assets, and their complexity and lack of transparency. these, let ’ s say, “ faults ” have undermined the credibility of capital ratios. therefore, the basel committee is considering including several constraints on internal models in order to strike a better balance between simplicity, comparability and risk sensitivity. the other remaining major challenge is calibration. basel iii has changed the prudential setting quite significantly. the days when there was a single metric ( the risk - weighted capital ratio ) are over. we now have several prudential measures that will most probably be interacting in different ways. banks will have to comply with a risk - weighted capital ratio ( including additional buffers ) ; a leverage ratio ; two liquidity ratios and the large exposure limits. additionally, banks that apply internal models will most likely face capital floors based on standardised approaches. finally, some systemic banks will have to hold additional capital to meet global - systemically - important - bank ( gsib ) buffer and total - loss - absorbingcapacity ( tlac ) requirements. applying different metrics will make the framework more resilient because some metrics will avoid the limitations of others. for instance, floors based on standardised approaches are meant to be a kind of control or safeguard on internal model risk calculations. therefore, during 2016 the basel committee will be quite busy deciding on the | economy can succeed without a high - quality see, for example, james m. poterba ( 1995 ), “ balanced budget rules and fiscal policy : evidence from the states, ” national tax journal, vol. 48 ( 3 ), pp. 329 – 36. see richard mattoon and leslie mcgranahan ( 2008 ), “ revenue bubbles and structural deficits : what ’ s a state to do? ” working paper no. 2008 – 15 ( chicago : federal reserve bank of chicago, july ) ; and david l. sjoquist and sally wallace ( 2003 ), “ capital gains : its recent, varied, and growing (? ) impact on state revenues, ” state tax notes, august 18. bis central bankers ’ speeches workforce, particularly in an age of globalization and technical change. cost - effective k - 12 and post - secondary schooling are crucial to building a better workforce, but they are only part of the story. research increasingly has shown the benefits of early childhood education and efforts to promote the lifelong acquisition of skills for both individuals and the economy as a whole. the payoffs of early childhood programs can be especially high. 7 for instance, preschool programs for disadvantaged children have been shown to increase high school graduation rates. 8 because high school graduates have higher earnings, pay more taxes, and are less likely to use public health programs, investing in such programs can pay off even from the narrow perspective of state budgets ; of course, the returns to the overall economy and to the individuals themselves are much greater. additionally, in a dynamic economy in which job requirements are evolving more rapidly than ever, individuals already in the workforce need opportunities to improve their skills throughout their lives. there are many ways to provide such opportunities. for example, community colleges and vocational schools train and retrain workers, often in close collaboration with private employers, and in many cases they perform this function at a relatively low cost. although helping workers acquire up - to - date skills is always important, it is especially critical now, when long spells of unemployment are threatening the longer - term employability and productivity of many. conclusion tonight i have highlighted some of the fiscal challenges faced by elected officials, both in new york and in other regions. in the past few years, the weak economy has significantly reduced government revenues, which in turn has forced governments to make difficult decisions on spending and taxes. an improving economy should help, but state and local finances will remain under pressure for some time. moreover, states and localities | 0 |
have urged my banker friends to revisit the important issues in the light of international best practices, the need for protecting our consumers against fraud, the availability of insurance products to protect individuals from such frauds and finally a clearly spelt out compensation policy that is communicated to the customers upfront. the major areas of concern are internet banking related misuse / abuse, atm related service deficiencies, loss of credit / debit cards and extent of card holders ’ liability in such an event, penalty for not adhering to the aqb discipline etc. an important recommendation made by the damodaran committee was about banks appointing an internal ombudsman. this idea needs to be followed up and implemented proactively in the interest of consumer protection and impartial / transparent dealings. the common problems faced by customers very frequently pertain to atm issues, pensions, levy of service charges without prior intimation, credit card related issues, loans and advances etc. it puzzles me that the total number of credit card users is less than 10 % of the total bank customers ’ base but still this area accounted for 24 % of the total number of complaints handled by the b o offices during 2010 – 11. similarly, a proper enforcement of the bcsbi codes should necessarily result in the banks intimating their customers about changes in interest rates and service charges at least 30 days in advance. here again the number of complaints highlight the gaps in implementation of the codes at the branch level. pensioners are senior or very senior citizens and in a majority of the cases this is their only source of livelihood. we need to be empathetic and humane while dealing with pensioners. bis central bankers ’ speeches the best way to minimize the incidence of these complaints is to educate the customers and bank staff alike : -. global initiatives in consumer protection the global financial crisis brought to the fore gaps in consumer protection measures in the financial services industry worldwide. many countries that were affected by the crisis have standards and codes in place to set the minimum benchmarks for customer care. the failure of voluntary / industry led initiatives to protect the financial sector consumers and the backlash created by a public resentment against bankers and banking has forced many governments to come up with statutory measures aimed at financial consumer care and protection. when service standards are defined as a part of the statute any breach or violation of law attracts penalty. are we moving in that direction? this may not happen in the near future but even in the indian context the day may not | existing peg to the deutsche mark or the french franc, as for instance in the countries of the western and central african monetary union. in other cases, especially in the balkans, the euro has been unilaterally adopted as legal tender. overall, the euro has become the monetary anchor for about 50 countries all around the world. ladies and gentlemen! having outlined this general institutional framework, let me now turn to some more specific issues and challenges that accession countries face on their way to euro. although a lot has been achieved, accession countries will still need to further advance the process of bringing down inflation rates, while not delaying the much needed relative price adjustments within the economy. such price adjustments are part of the transition process and of structural real convergence and will typically entail inflation rates that may, for some time, range above those prevailing in the euro area. hence, accession countries are well advised to properly sequence the disinflation path toward the maastricht criteria and in some cases delayed entry into the euro area could be an optimal policy choice. the objectives of nominal and real convergence should be pursued in parallel. progress in nominal and real convergence will imply an orderly closing of the gap between the accession countries and the euro area economy, both in terms of per capita income and price levels. in order to reinforce each other, nominal and real convergence paths must be properly sequenced and mutually balanced. a fast - track move toward full nominal convergence and, in particular, toward complete monetary convergence could prove counterproductive in the pre - accession period. an important element of structural real convergence is further development of financial services structures, which were practically non - existent when transition started a decade ago. the main tasks are bank privatization, the development of a sound credit culture and the transformation of banks into efficient and competitive financial intermediaries. the three pillars of a functioning banking system are high - quality corporate governance of banks, market discipline in accordance with best - practice standards and efficient banking supervision. especially in transition economies, it makes sense to locate banking supervision with the central banks, at least for the time being, as central banks have the necessary funds to perform this task, have established their reputations and are already concerned with systemic risk issues. the strict implementation of eu treaty obligations, in particular those concerning the independent status of central banks, will be of fundamental importance. institutional, personal and financial independence are constitutive elements of central bank independence which are not an end in themselves but are instrumental in | 0 |
basel ii proposals and associated supervisory guidance, so there are not yet any established standards for basel ii. in some cases, we were able to identify practices used for qis4 that appeared to be clearly inconsistent with what is envisioned in the framework. in other cases, it was not easy to determine whether the practices used in qis4 would be within the expected range of acceptable practice for u. s. basel ii standards. clearly, one of the real challenges we will face as supervisors is to how to define the range of expected practice for basel ii standards, how to communicate that range to institutions, and how to deal with practices that are on the margin. uncertainty about the expectations placed on institutions does not benefit supervisors or bankers. one of the key ways to reduce that uncertainty would be to continue our communication with the industry broadly, and with institutions individually, during the entire implementation process. certainly, as we move closer to implementation, supervisory oversight of the basel ii implementation methodologies by our examination teams will increase. indeed, during the qualification process, we expect to have several additional opportunities to evaluate institutions ’ risk - management processes, models, and estimates - - and provide feedback to the institutions on their progress. so qis4, an assessment conducted at one point in time, should not be considered a complete forecast of institutions ’ future basel ii capabilities or the framework ’ s ultimate effects. but qis4 did give a very useful insight into the linkage between capital and risks, and how institutions are attempting to quantify that linkage. indeed, it was one of the best glimpses we had to date. as we move forward with basel ii implementation, we expect to gather even more useful supervisory information about banks ’ progress in meeting basel ii standards, the potential impact of the framework, and, perhaps most importantly, banks ’ ability to measure and manage the risks to which they are exposed. as supervisors, we will highly value this opportunity to enhance our understanding of banking organizations, which we believe will promote safety and soundness in the banking system. identifying and addressing home - host issues given this extensive international audience, it might be helpful for me to offer the federal reserve ’ s perspective of the so - called “ home - host ” aspects of basel ii implementation - - a perspective that i believe is shared by my u. s. supervisory colleagues. first, we recognize that some may have concerns about the recent announcement by the u. s. agencies to implement basel ii with a one - year delay | john c williams : the “ new normal ” for growth remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the community bankers conference, hosted by the federal reserve bank of new york, new york city, 4 april 2019. * * * as prepared for delivery note : these remarks are based on those delivered at the economic club of new york on march 6, 2019. introduction good morning, everyone. it ’ s a pleasure to be hosting this conference, and i ’ d like to start by welcoming you all to the new york fed. i know there ’ s an opportunity to tour the gold vault later, and i definitely recommend it. there ’ s something very exciting about our more traditional approach to storing money … even though the gold bars pose certain logistical and practical challenges. if you drop one on your foot you ’ ll definitely know about it. community banks i ’ m going to start today by talking a bit about community banks. aside from a short period running a pizza restaurant, i ’ ve spent all of my career in the federal reserve system. and i ’ ve had the opportunity to travel extensively throughout the united states. when you visit communities in more rural or remote parts of the country, away from big urban centers like new york and san francisco, you really see the value of community banks. in many places you ’ re the only game in town when it comes to banking services and credit. you know the customers in your community because you are an integral part of the community. you represent an essential part of our financial system and economy. but i know you didn ’ t come here today to hear me tell you what an important job you do. what i hope is that i can give you some insights that will be useful going forward. i know interest rates play a vital role in your businesses, so i ’ d like to spend a bit of time talking about the outlook and what that means for monetary policy. but before i do, i need to give the standard fed disclaimer that the views i express are mine alone and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. where things stand for the last decade we ’ ve all had our focus on recovery from the great recession. the path to getting back on track has been a long one, and there is a sense that the economy has now fully recovered. gdp growth came in at 3 percent in 2018 and i expect it | 0 |
adequately supportive to growth. at the same time, we must not forget to chart a course towards the country ’ s long - term economic development. as the thai economy is in need to upgrade growth potentials and increase competitiveness, the bank of thailand will contribute to this process of economic transformation by taking a proactive role in the financial sector development policy. ongoing in this sphere, there are at least three development plans under implementation, namely, the financial sector master plan, the payment systems roadmap, and the capital account liberalization master plan. although the three plans have different objectives, they complement each other and together form a strong foundation for the country ’ s financial sector development. i will highlight a few key elements we hope to get out of these plans. the first one is the financial sector master plan ( fsmp ) phase iii. approved by the cabinet in march this year to set out strategic directions for the next five years ( 2016 – 2020 ), fsmp iii is aimed to promote a competitive thai financial sector, to support more diverse needs at fair and undistorted prices, as well as promote regional trades and investments, with proper supervision to ensure macroeconomic and financial stability. in short, this plan ’ s motto is to promote a “ competitive, inclusive, connected, and sustainable ” financial system. after five years, the bank of thailand expects to see growing financial innovation with more diverse players, both banks and non - banks, especially those offering digital financial services. these services will allow a new segment of customers to gain access to financial services through new channels. smes entrepreneurs, for example, could pitch their ideas to a wider group of investors, through crowd funding and peer - to - peer lending platforms. new ideas would have a higher chance of being translated into businesses, thus promoting innovative spirit among the thai entrepreneurs. financial innovation will also promote competition and drive higher efficiency in the banking sector. at the same time, we expect most thai individuals to have access to basic financial services at a fair price and have an appropriate level of financial literacy. financially deserved enterprises should receive adequate funding, using proper financial instruments. we expect to improve households ’ financial literacy, leading to more prudent financial management and lowered households ’ indebtedness. for financial institutions, we encourage them to improve the level of consumer protection and quality of financial professionals, and to incorporate more sustainability practices into their core business operation. on the road to enhancing regional connectivity, under the asean banking integration framework | the financial crisis has been stress testing – it is critical, and needs to be thorough and cannot be sidelined when the consequences may be awkward. but, there are some difficult issues surrounding how to set the parameters of stress tests – how much stress to assume? we tend to calibrate stress tests on the basis of history plus something, but the something can be hard to judge. as a case in point, this is what we did in the fpc's work on liability driven investment after 2018. now, we know that this sort of approach does not pass the black swan test, one in which the future is not implied by the past and thus not forecastable. on its own a stress test is very useful and an essential part of the toolkit. but we know that we cannot envisage and design tests that capture all possible future states of the world, and we should not pretend that we can. instead, we must stress up to the point where it is sensible for regulation to create the protection we want, and – this is crucial – we must have other approaches that cover the world of risks beyond that point. these approaches are bank resolution tools, and central bank intervention tools of the type we had to use last autumn. you will be mightily relieved to hear that we are into the home straight now, but it contains the small issue of non - bank finance. given the increase in bank regulation required in the aftermath of the financial crisis, it is not surprising that the last decade has seen a relative and absolute increase in non - bank finance. continuing the theme developed earlier, one important way to look at the bank versus non - bank world is that in the former there is assurance on the value of money as the main liability of banks, while in the latter the value of investments explicitly and deliberately is not assured. this is important, but we also have to recognise that the growth of non - bank finance has led to the significant expansion of the landscape of systemic risk since the crisis. in other words, we have seen that the non - bank world can transmit risk into the bank world, and other parts of the core of the financial system, like central counterparties. consequently, the relative focus of our financial stability work has shifted to the risks posed by non - bank financial institutions ( nbfis ). moreover, we have seen a common theme running through incidents that have occurred – the dash for cash in 2020, the archegos collapse, the ldi pension | 0 |
abated only slowly. therefore, the first idiosyncratic reason why these recoveries were tepid was likely that the preceding recessions were caused by shocks that proved to have longer - lasting effects and that were more difficult to counteract than expected. in the wake of the two recent downturns, further idiosyncratic shocks hit the economy, exacerbating the sluggishness of the recoveries. in the early 1990s, the collapse of savings and loan institutions and the need to repair the capital structure of the banking industry led to a period in which the flow of credit to businesses was impaired - the so - called credit crunch. facing limited access to credit, businesses - especially small businesses - curtailed hiring and capital expenditures. after the trough in 2001, the banking industry was much sounder. however, the economy was still adjusting to the excess capital spending from the late 1990s. equipment takes years to depreciate ; so when firms realized that they had purchased more than they needed, they did not feel compelled to raise their level of capital expenditures again for quite some time. indeed, this “ overhang ” of capital has likely contributed to the impressive growth in productivity over the past few years, as businesses have made more and better use of the high - tech equipment they had previously installed but underexploited. besides the boom - bust cycle in capital spending, the u. s. economy confronted the terrorist attacks of 2001, the corporate governance scandals of 2002, and the 2003 war in iraq. clearly, such an uncertain and risky environment, which led many firms to question the durability and strength of the recovery, encouraged neither the creation of new jobs nor the expansion of capacity. this discussion of the post - recession shocks that damped the pace of the most recent two recoveries does not imply that similar obstacles were absent in earlier recoveries. the early stages of previous recoveries also contained events that legitimately raised concerns about the vitality and viability of the upturns. indeed, at the beginning of each recovery for at least the past fifty years, some observers expressed concern that various factors might result in a tepid recovery. in 1982, for instance, as the united states emerged from recession, growth in the rest of the world was moribund, and the international financial system was considered fragile. other concerns were that the length of the recession would make consumers and businesses cautious and that changes in the economy would lead to prolonged structural unemployment. | janet l yellen : the bureau of labor statistics – a trusted us agency ( brief remarks ) speech by ms janet l yellen, chair of the board of governors of the federal reserve system, at the induction of carroll d. wright and janet l. norwood into the department of labor ’ s hall of honor, us department of labor, washington dc, 20 october 2015. * * * we are here to honor two exceptional public servants and the great institution they helped build. let ’ s consider for a moment why the bureau of labor statistics ( bls ) has succeeded and how carroll wright and janet norwood contributed to that success. in 1884, a time of great strife and mistrust between management and labor, the federal government created an agency with the mission of providing detailed and objective information on american workers. that task fell to carroll wright, who had won the confidence of workers and management as chief of the massachusetts bureau of labor statistics in the years after that state became the first to legalize labor unions. at that point, before the united states itself had recognized such rights and before the federal government could agree on labor standards, the public needed an unimpeachable assessment of the conditions faced by workers. under carroll wright, what was then called the bureau of labor investigated major labor disputes and issued reports that shaped public opinion and were the basis for executive action and legislation. he initiated the collection of data on hours, wages, and prices and was responsible for many important advances that successively improved the reliability of these data. the respect for the thoroughness and objectivity of the research that wright oversaw led to the dismantling of damaging trade barriers in the 1890s and later raised public awareness about the deplorable conditions faced by women in the workplace. in the u. s. constitution, there is not a requirement that government statistics be accurate and free of political influence or bias. carroll wright recognized that this simple, powerful idea could help build public confidence for the government ’ s effort to reduce conflicts between management and workers and move our nation forward. he and others are responsible for a fundamental feature of our democracy that is now often taken for granted – the public ’ s expectation and insistence that information provided by the government can be trusted. to carroll wright ’ s descendants, one of whom is with us today, thank you, on his behalf, for this valuable contribution. this legacy lives on in the agency carroll wright founded, and few of his successors did as much to advance this principle as janet | 0.5 |
well anchored. many elements of the normalization principles and plans are similar to the principles adopted by the committee in june 2011, while others have been revised in light of the changes since then in the size and composition of the system open market account ( soma ), the fed ’ s securities portfolio, as well as enhancements in the tools the committee will have available to implement policy during normalization. as was the case before the crisis and indicated in the june 2011 principles, the committee intends to adjust the policy stance during normalization primarily through actions that directly influence the level of the fed funds rate and other short - term interest rates rather than through active management of the size or composition of the fed ’ s securities holdings. specifically, when economic conditions and the economic outlook warrant a less accommodative stance of monetary policy, the committee will raise its target range for the fed funds rate. during normalization, the committee intends to move the fed funds rate into the target range primarily by adjusting the rate of interest on excess reserve balances ( ioer ) that it pays. we expect changes in the ioer rate to have a significant influence on the fed bis central bankers ’ speeches funds rate and other short - term interest rates. however, to help control the fed funds rate, the committee also intends to use an on rrp facility and other supplementary tools, as needed. the committee will use an on rrp facility only to the extent necessary, and will phase it out when it is no longer needed to help control the funds rate. with regard to the fed ’ s balance sheet, the committee intends to reduce securities holdings in a gradual and predictable manner, primarily by ceasing to reinvest repayments of principal on securities held in the soma. the committee expects to cease or commence phasing out reinvestments after it begins increasing the target range for the fed funds rate ; the timing will depend on how economic and financial conditions and the economic outlook evolve. the committee currently does not anticipate selling agency mortgage - backed securities as part of the normalization process, although limited sales might be warranted in the longer run to reduce or eliminate residual holdings. in the longer run, the committee intends to hold no more securities than it will need to implement monetary policy efficiently and effectively, and that the soma will consist primarily of treasury securities. given the $ 1. 6 trillion in large - scale asset purchases ( lsaps ) conducted since september 2012, the level | implies, in the words of professor issing, a “ permanent commitment ”. from this perspective, the two types of convergence are mutually reinforcing : nominal convergence provides the stable macroeconomic environment that fosters real convergence, while the latter lays the groundwork for sustainable nominal convergence by reducing the economy ’ s exposure to asymmetric shocks and containing differences in the transmission of symmetric shocks. it is, however, of the essence that the pursuit of real convergence gains should not be governed by a short - term vision, in which case they would come at the cost of macroeconomic imbalances. ii. is romania prepared for erm ii? professor issing is going to speak today about the global currency war, about whether we are indeed witnessing a genuine clash of currencies, as well as about the consequences of the massive exchange rate swings. it is a topical issue, also relevant to romania, because the reshaping of the relations among major global currencies – including on the background of the ecb ’ s recent quantitative easing – complicates the task of identifying the equilibrium exchange rate of the leu suitable for erm ii entry and thereafter for euro adoption. technically, the adoption of the single currency as of 1 january 2019 would imply joining erm ii in 2016 h1 and the minimum two - year stay. aside from the difficulty of setting the central parity, erm ii participation calls, however, for a certain preparedness of the economy as well, considering the risks inherently posed by a target - band regime. the need to minimise such risks and the requirement to fulfil the maastricht criteria by the end of the second year of erm ii participation render all the more important the completion of major economic policy adjustments ahead of adopting this exchange rate regime. i am mainly referring to removing the sources of repressed inflation ( the relevant example being the completion of the energy market deregulation ), of quasi - fiscal deficits ( by restructuring lossmaking state - owned enterprises ), as well as other sources of future budgetary pressure ( for instance, the unavoidable expenditures to modernise road infrastructure ). there are also monetary adjustments that need to be carried out ahead of erm ii entry, namely finalising the process of bringing minimum reserve requirement ratios in line with euro area levels. the large volumes implied by the cut in reserve ratios and the potential impact on the exchange rate call for a gradual approach to this process, possibly | 0 |
will continue to conduct this year, aimed at scaling up the safe usage of digital financial services in the country. ladies and gentlemen, in accordance with this year's theme, we would like to implore consumers of financial services and products to take a keen interest in safeguarding their money by engaging with licensed financial institutions. in recent years, the bank of zambia has observed a rise in the number of individuals who have fallen victim to promoters of money circulation schemes, resulting in the loss of their hard earned income and jeopardising their future. this trend is deeply concerning. the general public is therefore urged to be vigilant and report all suspicious financial institutions to law enforcement agencies. at the same time we want warn all fraudsters that the law will catch up with them. esteemed guests, we firmly believe that the development and execution of national strategies on financial education and inclusion have established a robust framework that facilitates effective engagement among various stakeholders, including government, financial sector regulators, financial service providers, and the private sector. this collaborative effort has led to various initiatives to heighten awareness among the public regarding the availability and safe usage of financial products and services nationwide. an important milestone to note is the publication of financial education supplementary books for students in grades 1 to 12, which have been integrated into the school curriculum and translated into 7 local languages for grades 1 to 4. these books were developed through a collaborative effort by the ministry of finance and national planning, the curriculum development centre under the ministry of education, the bank of zambia, and other key stakeholders with the objective of providing our future generations with the essential knowledge about making well - informed financial decisions for their financial well - being. today, we will witness the official launch of the supplementary books. distinguished guests, as we have said before the finscope 2020 survey, revealed that there has been an increase in overall financial inclusion in zambia from 37. 3 % in 2009 to 69. 4 % in 2020. however, despite the increase, it has been observed that awareness levels regarding financial products and services remains low in rural areas. according to the findings of the 2022 micro, small, and medium enterprises finance survey, awareness levels regarding financial products and infrastructure tend to be higher among business owners in urban areas compared to those in rural areas. for example, the awareness level for business loans was 69. 7 percent in urban areas compared to 59. 1 percent in rural areas. similarly, awareness of property insurance 2 / 3 bis - central bankers'speeches stood | denny h kalyalya : protect your money, secure your future speech by dr denny h kalyalya, governor of the bank of zambia, at the launch of the 2024 financial literacy week, lusaka, 18 march 2024. * * * the minister of finance and national planning, hon dr situmbeko musokotwane, mp, represented by the permanent secretary for economic and financial management, mr. denies chisenda the permanent secretary for technical services, ministry of education, mr. joel kamoko all senior governmental officials, present the chief executive officer, securities and exchange commission, mr. phillip chitalu the registrar of pensions and insurance authority, mrs namakau ntini the chairperson of the bankers association of zambia, ms lowani chibesakunda all chief executive officers of financial services providers all cooperating partners boys and girls distinguished invited guests members of the media ladies and gentlemen good morning i am pleased to extend a warm welcome to you all for joining us for this year's launch of the public awareness campaign for the financial literacy week activities, scheduled for 18 to 24 march 2024. the campaign will be marked by a variety of activities, such as, public exhibitions, debates, and media programmes that will be conducted by financial institutions and stakeholder partners in all the ten provinces of our country. distinguished guests, the theme for this year, " protect your money, secure your future, " aligns with the official theme for global money week 2024 and has been adopted by financial literacy week in zambia. this theme emphasises the importance of adopting a responsible and security - conscious approach to managing personal finances, by being mindful of potential risks in the financial sector and safeguarding one's hard - earned money. these risks include financial scams that include fraud, 1 / 3 bis - central bankers'speeches pyramid schemes, cyber - attacks, and identity theft. limited financial literacy and awareness about safe usage of digital financial services increase the likelihood of individuals falling victim to these risks. with the increased usage of digital financial services, financial scams have also increased. as financial sector regulators and services providers, we are obliged to disseminate information about the risks that may be associated with different types of services and products in order to increase public awareness on how to save, borrow, and invest financial resources safely in an increasingly digitised environment. therefore, i urge financial service providers and stakeholders to join the'go cashless'campaign, which the boz | 1 |
øystein olsen : management of the government pension fund global introductory statement by mr øystein olsen, governor of norges bank ( central bank of norway ), at the hearing before the standing committee on finance and economic affairs of the storting ( norwegian parliament ), oslo, 30 october 2020. * * * please note that the text below may differ from the actual statement. the government pension fund global ( gpfg ) and the fiscal rule have long been important pillars of economic policy in norway, as the past year has clearly illustrated. it has been necessary to draw on the gpfg to finance the extra costs related to managing the covid - 19 pandemic. at the same time, wide swings in international equity prices have led to substantial volatility in the return on the gpfg. norges bank manages the gpfg with the objective of achieving the highest possible return over time within the mandate defined by the ministry of finance. the gpfg is to be managed within an adequate control and risk management framework and in a responsible and efficient manner with a high degree of transparency. the gpfg has a diversified portfolio of investments all over the world. this allows us to reap the gains from an upturn wherever it may occur and shields us from negative events in individual markets. however, we cannot protect ourselves from broad - based global downturns, as shown by the developments in the gpfg through 2019 and 2020. the return on the gpfg in 2019 was the second highest percentage return since 1998 and the highest measured in nok. but global equity markets fell abruptly in the first quarter of the year. the value of the gpfg's equity investments sank by over 20 percent, measured in international currency. central banks and authorities all over the world have responded forcefully to dampen the crisis. equity markets picked up. the gpfg posted a positive overall return in the first three quarters of 2020. equity market volatility is not new. the gpfg has a long - term investment horizon. history has shown that we are able to ride out temporary falls in value. measured over the whole period from 1998 to the third quarter of 2020, the annual net real return was 4 percent. as long - term interest rates are low, we cannot expect the return to be as high in the years ahead. the return on the gpfg is measured against the return on a benchmark index of global equities and | njuguna ndung ’ u : the importance of digital identity to kenya ’ s financial sector remarks by professor njuguna ndung ’ u, governor of the central bank of kenya, at the national digital registry service financial services sector consultation, nairobi, 23 october 2014. * * * ms. mwende gatabaki, director general, kenya citizens and foreign nationals management service ; mr. joshua oigara, chairman, kenya bankers association ; mr. habil olaka, chief executive officer, kenya bankers association ; distinguished ladies and gentlemen ; i am delighted to be here today at this important consultative meeting on the national digital registry service to the financial services sector. i am grateful for the invitation and at the outset let me register the central bank of kenya ’ s support for this important initiative. ladies and gentlemen : the national digital registry has three core objectives : • strengthening national security, reducing crime and improving safety. • driving efficiency, effectiveness and accountability in service delivery. • providing citizen centric services that are easy to access, available and affordable. more fundamentally, the register will capture details of people, land, assets and establishments. these are important objectives but of fundamental importance to the financial sector is the provision of a digital identity for individuals and corporate entities. identity is a prequisite for the stable, efficient, safe and inclusive financial sector that is envisaged pursuant to vision 2030. it is the process of identification and a host of menu services that can be included that makes an assurance of safety and accessibility of financial services. without identity, individuals and corporate entities cannot access the financial sector. in kenya, the use of the identification card has mitigated this challenge. however evolution in the financial sector and growth in fraud has posed serious challenges in the form of fraud perperated through identity theft. we need such a registry service as the repository institution for any verification and cross - checking. ladies and gentlemen : most businesses in kenya thrive in the informal market and lack the formal identity that is required to in particular access credit. these are mainly the small and medium size enterprises that drive kenya ’ s economic growth. these businesses lack the formal identity or track record that is required to access credit. for these businesses to grow to the next level, it is imperative that they acquire a formal identity and a documented track record. only then, will they be able to access credit and grow their business. but how do we make it easier for them to register formally? i leave | 0 |
news conference 15 december 2022, 10. 00 am introductory remarks by martin schlegel i am pleased to give you an assessment of current developments with regard to cash. since june, after many years of strong growth, we have seen a significant decline in banknote circulation. to contextualise this decline of approximately 10 %, let me first say a few words about the above - average growth in recent years. in the period since the 2008 financial crisis, the value of banknotes in circulation grew, on average, more than twice as fast as in the two preceding decades – by around 6 % instead of 2. 5 % per year ( cf. chart 1 ). between mid - 2008 and june 2022, the value of banknotes in circulation more than doubled overall, from around chf 41 billion to chf 91 billion. this sharp increase was driven in particular by the desire of companies and private individuals to hold cash as a store of value. there was particularly strong demand for the large denominations, such as the 1000 - franc and 200 - franc notes ( cf. chart 2 ). we see two reasons for the increased demand for cash as a store of value over the last 15 years or so. first, there were multiple periods of high uncertainty, notably the financial crisis and the coronavirus pandemic. cash tends to be popular as a secure store of value during such times. second, the general decline in interest rates – and negative interest rates in particular – also contributed to the increased demand for cash. when interest rates are low or negative, it is relatively attractive to hold cash ( as opposed to bank deposits, for example ) as a store of value. the increase in interest rates since june has meant that there is once again less of an incentive to hold cash. against this backdrop, the value of banknotes in circulation fell by around chf 10 billion to chf 81 billion between june and october. returns of the 1000 - franc notes in particular were substantial, totalling chf 7. 7 billion. we expect this decline to continue. nevertheless, demand for cash as a store of value is likely to persist. companies and households consider such a safety net to be important. page 1 / 2 berne, 15 december 2022 martin schlegel news conference of course, cash is not only used to store value, but also to make payments. small denominations in particular play an important role here. the decline in banknotes in circulation observed since | the moment essentially focused on larger firms with smaller ones probably suffering from restricted access to credit, in the swiss case, any diverging trend between big and small firms is not of major importance. rather, the difference is more accentuated for firms that are predominantly export - oriented as opposed to those oriented towards the internal market. on the export side, the ability of swiss exporters to continue redirecting their efforts towards the more dynamic regions of the world economy, in particular emerging asia may be a crucial test. this region is leading the world in terms of economic recovery from the crisis. it is clear here that the proponents of a reasonable version of the decoupling hypothesis are on the winning side of the intellectual debate. on a global level, inflation pressures are expected to remain subdued in most economies. in advanced economies, headline inflation is expected to pick up from near neutral levels in 2009, but remain low in 2010. for switzerland, the path of inflation in the short term will be largely dictated by recent movements in oil prices and associated base effects. inflation will nevertheless remain positive throughout 2010. this follows a negative rate of 0. 5 % in 2009. assuming that monetary policy remains unchanged, the snb ’ s forecast show that inflation will reach 0. 7 % this year. the snb ’ s forecasts also show that inflation will begin to increase again from the beginning of 2011, to reach 2 % in the first half of 2012. iii. policy challenges for the future 1. exit strategies for the snb, the return to normality does not pose any difficult conceptual problem. the unconventional measures developed to combat the current crisis have in part modified the nature of the liquidity created. liquidity resulting from repos and currency swaps is temporary : it flows back automatically when transactions are not renewed. liquidity created by acquiring foreign exchange and swiss franc bonds is more permanent. the issuance of snb bills routinely practiced since october 2008 has given the snb a tool that can play a central role in liquidity absorption. the next speaker, my colleague dewet moser, will concentrate on the more technical aspects of the exit strategy. suffice it to say that the toolbox is available. it is not a question of how, only of when. on the timing issue, because of the long and variable lags between monetary policy decisions and their impact on inflation, the decision to start tightening is a difficult one. it is necessary to balance the risk of moving too soon | 0.5 |
that there remain significant difficulties ( 1 ) in grasping the benefits and risks of some major “ mutations ”, namely important financial innovations and new business models, and ( 2 ) in predicting how the overall “ body ” reacts to specific stresses. 6. more specifically, i would argue that our analytical apparatus would still have to make progress in characterising the role of non - bank financial intermediaries. for example, the “ explosion ” of the industry of highly leveraged financial institutions from around 100 billion us dollars of capital under management in 1990 to 3 trillion dollars in 2007 implies that this industry is likely to generally have important systemic implications, even though the present crisis was not caused by failures of large hedge funds. many hedge funds are highly sophisticated, but this does not imply that in the aggregate they always act in the stabilising contrarian way perceived by some observers. recent research about the “ dot. com ” bubble episode bis central bankers ’ speeches 7. the second intellectual challenge for such an analytical apparatus relates to when and how a financial system migrates from tranquility to a severe crisis. it appears to me that in economics we have some way to go in understanding the triggers, speed and abruptness of such migrations. see, for example, the sudden eruption of systemic instability in august 2007 and its dramatic worsening in september 2008, as reflected in a new indicator of systemic stress developed by ecb staff displayed in chart 1 of my article. in physics, however, “ phase transitions ” are the subject of ample research since a long time. for example, jean - philippe bouchaud from the ecole polytechnique here in paris has shown how fundamental research in physics on “ crackling noise ” and “ self - organised criticality ” can be applied to transitions to financial crises. this helps, for example, to understand the initial persistence and subsequent abrupt breakdown of financial bubbles. while this type of approach closely matches a number of important empirical patterns in asset prices, for example, it does not assume very high levels of rationality of economic agents, a strong tendency towards equilibrium situations or universal efficiency of financial markets. this observation might be insightful, if we compare it with the standard models that are nowadays used in economics. 8. the third challenge concerns how financial instability interacts with the macroeconomy. in my article, in chart 2, i have illustrated how drastically major forecasting institutions missed the start of the “ great recession ”, the “ free fall ” of economic | the favourable impact of the recent monetary policy measures on aggregate demand, and by the impact of the lower euro exchange rate, the base effects that will materialise later in 2015 and somewhat higher oil prices in the years ahead, inflation rates are expected to increase consistently over the short and medium term. the ecb will continue to closely monitor the risks to the inflation outlook. in this context, the governing council will focus in particular on the pass - through of our monetary policy measures, as well as on geopolitical, exchange rate and energy price developments. our monetary policy continues to aim at safeguarding price stability. since mid - 2014 we have taken a number of both conventional and unconventional measures. monetary policy measures adopted in the second half of 2014, such as the tltro, cbpp3 and abspp, had resulted in a material improvement in terms of financial market prices. in january 2015, the governing council launched an expanded asset purchase programme to address the heightened risks of too prolonged a period of too low inflation, encompassing purchases in the secondary market of euro - denominated investment - grade securities issued by euro area governments and agencies and european institutions. we intend to purchase private and public securities until end - september 2016. in any case, we will continue the purchases until bis central bankers ’ speeches the governing council sees a sustained adjustment in the path of inflation which is consistent with its aim of achieving inflation rates below, but close to, 2 % over the medium term. in its assessment, the governing council will follow its monetary policy strategy and concentrate on trends in inflation, looking beyond any unexpected movement of inflation in either direction if it is regarded as transient and deemed to have no implications for the medium - term outlook for price stability. there is clear evidence that the policy measures are effective, as financial market conditions and the cost of external finance for the private sector have eased considerably over the past months and borrowing conditions for firms and households have improved notably, with a pick - up in the demand for credit. as regards fiscal policies, we concur with the imf weo assessment that the by and large neutral euro area aggregate fiscal stance in 2015 continues to appear broadly appropriate, although it masks significant heterogeneity across countries. many euro area countries still face significant consolidation challenges in order to reduce high debt ratios and to ensure fiscal sustainability. the flexibility within the stability and growth pact should be used wisely and should not lead to increased debt sustainability risks and making countries vulnerable to economic shocks in | 0.5 |
peter praet : creating an enabling environment for pan - european banks in the banking union remarks by mr peter praet, member of the executive board of the european central bank, at the eurofi financial forum 2018, vienna, 5 september 2018. * * * in recent years, the european union has achieved major progress towards financial integration. we now have a single supervisor and a single resolution authority, and banks are subject to the same european rulebook. the banking union contributes to providing effective mechanisms for cross - border risk - sharing and broadening the sources of funding within a country, thereby promoting macroeconomic stability and growth. however, we still observe a number of obstacles that hinder the fungibility of capital and liquidity of banking groups. very often, these obstacles relate to regulatory fragmentation and ring - fencing of national markets. further harmonisation would help to address many of the issues, while appropriate prudential safeguards can be put in place to address possible financial stability concerns by national authorities. first, a number of national options and discretions are hindering the practical application of cross - border liquidity waivers within the union. while such waivers are explicitly allowed by the crr, and already contain prudential safeguards, so far the ecb has received almost no application for their use from the banks it supervises. an important reason for this lack of applications is the existence of national large exposure limits on intragroup exposures in several european countries. these limits prevent institutions in these countries from transferring liquidity within the group in a flexible manner and thus represent practical obstacles to the use of liquidity waivers. effectively, they are hindering the free flow of liquidity in the banking union and should be harmonised further. second, the proposal to have cross - border capital waivers within the eu was not taken forward in the on - going review of the crr, which is a missed opportunity. such waivers would be consistent with the establishment of the ssm and the banking union and help to support the free flow of capital across the union. on the one hand, it is understandable that some national authorities are concerned about the possible financial stability implications of the proposal. on the other hand, such concerns could be addressed by making the waivers subject to additional prudential safeguards, and by putting in place appropriate transition arrangements that account for the planned further progress on the banking union. third, the major progress we have made in our banking union needs to be recognised also in the international | regulatory framework. for example, the g - sib framework currently penalises cross - border transactions within the banking union by attaching a higher systemic risk score to banks with more of such transactions. this goes against the very rationale of the banking union, as it reduces the incentives for cross - border transactions and risk diversification. the international regulatory framework should recognise the progress that has been made in the banking union and exclude intra banking union positions from the cross - jurisdictional indicators in the g - sib methodology. fourth, there are also some resolution related aspects that warrant further consideration. in particular, the allocation of internal mrel has turned out to be an area of tension between national jurisdictions. jurisdictions with a foreign bank subsidiary prefer to have a high pre - positioning of internal mrel to ensure an orderly resolution of its local subsidiary. however, this implies a certain degree of ring - fencing to the detriment of the foreign parent bank. the compromise reached by member states in the council only allows that internal mrel is 1 / 2 bis central bankers'speeches waived if the resolution entity and the subsidiary are located in the same member state, neglecting the fact that we have achieved so much in terms of joint supervision and resolution among euro area countries. to account for this progress, internal mrel waivers on a crossborder basis in the banking union should be allowed as this would contribute to continuous cross - border banking, e. g. by generating efficiency gains and promoting further integration. therefore, it should also be possible to use guarantees to replace internal mrel and allow for more flexibility in the allocation of resources within the banking union. of course, to install confidence it will be important to have adequate safeguards in place, including that there is no legal or practical impediments to the provision of support by the parent to the subsidiary, in particular when the resolution action is taken. 2 / 2 bis central bankers'speeches | 1 |
banks in the major countries have expanded very significantly, in some cases approaching or even surpassing their war - time peaks ( graph 1 ). further expansion may yet occur. graph 1 it is no criticism of these actions – taken as they have been under the most pressing of circumstances – to observe that they raise some very important and difficult questions for central banks. there is discomfort in some quarters that central banks appear to be exercising an unprecedented degree of discretion, introducing new policies yielding uncertain benefits, and possible costs. one obvious consideration is that central banks, in managing their own balance sheets, need to assess and manage risk across a wider and much larger pool of assets. gone are the comfortable days of holding a modest portfolio of bonds issued by the home government that were seen as of undoubted credit quality. central bank portfolios today have more risk. to date in the major countries, this has worked well in the sense that long - term yields on the core portfolios have come down to the lowest levels in half a century or more. large profits have been remitted to governments. but at some point, those yields will surely have to rise. bis central bankers ’ speeches of course large central bank balance sheets carrying sizeable risk is hardly news around asia. once again, the bank of thailand has made an excellent contribution to the international discussion here, having recently held a joint conference with the bis on central bank balance sheets and the challenges ahead. 10 the difference is that in asia the risks arise from holdings of foreign - currency assets which have been accumulated as a result of exchange - rate management. there is obviously valuation risk on such holdings. there is also often a negative carry on such assets since yields on the asian domestic obligations which effectively fund foreign holdings are typically higher than those in the major countries. in effect the citizens of asia continue to provide, through their official reserves, very large loans to major country governments at yields below those which could be earned by deploying that capital at home in the region. for the major countries a further dimension to what is happening is the blurring of the distinction between monetary and fiscal policy. granted, central banks are not directly purchasing government debt at issue. but the size of secondary market purchases, and the share of the debt stock held by some central banks, are sufficiently large that it can only be concluded that central bank purchases are materially alleviating the market constraint on government borrowing. at the very least this is lowering debt service costs, and it may also condition | ##326. pdf >. a further question is whether significant parts of private markets for which central banks are de facto a more or less complete substitute today will actually resume when central banks seek to step back, or whether those market capacities will have atrophied. this is something the bank of japan has long worried about – since it has been involved in qe for more than a decade. it will also be relevant in european inter - bank markets and probably elsewhere. of course some may not mourn the loss of such markets, but that would be short - sighted. bis central bankers ’ speeches too much. they cannot combat the effects of population aging or drive the innovation that raises productivity and creates new markets. nor can they, or should they, put themselves in the position of deciding what real resource transfers should take place between countries in a currency union. one fears, in short, that while the central banks have been centre stage – rightly in many ways – in the early responses to the crisis, and in buying time for other adjustments by taking bold initiatives over the past couple of years, the limits of what they can do may become more apparent in the years ahead. a key task for central banks is to try to communicate these limits, all the while doing what they can to sustain confidence that solutions can in fact be found and pointing out from where they might come. challenges with spillovers talking about the challenges associated with large balance - sheet activities leads naturally into a discussion about international spillovers. in one sense, this is not a new issue. it has been a cause of anxiety and disagreement since the latter days of the bretton woods agreement at least. the remark attributed to the then secretary of the us treasury in regard to european concerns about the weakness of the us dollar in the 1970s of “ it's our currency, but your problem ” was perhaps emblematic of the spillovers of that time. there have been other episodes since. 13 in a much earlier time there was, of course, the “ beggar thy neighbour ” period of the 1930s – something which carries cogent lessons for current circumstances. in recent years, as interest rates across a number of major jurisdictions have fallen towards zero and as central bank balance - sheet measures have increased, these developments have been seen as contributing to cross - border flows of capital in search of higher returns. the extent of such spillovers is still in dispute. and, to the extent that they are material, some argue that a world in | 1 |
european central bank : press conference - introductory statement introductory statement given 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 11 may 2000. * * * ladies and gentlemen, the vice - president and i are here to report on the outcome of today ’ s meeting of the governing council of the ecb. the governing council conducted its regular examination of the outlook for price developments and the risks to price stability in the euro area. the interest rate on the main refinancing operations of the eurosystem was left at 3. 75 % and the interest rates on the marginal lending facility and the deposit facility were maintained at 4. 75 % and 2. 75 % 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 march 2000 the three - month average of the annual growth rates of m3 - covering the period from january to march 2000 - rose to 6. 0 %, compared with 5. 9 % in the period from december 1999 to february 2000. consequently, m3 growth remained 1½ percentage points above the reference value of 4½ %. the annual rate of increase in credit to the private sector also rose, to 10. 9 %, compared with 10. 4 % in the previous month. these figures confirm our earlier assessment, namely that liquidity continued to be ample in the euro area in early 2000. as regards economic developments, recent information confirms the very positive outlook for strong growth in the euro area. all available indicators and forecasts seem to point to a phase of continued economic growth, following the upturn observed in the second half of 1999. industrial production rebounded in february and this, together with further increases in capacity utilisation and industrial confidence up to april, suggests an ongoing strengthening in industrial activity. in addition, with consumer confidence remaining at an all - time high and unemployment continuing to decline, the recent strength of private consumption should be sustained. looking at the world economy, the upturn in growth has become more broadly based, pertaining to both industrial and emerging economies, and most forecasts indicate that current growth differentials between economic areas are in the course of narrowing. notwithstanding the strong growth performance and favourable outlook for euro area economic activity, the exchange rate of the euro has continued to decline over the past few weeks and has thereby moved | makers and greek citizens. before giving the floor to the distinguished speakers, please allow me to thank the researchers who have worked for this study, eliamep and its president, professor loukas tsoukalis, and last but certainly not least, professor jean pisany ferry, who is the keynote speaker today. 1 see, among other, blanchard and giavazzi 2003, boeri 2005, fiori et al. 2007. 2 / 2 bis central bankers'speeches | 0 |
new asset class in their investment universe. dynamism of the sukuk in the islamic capital market is evident with the large variety of sukuk being structured and issued, including exchangeable, convertible and hybrid sukuk. the sukuk market stands at almost us $ 130 billion today and is growing at a rate of 40 percent annually. new issuance of sukuk in the global sukuk market has remained robust despite the challenging economic environment, with an increase of 43 percent to us $ 20 billion in 2009 while linkages with europe have resulted in a more cautious market in the first half of 2010 which saw decline by about 20 percent in the global sukuk issuance, the trend is expected to reverse with initiatives by the governments in asia and the middle east to raise funds for the implementation of infrastructure development and investment projects. in malaysia, the islamic financial system operates in parallel with the conventional financial system. with a humble beginning of establishing the first islamic bank in 1983, islamic finance in malaysia has evolved to become a comprehensive domestic islamic financial system, comprising the islamic banking institutions, the takaful industry, the islamic money and capital markets. malaysia ’ s islamic banking sector grew 20 % annually since 2001 in terms of assets and as at the end of june 2010, the share of islamic banking assets in the total banking sector has expanded to reach 20. 9 percent as compared to 6. 9 percent a decade ago. malaysia also remains the world ’ s largest sukuk market, accounting for more than 60 percent of global sukuk issuances. islamic finance prospers in malaysia because it is competitive, innovative and in sync with what the market want. recent developments of islamic finance that strengthen its resilience significant milestones achieved in the recent decade in the area of international financial infrastructure provides further support for sustainable and orderly development and continued growth of islamic finance. in 2002, the islamic financial services board or ifsb was established with the role as an international prudential standard setting body for islamic finance. the ifsb has been instrumental in developing and issuing global prudential standards and guiding principles for the industry. further efforts to ensure sustainability of islamic finance in this new and more challenging environment include the formation of a task force on islamic finance and global financial stability by the islamic development bank and ifsb. the report by the task force was completed in april this year and highlights eight building blocks to strengthen the financial infrastructure of islamic finance, drawing also on important lessons | to a marked cyclical shock, some real imbalances in the global division of labour are being corrected through the current global downturn. stabilisation policies should not try to prevent these processes ; returning to a status quo ante is not a sensible option. given the recent encouraging signs from financial markets and a number of leading economic indicators, i believe there are some grounds for being optimistic that the pace of decline in economic activity will decelerate markedly in the months ahead. however, it is certainly not advisable to be overly optimistic that the recovery process is safely on track. this will most likely be a gradual process with growth rates – notwithstanding some volatility in quarterly figures – lying below potential for a considerable period of time. this means that economic slack measured by very low rates of capacity utilisation will not diminish rapidly. and we should take into account that, even if in many countries – including germany – the worst may be over in terms of negative growth rates, the labour market situation will visibly deteriorate in the quarters ahead. the german economy has been hit hard by the global downturn. germany as an open and export - oriented economy has its comparative advantage in investment goods. and it has specialised by increasing its degree of openness markedly over the past decade. by doing so, the german economy has benefited from the dynamic global environment of the past few years. currently, the sharp contraction in the german manufacturing sector makes clear that this kind of specialisation also means a more cyclical overall economy, at least in the face of rare massive common global shocks. an open economy like germany ’ s cannot insure itself against truly global shocks regardless of how diversified its export portfolio is in regional or product terms. with regard to measures stabilising the global economy, one aspect that is too often overlooked is the fact that due to the sharp contraction in net exports since summer 2008 the german economy is de facto stabilising the global economy. a decline in net exports means that less income from global trade flows is absorbed by germany. then, by definition, in some other countries net exports must rise, de facto stabilising production in those economies. 2. 4 longer - term lessons for monetary policy let me turn finally to what are more longer - term lessons for monetary policy to be drawn from the current crisis. in doing so, i shall take a step back from the sort of crisis management i have just described to the more general issue of conducting monetary policy in | 0 |
been growing at an annual rate of 20 percent. as of end of 2003, fixed assets of the non - state sector accounted for 61. 1 percent of the nation ’ s total. ( 3 ) now there are more than 400, 000 foreign - invested enterprises in china. 4. efforts are being made to enhance innovation capacity. ( 1 ) to seize the great opportunity brought about by domestic industrial restructuring, the chinese government has speeded up the introduction of advanced technology, management expertise and high quality professionals from abroad. ( 2 ) enterprises are encouraged to enhance their capacity for market development, technological innovation and brand establishment. ( 3 ) the government has also redoubled efforts to facilitate study and research in basic science. ( 4 ) “ soft environment ” has been improved to encourage multinational companies to build r & d centers in china. 5. the opening process has been accelerated. ( 1 ) the chinese government has opened certain sectors in an orderly and sequenced manner according to the requirements of the market economy and the wto rules. some sectors, such as insurance and tourism as well as the local currency business for foreign banks have been opened even ahead of the wto schedule. ( 2 ) the “ go - abroad ” strategy has been firmly implemented, allowing enterprises to grow stronger through international competition. 6. financial reform has been deepened to speed up the development of the financial markets and improve competitiveness of the financial institutions. the following measures have been taken in recent years to strengthen financial stability, promote the reform of financial industry and improve the quality of financial service. accelerating joint - stock reform of the commercial banks, taking advantage of the strong economic growth momentum. commercial bank reform has undergone several important stages. first, the chinese government issued special treasury bonds amounting to rmb 270 billion yuan in 1998. the fund raised was subsequently used to recapitalize the state - owned commercial banks. in 1999 - 2000, four asset management companies ( amcs ) were established to take over part of the non - performing loans from the commercial banks. second, commercial banks used their own resources including reserves, profit and capital, to write off non - performing loans. third, us $ 45 billion foreign exchange reserves were used to recapitalize two state - owned commercial banks - the bank of china and china construction bank. meanwhile, efforts have been made to clean up their non - performing assets and improve their internal risk control and corporate governance. supervision on their capital adequacy has also been intensified. | remarks by javier guzman calafell, deputy governor at the banco de mexico, on “ attacks of tariffs : what about currencies? ”. euro50 group & cigi meeting. bali, october 12, 2018. 1 i thank the organizers, and especially nina massis and edmond alphandery, for the invitation to join you in this event. ten years after the outbreak of the financial crisis, the global economic recovery appears to have peaked, with gdp growth rates for this and the next couple of years projected to stabilize at levels similar to those recorded in 2017, and to decline subsequently to a less vigorous pace in line with lower potential rates of growth in many economies. further to the envisaged loss of momentum going forward, a number of remaining legacies, as well as new perils, continue to tilt the balance of risks for the outlook to the downside. chief among the latter is the rising trend of protectionism, evidenced by more restrictive trade policy stances, both actual and intended, in a number of countries, leading in turn to heightened tensions or outright conflict between governments. of course, the specific nature and extent of these tensions is varied and broad - ranging, and while there has been some relief in virtue of progress achieved in some particular cases, such as the recently announced agreements in the north america region and between the united states and korea, ongoing hostilities in other fronts remain a major source of concern. of particular note is the clash between china and the united states, which is widely regarded as the one with the potentially direst consequences, not only for the economies directly involved but, also, globally. in fact, the performance the views and opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the institutional position of the banco de mexico or of its board of governors as a whole. throughout this year of a number of variables points to the effects that such a situation may already be exerting on the world economy. for instance, international trade volumes have notably slowed down relative to the upward trend they had displayed since 2015, while other indicators on the output side, such as export orders in global manufacturing pmis, sentiment indexes for trade oriented sectors, and capital goods orders in some of the main economies, are showing a declining trajectory that, if sustained, would eventually be reflected in international trade figures. why is such a potential setback in global openness to trade so worrisome? naturally, the complexities of the trade | 0 |
growth to around 1. 5 per cent ( the average annual level recorded in the ten years leading up to the global financial crisis ) will require an average increase in labour productivity of a little under 1 percentage point per year ( figure 9 ). this objective calls for a sharp rise in tangible and intangible capital investment, and for productive efficiency gains comparable to those observed in the other main european countries. in any event, its achievement presupposes a break from the recent past ; it calls for the resolution of those structural problems, which for too long now we have failed to address, and which have become increasingly pressing in a new technological context and a more integrated world. last year, the ratio of investment to gdp was still three percentage points below what it was in 2007 : this year it will decline further ( figure 10 ). the lags with respect to the most advanced economies cannot be recouped by increasing public expenditure without first improving its efficacy and without making structural adjustments to the economy. while it will remain extraordinarily accommodative for a long time, monetary policy is no substitute for the measures needed to raise growth potential. resources must be channelled to where the social returns are highest ; to do so requires ongoing and substantial improvement in public services, with the necessary simplifications and the right distribution and mindful assumption of responsibilities. the technologies used and the quality and motivational levels of human resources have a profound impact on how administrations operate. we have learnt a lot from this crisis ; it has demonstrated the need to fast track the digitalization of working processes and to rethink their organization. the heavy turnover expected in public administration in the the governor ’ s concluding remarks annual report 2019 banca d ’ italia coming years will make it possible to hire young, highly - skilled and motivated workers from a variety of backgrounds ; we must support and invest in them. the accumulated lag in infrastructure must be overcome, as regards both traditional infrastructure, which must be upgraded and made more efficient, and highly innovative infrastructure, such as the telecommunication networks, which are necessary to support the technological transformation of the italian economy. the fixed broadband network reaches less than one fourth of households, compared with 60 per cent on average in europe, and the south of the country is especially penalized. the european commission ranks italy nineteenth among the eu states for connectivity. as has been underlined for too many years now, the quality of human capital must be improved, by tackling the | ##4, characterised by robust capital adequacy, low levels of non - performing assets, and healthy profitability of banks and nbfcs. i would like to compliment the banks and other financial sector entities for such a stellar performance. there is, however, no room for complacency. we must keep constant vigil and continue to take proactive measures to sustain this progress. in today's environment which is characterised by turbulent global spillovers and uncertainties, it is important for the financial sector to follow an adaptive and forwardlooking approach to navigate amidst the emerging challenges. this would entail strengthening governance and risk management practices ; employing sustainable business models ; and embracing technological advances and using them to our advantage. on its part, the reserve bank will continue to fine tune the regulatory architecture and the supervisory rigour, as may be required, to promote long term resilience and stability of the financial system. let me now elaborate on each of these aspects. governance strong governance is at the core of resilience, especially in the financial sector. it is in fact the bedrock for informed and strategic decisions that align with long - term goals and risk management principles. in this context, i would like to highlight three major imperatives. first, effective governance entails establishing clear roles and responsibilities for the board of directors and the executive management. both of them should possess necessary expertise and independence to take the right decisions and to effectively exercise appropriate oversight on operations. second, robust governance also involves implementing comprehensive internal controls and strong assurance functions, namely, risk management, internal audit and compliance. internal controls should be designed to detect and mitigate potential risks before they escalate into significant issues. regular internal and external audits play a critical role in this process as they provide independent assessments of the organisation's financial health. they also facilitate genuine compliance with regulatory requirements. perfunctory compliance with regulations would actually be self - defeating. i am happy to note that at the systemic level, there has been significant improvement in compliance culture in our financial system. the reserve bank is bilaterally engaged with the outlier entities wherever it notices deficiencies. the heads of risk management, internal audit and compliance functions are the conscience keepers of a financial institution. they should have the necessary seniority and independence within the organisation. these verticals in a bank or nbfc play a critical role in identifying the gaps and weaknesses, if any, in their organisations and help in managing risks and safeguard | 0 |
where common functions and capabilities have been pooled leading to more cost - efficient entities as well as allowing for greater focus in the marketing and customer management. following this rationalisation, the cost to income ratio of the domestic banks have improved from 55 % in 2003 to 51 % in the first quarter of this year. on the aspect of improving customer interface and improving time taken to conduct banking transactions, branches have been redesigned with new business models. with this move, branch staff now have greater opportunity to provide value - added consultations and interface with clients. increased investments have also been made to improve information systems - to be better positioned to understand customers'profiles and needs, as well as enhance overall risk management. technologies such as data warehousing are now readily available to aid banking institutions to be more customer - centric and thus be more focused in their approach. as a result, more institutions have undertaken to offer greater product differentiation and value added services. the robust growth in the malaysian economy has also contributed to an increased demand for life insurance coverage. the growth in premium income has continued to outpace economic growth. over the period 2000 - 2004, the market penetration rate increased from 31 % in 2000 to 39 % in 2005. the per capita spending on life insurance products also increased at an average annual rate of 10 % over the same period. notwithstanding this wider reach, life insurance coverage has remained relatively low compared with the more developed markets in the region such as the republic of korea, singapore and japan which reported penetration rates of more than 80 %. given the vast untapped market potential and the increased product innovation and new distribution channels, the life insurance penetration in malaysia is expected to strengthen. demographic changes leading to a growing ageing population has been a growing concern in many countries. given the trends in rising life expectancy and falling birth rates, responding to the increased challenges of retirement financing has been high on the nation's socio - economic development agenda. going forward, there will be greater interest in private pension schemes representing an are of significant growth opportunities for life insurers. the financial performance of the malaysian insurance industry has also continued to be impressive during the 2000 and 2005 despite the challenging underwriting and investment conditions, with growth primarily driven by the life sector. total insurance fund assets of the industry grew at an average annual rate of 13. 8 %. the insurance industry also increased in importance as a component of the economy and financial system. the ratio of total industry assets to nominal gnp rose from | are manifold ranging from efficiency gains brought about by new technologies to the introduction of innovative products and management techniques. further, more advanced research and development facilities and adoption of best practices from more matured financial markets will contribute to the transfer of skills and knowledge, adoption of sound risk management culture, technology and ideas in the domestic financial system. another consideration in the liberalisation process is that of promoting financial inclusion, where all segments of society will have access to adequate financial services. the wide branch network of domestic banking institutions has ensured that non - urban areas have access to banking services, thereby eliminating the use of informal financial services. domestic banking institutions with large presence in the non - urban areas, some as high as 20 % of total branches, have succeeded in achieving sustainable performance while meeting this objective. locally incorporated foreign banks are however located mainly in major cities and serve only certain segments of the banking public. a wider dispersion of branches of locally - incorporated foreign banks across the country would contribute towards achieving greater financial inclusion. for further expansion outside major cities to be a commercially viable proposition, it is recognised that the attainment of critical mass is essential. in this regard, in addition to the flexibility accorded to establish up to four new branches, consideration will be given to allow for greater presence in the non - urban areas and to serve the segments of the economy which are currently underserved. the banking sector is now in a prime position for the next step in evolution. the foundation for the development of a more efficient, effective and stable financial system has been laid. the task is now for the industry to move forward and undertake the necessary actions towards realising goals as envisaged in the fsmp. nevertheless, this journey does not end in 2010. we should also look forward towards what lies beyond 2010. as an open economy, we should also be cognisant with the developments that take place around us. i believe that the malaysian financial services industry is ready to take on this challenge to elevate the performance and standards of the sector. with this, i wish you a productive summit. | 1 |
done, we actively track the coordinates of agent banks to ensure that access is provided to sub - districts in need of financial access points. since its implementation in 2012, 95 % of sub - districts now have at least one financial access point, a significant increase from 2011. as at august 2013, there were 5, 661 agents and the total number of transactions has exceeded 25 million, with a total value of rm2. 8 billion. fourth, islamic finance can play a huge role in financial inclusion given the strong parallels between the two the concept of financial inclusion – to develop a prosperous, egalitarian economy that contributes towards social development and social justice – is very much in line with the core principles of the islamic economy, which place great emphasis on social justice, inclusive growth and equitable distribution of resources. in advancing the islamic financial inclusion agenda, crucial criteria such as injection of innovation and enhancement of products and services as well as distribution channels to reach targeted groups especially the rural areas are essential : bis central bankers ’ speeches one of such example in malaysia is the introduction of profit and risk sharing investment accounts, where savings are matched with funding required by smes for financing specific projects. greater outreach to microenterprises and smes can also be achieved through the wider application of equity - based structures in financing for islamic microfinance and smes. this contributes towards the overall objective of generating inclusive growth that enhances job creation. other financial products such as microtakaful and waqf can also provide a financial solution for lower income groups and small businesses. through islamic finance, we can also further explore the concept of agent banking or branchless banking to leverage on the role of traditional community centres such as mosques. this would harness more efficient means of outreach amongst muslims, which is of particular relevance in many oic members. another important sphere that has not been explored exhaustively, islamic financial institutions may also leverage on its large distribution network to facilitate the collection and mobilisation of zakat and waqf. fifth, proportionate regulation can achieve objectives of inclusion, stability and integrity proportionate regulation ensures that the costs of regulation do not outweigh the benefits of regulation and that regulation is commensurate to risks. of significance, proportionate regulation protects the stability and integrity of the financial sector, and at the same time encourages innovative financial inclusion solutions. it is important to recognise that regulation that is proportionate to risks does not necessarily equate to “ lighter regulation ” as many perceive | government securities have swiftly recovered to 3. 9 % from a peak of 4. 5 % last november, post - us elections, reflecting higher confidence in the malaysian bond market. we are currently the largest bond market in asean in terms of percentage over gdp. the malaysian bond market continues to be resilient and well - functioning. non - resident holdings of malaysian bonds have settled at a lower level of 26 % compared to its peak of 34. 7 %. however, we have observed a more diversified and well - balanced non - resident investor base in recent months and our surveillance indicates that composition of medium to long - term investors is now much higher. the participation of a diverse spectrum of non - residents, including central banks and sovereign funds, is pivotal in providing a more stable and balanced two - way flows. malaysia is constantly in top 20 global competitiveness index. malaysia is the world ’ s 34th largest economy. we are also consistently ranked among the world ’ s most competitive economies. these are externally driven indexes and are independently researched. in the world bank doing business report, malaysia scored better than the average oecd high income nations in terms of legal rights and credit information. our protection of businesses are also stronger with faster and higher recovery rate in cases of insolvency. in terms of talent development, attraction and retention, malaysia has consistently ranked in the top 20 of the imd world talent report. within the region, malaysian talents stand out due to our diversity. a key attraction for investors in malaysia remains the english proficiency of our workforce. we have maintained a top 15 ranking in the ef english proficiency index for the last 6 years. many multinational companies based in malaysia have taken note of this cultural diversity. the familiarity of our people with the numerous languages spoken within asia, including mandarin, arabic, tamil, urdu and malay allows for malaysia to be a natural choice for regional business operations. the flourishing of our global business services industry illustrates this point. google has established its center of excellence in cyberjaya. this centre would showcase a range of google for work products such as google apps for work and google cloud platform. malaysia always subscribes to global best practice and standards. from national statistics to macroeconomic management, international organisations like the imf and world bank have long acknowledged malaysia ’ s adherence to international best standards. a quick word on the impact of global standards on the real economy. our adherence to international standards has extended to the quality of our products. from precision semiconductor | 0.5 |
nestor a espenilla, jr : revisiting the role of rural banks in countryside development and financial inclusion speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 65th annual convention and general membership meeting of the rural bankers association of the philippines ( rbap ), davao city, 21 may 2018. * * * davao city mayor sara “ inday ” z. duterte, secretary of finance carlos g. dominguez, pdic president roberto b. tan, land bank president alex buenaventura, rbap president giovanni d. gabriento, rbap members, colleagues from the bangko sentral, fellow workers in government, esteemed guests, ladies and gentlemen, a pleasant good morning to everyone! i am honored to visit davao again, for rbap ’ s 65th annual convention and general membership meeting. it is always a pleasure to see and appreciate the city ’ s beauty. i also look forward to sampling some durian. and as mayor sara said, let us support davao ’ s buy buy buy to support the local economy. i commend the outgoing set of rbap officers and directors for their commitment and exemplary performance to promote a sound rural banking industry. rbap ’ s milestones under your leadership are vital to promoting broader countryside development through financial inclusion. your consistent service to our farmers, fishermen, and msmes has become rbap ’ s trademark of service excellence. i remember during last year ’ s charter anniversary symposium in october, we talked about how rural banks have become customers ’ best financial friend or bff 1. now, we celebrate how rural banks are # lodis in bringing necessary financial services to the underserved, unserved, and unbanked filipinos. this term “ lodi ” is filipino millennial speak for “ idol ” and takes off from your theme, “ leading onwards to development and inclusion # lodi. ” to me, this theme indicates the industry ’ s willingness to reposition itself to the growing needs of a new breed of financial customers and to leverage on digital financial technology to advance economic development and financial inclusion objectives. that you have one of the youngest rbap presidents to steer the rural banking industry into this direction is very promising. rural banks as # lodis for financial inclusion rural banks have proven themselves to be lodis in their own right — exemplary | ##men into the banking and financial system. maraming salamat. mabuhay ang rbap! mabuhay ang rural banking! mabuhay ang pilipinas! 4 / 4 bis central bankers'speeches | 1 |
mentioned. the current challenge is not only about solving this institutional imbalance, but also about achieving this in a politically, economically and socially feasible way. in other words, europe is struggling between easing short - term pain and committing to long - term reforms. let me give you a brief idea of the two options for long - term reforms. in both cases a stable, long - term solution for europe can only be achieved if actions can once again be reconciled with responsibility for their consequences. the first option would be a bold institutional step forward and would shift responsibility for fiscal and economic policy to the supranational, or european, level. in other words, the creation of a fiscal union. a fiscal union would undoubtedly be the largest step in the european integration process since the launch of the euro. however, transferring sovereignty to the european level would prove impossible without extensive treaty amendments and referendums all over the eu. appointing a european finance minister or establishing a joint ministry of finance would be two possible ways of enshrining fiscal control at the european level. admittedly, there is currently little prospect of finding political support for a fiscal union. the second option would be to eliminate the flaws and inconsistencies of the current framework. that would imply a restoration of the core principle of national responsibility. what this means, above all, is that the repercussions of national decisions on economic and fiscal policy must no longer be capable of jeopardizing the financial stability of the euro area as a whole. experience has shown us the need to focus on a set of credible policy rules in the euro area – in other words rules that do not provide governments with incentives to flout them. and, equally important, rules need to fit together – creating a consistent incentive structure. let me demonstrate this reasoning with respect to the so called sovereign - bank nexus. this is 2 / 5 bis central bankers'speeches the unhealthy relationship between countries and their banks, whereby banks lend on a large scale and without a capital charge to their home countries, while governments simultaneously find they must support struggling banks in order to prevent an immediate crisis. the sovereignbank nexus still persists in many euro - area countries and is an important impediment to a credible no bail - out clause. if banks are too strongly exposed to their own governments, this can hinder a market - based regime of public debt, namely the possibility of restructuring government bonds without jeopardizing financial stability. to | - inequality. 5 / 5 bis central bankers'speeches | 1 |
, which would be conducive to economic expansion. it is, however, probable that the moderate tax ratio does not reflect low fiscal pressure as much as the use of inappropriate mechanisms which yield insufficient revenues. one reason for this is that direct taxation is rather progressive, which creates a disincentive for work, or at least for work in the formal economy. at the same time, it is common knowledge that tax evasion is still widespread. these phenomena may well be compounded by distortions inherent in the system, among them the charging of a minimum national insurance contribution on part - time work. all of this suggests that the taxation system should be further refined in order to enhance the degree of compliance and to shift the tax burden away from productive activities. conclusion on this same occasion five years ago my analysis of the country ’ s economic condition led me to conclude that the status quo was not sustainable. i expressed the view that the time had therefore come for us as a nation, not as followers of narrow sectoral interests, to revisit the choices made in the past and to establish new priorities commensurate with the prevailing economic realities, with the limited resources available to us and with our core values. the situation we face today compels me to reiterate this appeal with greater conviction. for we have clearly not done enough. speaking in april 2002, a year after the collapse of the high - technology boom and looking ahead to the next upturn in the economic cycle, i observed that when the tide eventually rose, it would not necessarily raise all boats. countries which benefited most would likely be those who made the greatest effort to adapt to evolving market conditions. the tide has risen, even higher than expected. global gdp is likely to increase by up to 5 % this year, its strongest pace for a generation. this growth is being largely led by robust consumer spending in the united states and booming corporate investment in china, but japan is also growing fast and even the euro area is showing signs of recovery, while emerging economies as a group are enjoying their fastest growth for at least twenty - five years. in sharp contrast, the maltese economy is again this year likely to post one of the slowest growth rates in the eu. returning the economy to a sustainable growth path closer to its potential rate must, therefore, be a priority objective. how should it be pursued? in today ’ s highly competitive global economy, there are no quick fixes or painless options that will | on costs, including labour costs, which represent more than half of the total. some progress has been made on this front, but we need all parties to participate, and take responsibility, in an action not unlike the one successfully launched in the second half of the 1990s to reduce the gap with the leading foreign banking systems. a major part of this effort must consist in a rigorous review of executive compensation. cost containment requires a radical rethinking of the distribution channels to make full use of the opportunities offered by technological innovation. standardized and low - value - added services can be distributed at lower cost through remote channels, and the traditional distribution network should be reviewed to concentrate on the supply of more complex products. it is not an easy task, and it requires a profound transformation of banks ’ organization and operating structure and considerable investment in staff training. targeted mergers and acquisitions, based on robust economic premises, may facilitate the restructuring and the recovery of efficiency. the process of financial integration in the euro area is encouraging a wider use of technology. the transition to the new payment standards under the single euro payments area, which will be completed by 1 february next year, is an important element. it affects firms, consumers, banks and other payment service providers. the availability of efficient services will benefit the economy as a whole ; according to studies sponsored by the european commission, the efficiency gains resulting from the transition to the new standards will be in the order of 0. 2 per cent of european gdp. the bank of italy is committed to ensuring that all those involved in the initiative put in place the necessary organizational, technical and procedural arrangements within the time limits. corporate reorganization, including within groups, and more streamlined boards are needed in order to improve the chain of decision - making, by making directors more accountable and eliminating unnecessary costs. mechanisms must be adopted to prevent a misinterpretation of banks ’ relationship with their local area from steering lending and investment activity in the wrong direction, putting the soundness of banks ’ balance sheets at risk and hindering the efficient allocation of resources. in addition to disbursing credit, italian banks often participate directly in firms ’ capital. such equity links must not be a source of distortions in lending decisions or give rise to attempts to prevent debtors ’ difficulties from emerging. these risks, like all others deriving from relationships with counterparties closely linked to banks, must be appropriately monitored by banks ’ governing bodies. the supervisory authority cannot intervene preventively with regard to individual transactions, | 0 |
is likely we will pass irreversible tipping points in just 12 years. as the ipcc puts it, in their report : “ there is a significant risk of crossing critical thresholds and even triggering tipping points as warming goes from 1. 5 degrees to 2 degrees celsius. ” so waiting for climate change to become less of a “ hot ” topic is not an option. it will only get hotter. inaction is simply not an option. i must admit, in view of the findings of the ipcc and others, i was a bit surprised when i saw the topic of the next panel discussion : “ climate - related aspects in investment portfolios : nice - to - have or compelling necessity? ” for me, the question has long been answered and the answer is compellingly clear. fout! onbekende naam voor documenteigenschap. at this point, and given all the extensive scientific evidence, it is clear that climate change poses risks beyond anything seen in the modern age. it is clear that we need to make unprecedented changes to our economy and it should be clear that ignoring climate - related issues, is far riskier than facing up to them. so we should not discuss if, but how we respond to climate change. it requires urgent action to limit the damage as much as possible. and it takes collective action to avoid these irreversible tipping points. today, i would like to focus on what central banks, financial institutions and governments can do. role of central banks and supervisors central banks and supervisors are working together to produce a collective response to climate change. but our collective journey together started much later than 1992. last year, de nederlandsche bank hosted the first ever international climate conference for prudential supervisors. this conference was organized by the newly - formed central banks ’ and supervisors ’ network for greening the financial system. the ngfs. the ngfs was founded on the initiative of the banque de france. and i have the privilege to be the first chair of this network. at the conference we came to the conclusion that climate change is a source of financial risk. and one that is squarely within our mandate. this was still unthinkable in 1992, but now, this is a widely - shared conviction. the network has grown significantly. from the original eight founding members, today, the ngfs brings together 42 central banks and supervisors and eight observers, representing five continents, representing half of global greenhouse | countries had increased their current account surpluses after the asian crisis in 1998. this was partly to reduce their vulnerability and partly due to export - led growth strategies. these savings were mostly held in official reserves, which increased six fold to around five trillion dollars in only a decade. because financial markets within asia are underdeveloped, the reserves were invested in advanced economies, for instance in us treasuries. this may have reduced long - term interest rates and fuelled the credit boom. while the savings glut did contribute to global liquidity, it is not the only explanation. after all, asia still plays a relatively modest role in financial globalisation. asia, like many other emerging markets, is not so financially integrated. the average size of foreign assets and liabilities is only around 70 % of gdp in emerging markets, against a much larger 220 % in advanced economies. emerging markets usually have smaller financial sectors, less developed financial markets, and often a more domestic orientation. china has some of the largest banks in the world, but this is because of china ’ s enormous domestic market. their international activities are relatively limited, if only because china still has a closed capital account. capital flows from emerging markets therefore mainly consist of foreign direct investment, which is relatively stable and not so harmful for financial stability. by contrast, the volatile international portfolio and banking flows are dominated by advanced economies. the recent literature therefore suggests that the loose liquidity conditions before the crisis largely came from financial sectors in advanced countries themselves. the great moderation fed the perception that large fluctuations were a thing of the past, and this has reduced risk premia and increased leverage. this was reinforced by low policy interest rates, which were possible thanks to more credibility in monetary policy and because globalisation contained consumer price inflation. credit growth was fuelled further by financial innovations like securitization, and by the internationalization of banks. banks increasingly relied on foreign wholesale funding, which enabled them to expand credit much further than if they had only relied on domestic deposits. the us housing bubble, for example, was partly financed by european banks that bought mortgage - backed securities. the banking glut in advanced economies seems at least as important as the savings glut from asia. crisis accelerates the shift in balance of power in retrospect, we should have been aware of the risks. the world became more financialised than ever, as the size of financial sectors and capital flows grew strongly. history shows that these | 0.5 |
more frequent issuance of a sufficient quantum of domestic government securities in a predictable arrangement that, hopefully, will attract a larger pool of participants and support deficit financing, with lower risks. this would be premised on the adoption of a strong governance architecture around public debt management, underpinned by the country ’ s well - established track record of prudent fiscal policy and strong institutions. furthermore, given the vulnerability of botswana to trade shocks, climate change and consequent prolonged droughts, there is need to maintain sufficient fiscal and external buffers. this means building sufficient resilience to afford the fiscal space to undertake countercyclical stabilisation when necessary. the contribution of the bank, in this regard, is through continued judicious management of the foreign exchange reserves to preserve capital, generate returns for organic growth, and to ensure availability of foreign exchange, necessary for uninterrupted economic activity. monetary policy framework distinguished ladies and gentlemen, the objective of the bank ’ s monetary policy is to achieve price stability, defined as a low, stable and predictable level of inflation within 3 – 6 percent, in the medium term. monetary policy formulation is also aligned to safeguarding stability of the financial system. in this regard, price stability as well as conducive monetary and financial conditions foster mobilisation of savings, productive investment, prudent allocation of credit and international competitiveness of domestic firms. in turn, a sound and stable financial system is critical for effective transmission of monetary policy signals, facilitating the flow of funds and liquidity, as well as risk mitigation in support of economic activity. overall, therefore, the conduct of monetary policy and attention to financial stability support the national objectives of employment creation and sustainable economic growth. price and financial stability also help to preserve the value of incomes and long - term savings, especially for low income earners and pensioners, with less opportunity or wherewithal to protect their incomes or generate wealth by other means. at this juncture i will, in turn, address three areas, namely, global trends that have influenced inflation in botswana ; highlights of the conduct of monetary policy, both internationally and here at home ; and, finally, provide the medium - term inflation outlook and outline the likely policy stance in 2020. external economic developments in 2019 global gdp growth declined to an estimated 2. 9 percent in 2019 compared to 3. 6 percent in 2018. the slowdown was widespread across countries and regions. global economic performance and sentiments | jerome h powell : remarks on monetary policy speech by mr jerome h powell, member of the board of governors of the federal reserve system, at the c. peter mccolough series on international economics council on foreign relations, new york city, 8 april 2015. * * * the views i express here today are mine alone and not necessarily those of any other member of the federal open market committee. accompanying charts can be found at the end of the speech. thanks for the opportunity to speak to you today. in these brief remarks, i will discuss the progress of the economy and the path forward for monetary policy. the current expansion is almost six years old and is now one of the longest since world war ii. while the pace of improvement has at times been frustratingly slow, by some measures the recovery is now well advanced. by other measures, there is still room for improvement. assessing the scope for further improvement will be important in judging the appropriate path for monetary policy. after its most recent meeting in march, the federal open market committee ( fomc ) modified its forward guidance to say that an increase in the target range for the federal funds rate will be appropriate when the committee has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. such an increase could come as soon as the june fomc meeting. the timing of liftoff and the pace of subsequent rate increases will depend on incoming data and on realized and expected progress toward our congressionally mandated goals of stable prices and maximum employment. monetary policy works with long and variable lags, so rate increases need to begin well before we reach those goals. let us turn to the two main economic conditions for liftoff that the committee articulated. we have already seen a great deal of progress in the labor market, and i expect that progress to continue. despite slowing in march, job creation has been particularly strong over the past two years. the unemployment rate has declined from 10 percent in october 2009 to 5. 5 percent in march 2015, a level that is not far above many estimates of its natural rate. but the unemployment rate probably understates the amount of slack still remaining in the labor market. the labor force participation rate continues to be unusually low, suggesting that potential workers may be waiting on the sidelines for further improvements in job opportunities and wages. the number working part time who want full - time jobs also remains elevated. the low level of wage increases also suggests | 0 |
however, higher funding costs and less prudent fiscal policies could reignite concerns around sovereign debt sustainability, particularly in countries where debt levels are already high. the euro area banking system has been a source of resilience in this turbulent year. banks'capital and liquidity buffers remain strong, and profitability has further improved in recent quarters on the back of higher interest rates. despite these strong fundamentals, it is striking just how compressed bank valuations remain. this seems to reflect lingering concerns about the long - term sustainability of bank earnings, as they face increased downside risks from the prospect of deteriorating asset quality, lower lending volumes and higher funding costs. while asset quality indicators have been robust over the last year, early signs of deterioration are becoming visible a€ “ particularly in smaller firms and some sectors like commercial real estate. conclusion since the start of our hiking cycle, we have increased our policy rates by a cumulative 450 basis points. our restrictive policy stance continues to be transmitted forcefully into financing conditions and is increasingly affecting the real economy. inflation has come down markedly but is still expected to stay too high for too long, and domestic price pressures remain strong. we will therefore ensure that our policy rates will be set at sufficiently restrictive levels for as long as necessary. in view of the prevailing elevated uncertainty, our future decisions on policy rates will continue to be data dependent and taken on a meeting - by - meeting basis. at our december meeting, we will have a new set of macroeconomic projections and more 3 / 4 bis - central bankers'speeches data on actual and underlying inflation, economic activity and the state of transmission, so we will be in a better position to reassess the inflation outlook and required policy action. a resilient and well - functioning financial system is essential for the smooth transmission of monetary policy that is required to achieve our goal. to this end, macroprudential authorities should preserve releasable capital buffers to ensure that they are available in the event that conditions in the banking sector deteriorate. furthermore, the lessons learnt from the turmoil this spring underline the need to implement outstanding basel iii reforms and complete the banking union, while previous market shocks confirm the need to boost the resilience of the non - bank financial sector by strengthening the policy framework for non - banks in an internationally coordinated manner. prudent and investment - oriented fiscal policies are also very supportive of our price stability goal. fiscal policy should be geared towards making the euro area economy | higher than anticipated in many euro area countries, and especially in spain and italy which both saw an unexpected surge in private consumption. however, the reopening effects are expected to dwindle and economic growth to slow in the short term, in view of households ’ loss of purchasing power, the energy crisis, weaker global demand, tighter financial conditions as a result of the monetary policy normalisation, and the highly uncertain economic and geopolitical setting. indeed, the latest data for the third quarter point to a rapid economic slowdown in the euro area countries. the purchasing managers ’ indices ( pmis ) signal a contraction in manufacturing in the big euro area economies in the third quarter, while the pmi services index points to a considerable slowdown, with a contraction in germany and italy. thus, the gas market developments described above contrast with developments in other commodities – such as oil and non - energy goods – whose prices have tended to moderate since the summer owing, among other factors, to the prospects of a global economic slowdown. inflationary pressures are stronger than expected and are spreading across expenditure items, exacerbating the loss of purchasing power inflationary pressures in the euro area have been more intense and more persistent than expected throughout the year. euro area inflation stood at 9. 1 % in august. higher energy prices are the main factor behind these high inflation levels. indeed, it is estimated that, between their direct impact on energy goods in the consumption basket and their indirect effect through other goods and services, they are responsible for somewhat more than 60 % of the growth in inflation. yet the increase in food prices is also very significant ; in fact, food prices are directly responsible for almost 25 % of the increase in inflation. in any event, inflationary pressures have gradually spread to the less volatile prices in the consumption basket. higher production costs have passed through to consumer prices faster than expected, against a backdrop of manufacturing bottlenecks and demand pressures associated with the economic reopening. underlying inflation in the euro area was over 4 % in august, and over 3 % in all euro area countries. moreover, inflation was over 4 % in more than half the underlying inflation components ( in 41 % of them in spain ). particularly notable was the higher inflation in components relating to expenditure on transport, household equipment and maintenance and, especially in spain, recreation, hospitality and tourism. 4 the economic projections for the euro area have undergone significant revisions, with growth revised down and inflation revised up the recent | 0 |
michelle doyle - lowe : become financially savvy and shape the future you want remarks by ms michelle doyle - lowe, deputy governor of the central bank of barbados, at i am a girl ngo's " money smart girls : building wealth, shaping futures! ", bridgetown, 27 may 2024. * * * to our young ladies and participants, as well as the organisers of i am a girl ngo, to our scotia bank and other colleagues – good morning, and a warm welcome to the central bank. let me begin by saying how pleased and encouraged i am to be chatting with you this morning. as a woman and as a mother of two daughters around your age, i understand the importance of having supportive, empowering spaces for girls. i am also pleased because the topic of focus - " money smart girls : building wealth, shaping futures! " - is quite apropos because just two and a half months ago at the start of march, the central bank launched a digital financial literacy campaign called moneysmart, so it seems our conversation this morning is well aligned with the bank's recognition that financial literacy is paramount to repositioning our future. like your workshop today, our programme aims to help people understand the ins and outs of personal finance. we began by focusing on saving and budgeting, and, over the next few months and beyond, we will look at investing, borrowing, and other moneyrelated matters. since we have a lot of information readily available to you on our website, youtube channel, and social media accounts, i don't intend to repeat everything you'll find there – and yes, the central bank is sufficiently cool to have a social media presence on some of the day - to - day platforms that you use. rather, than just mentioning a few key points of relevance, let me ask you a few questions : by a show of hands how many of you get an allowance, or if not an allowance, then money, be it weekly or monthly, from your parents, grandparents, or whomever you live with? how many of you have a part - time job, a micro business or a side hustle? maybe you manage a business'social media accounts, or build websites. maybe you do hair, nails, or eyelashes. maybe you bake or sell customised or hand - made items. so why am i asking these questions? because i want to show you that you're not too young to be thinking | deep and liquid fx market that could work as a critical shock absorber took decades of implementing consistent policies and avoiding the temptation of using capital flow management measures. the journey began after the crisis of 1994 - 1995, when banco de mexico was forced to adopt a flexible exchange rate regime. at that point, it was clear for the local authorities that, in order for the mexican economy to achieve long - term development and integration to global trade and financial markets, it was essential to develop a deep and liquid fx market with an efficient price discovery process. such situation required profound reforms. among the most relevant were : 1. adopting full convertibility of the mexican peso. 2. developing a derivatives market that could allow market participants to hedge against exchange rate fluctuations and manage fx risks. 1 / 5 bis central bankers'speeches 3. introducing risk - management regulation to avoid currency mismatches in the domestic financial system, fostering long - term peso financing and hedging practices to enhance intermediaries, corporates and households ’ resilience against large tail - risk fx adjustments ; and 4. adopting the best fx market trading and settlement practices. for instance, since 2008 the mexican peso has been included in the cls system, allowing the mxn to trade on a 24 - hour basis. these reforms had a very positive effect on the liquidity and depth of our fx market. according to the 2020 bis triannual survey, the mexican peso is now the second most traded currency in emes, with a daily total turnover of 114 usd billion, including spot, forward and swap transactions. the development of our fx market has had a virtuous effect on other markets as well, including the money and fixed - income markets, playing a critical role in broadening the investor base in domestic debt instruments and lowering the cost of funds. it has also allowed market participants to rapidly adjust their investment positions and adapt to difficult market environments. as such, the flexible exchange rate, supported by the better functioning of our fx market, has served its function as a shock absorber, reducing output and nominal variables ’ volatility. furthermore, in an exchange rate market like the one i described, there has been a lesser need for fx interventions. i should stress that the development of deep, liquid and resilient financial markets must be accompanied by the development of sound economic fundamentals and strategies for long - term crisis prevention and mitigation. the goal has been to design and follow an appropriate | 0 |
##litation. to increase the profitability of our foreign exchange earning sectors we must improve the productivity of labour and the efficiency of capital, make our products and services superior in every market category, enrich our products ( sports, heritage and cultural tourism, for example ), do targeted marketing and develop new markets. it is critical that we improve service quality and set our standards at the very highest level. there are many success stories in each of these areas and we should always keep them in mind. we should celebrate these achievements, and use them as inspiration for what still needs to be done. bis central bankers ’ speeches the fiscal adjustment : the fiscal adjustment is designed to stabilize the economy by matching foreign exchange outflows to inflows, and to slow and eventually eliminate the drain on foreign exchange over the next several months. reserves are held for the purpose of financing imports in the interim, while the measures take effect. we expect reserves to fall during that period, but we expect that once inflows and outflows are brought into balance, our foreign exchange reserves will return to levels that have been sustained since 2008. barbados has no problem in servicing government debt. service costs on the external debt are less than 10 % for the foreseeable future, and the net public sector ratio to gdp is a moderate 62 %. barbadians have every reason to be confident of our future : barbadians have bested the caribbean through strength of character, sound decisionmaking, and investing in ourselves. the quality of our lives reflects our achievement. we have beaten the odds before, and we can do it again ; experience has taught us that it is not as difficult as it seems, once you buckle down to the task. patience, persistence, determination and commitment to excellence will win the day. there is something that each and every barbadian can contribute to growth : for entrepreneurs it is the development and promotion of projects to prospective foreign investment partners ; for government it is the upgrade of business facilitation ; and for workers, the improvement of productivity and the development of the barbadian reputation for excellence. finally, the narrative matters. we must together build our self - confidence, by celebrating our successes, to give us energy for tackling the challenges ahead. bis central bankers ’ speeches | policy - makers for a long time. but the outcome of this process is well known. it resulted in buoyant credit growth, high indebtedness by the private sector, excessive wage increases, and increased risk - taking by banks. contrary to expectations, aggregate supply did not catch up with demand. this was due to the misallocation of capital in non - productive sectors, and due to important structural rigidities, which policy - makers neglected to tackle in the boom years. concerning the public sector, good times were not used to build up the necessary fiscal leeway and asset booms made fiscal positions appear sounder than they were. in some booming economies ( e. g. ireland and spain ) government debt ratios declined, but given the bis central bankers ’ speeches extent to which ample fiscal revenues had been linked to unsustainable asset market developments, structural fiscal balances remained fundamentally weak. finally, prices in the non - tradable sector also ran ahead of actual increases in productivity during the boom years, leading to real effective exchange rate misalignments. the ensuing, persistent losses of competitiveness translated into an accumulation of external imbalances. the facts of the lehman collapse in late 2008 and the subsequent sovereign crisis in mid - 2010 onwards are well known. as financial markets realised that the combination of high private indebtedness, external imbalances and structurally weak fiscal positions was unsustainable, a “ sudden stop ” occurred. private cross - border financial flows dried up, bank lending collapsed and spreads increased sharply in the countries most affected by the crisis. crisis management the policy response of euro area national and supranational institutions was driven by this analysis of pre - crisis developments. pre - crisis imbalances had to be redressed. excessive leverage in both the public and private sectors had to fall. countries with large external debts ultimately needed to service and repay their obligations in the form of real goods and services exported abroad. an “ expenditure switching ” was necessary, i. e. an increase in exports and a rotation of internal demand towards domestically produced goods, implying relative price adjustment. this raises three questions. first, which adjustment polices would in theory avoid large employment costs? second, why were adjustment costs in fact so high for stressed countries? third, could we have done things differently? let me elaborate on each question in turn. macroeconomic adjustment policies there is one obvious mechanism which delivers the required macroeconomic adjustment without unnecessary costs : a | 0 |
, march. - - - - ( 2009b ), “ macroeconomic and monetary developments during 2008 - 09 ”, april. taylor, john ( 2009 ), “ the financial crisis and the policy responses : an empirical analysis of what went wrong ”, working paper 14631, january, national bureau of economic research. turner review ( 2009 ), “ the turner review : a regulatory response to the global banking crisis ” by lord turner, chairman, financial services authority, uk. world bank ( 2008 ), global development finance 2008 : the role of international banking, world bank. | think it would be preferable not to disturb the existence of both inside and outside money and the broad balance between them. but, this requires a number of things to happen and questions to be answered. it requires banks to be more active in thinking about digital commercial bank money and not leave it to cbdc. in any event, as we have set out in the cp, we think in this new world a central bank digital currency is likely to be needed to anchor the value of all forms of money, including new digital ones and to ensure the maximum opportunity for innovation in payments services. moving on, let me now point to an area where we are at risk of contradicting ourselves. i said that assured value was a key principle of digital money. how does this fit with the idea that we could resolve failed banks and allow deposits ( inside money ) to take a haircut? one answer is that it depends on the size of the deposit above a certain threshold. the idea behind deposit protection is to set a level below which the assurance of value holds, and above which it does not. practice, i would suggest, points to the difficulty of this principle. in seeking to solve too big to fail we have tackled this problem by requesting an additional slice of subordinated liabilities which can explicitly bear losses by being converted into equity in the event of a resolution. i'm not talking here about at1 securities, but what comes further up the hierarchy – what in europe we call'eligible liabilities '. the point is that for large banks we have reinforced the assurance of deposits by requiring a bigger cushion of loss absorbing liabilities. but smaller banks find it harder to issue marketable long - term debt securities that can count as eligible liabilities. i think the answer here lies in the world of deposit insurance. 3 / 6 bis - central bankers'speeches the us authorities have announced a review of their deposit insurance system. in the uk, the bank is also considering improvements to our approach to depositor pay - outs for smaller banks which do not have eligible liabilities. our work has thus far focused on the speed of pay - outs. going further and considering increasing deposit protection limits could have cost implications for the banking sector as a whole. as with all things relating to bank resolution, there is no free lunch. two issue areas to go. the first is a key part of how we underpin financial stability, namely how we assess and test for stress. one of the important innovations since | 0 |
years bonds. • more recently, in august 2007, a portfolio of government bond maturity terms was further increased to include the 7, 10, and 15 years. since that period, the size of the outstanding issues has grown from 7 % of gdp in 1994 to 17 % by the end of 2007. with regard to secondary market, policy efforts have been initiated at different stages in the development of our market. • in 1996, the bank of zambia attempted to jumpstart secondary market trading in government securities by restricting the primary issues of government securities to commercial banks. it was expected that commercial banks would take up the role of market - making. this did not materialize with most commercial banks preferring to buy and hold the securities until maturity. consequently, authorities were obliged to re - open the primary market to other non - bank investors. • further, since 1998, government bonds have been listed for trading at the lusaka stock exchange. the benefits have not been realised despite the fact that all banks are registered as brokers in this respect. i am sure the luse will provide you with more detail on this as you deliberate. • more recently, the government and the bank of zambia in 2006, with the support of difid and the world bank undertook a study tour of selected emerging markets in africa and asia. the aim of this tour was to learn the actual workings of well functioning government securities markets. technical information was collected and a report prepared. once the recommendations in that report have been adopted, i expect that these will complement your own efforts to activate secondary market trading. i am aware that the successful development of a secondary market needs a reliable and efficient settlement infrastructure. this is important for it addresses the concern that is normally raised on the possibilities of settlement risk. you may wish to know that the bank of zambia and the lusaka stock exchange are already engaged to develop an efficient settlement stream within the rtgs payments system. it is my belief that once this initiative has been fully developed, settlement risk will be reduced and more credibility will be added to securities trading. chairperson, i know there are still formidable challenges in building a vibrant secondary market. hence, in my concluding remarks, let me reiterate what i said earlier ; that setting the primary market off the ground has been a challenging task. to set up secondary markets is even a more challenging task. yet it is not an impossible one. with the participation of every stakeholder, the challenges that seemingly look insurmountable can easily be | overcome. we all know that the development of a vibrant secondary market for securities is necessary. when i look at all of you gathered here this morning, i see a determined optimism that we can get there. each and every one of us has a role to play, be it government, corporate institutions, or indeed a small investor. on our part as bank of zambia, you can rest assured that we will continue doing our part in facilitating the development of this market. thank you very much and i wish you a very successful workshop. | 1 |
that close to 60 percent of fiji ’ s labor force is involved in various forms of business that fall under the heading of smes ”. these statements show that we critically need data. we need to know more about these sectors if we want to plan for them, rather than using rough estimates and best guesses. we need to know for example how much of our economy is made up of the smes sector, we should know how much is made up of medium sized businesses. we need to know how many people are employed by the various business - size categories and statistics on loans to the various categories of business - size, just to name a few, if we want to have proper, effective and informed planning, decision and policy making to promote growth of these sectors. this could be a role for the national centre or perhaps the bureau of statistics. having such a statistical database is critical in order to do any type of planning at all in regards to these sectors. this will therefore be a necessary input to any national strategy for msmes, and i hope that it will be an issue that will come up in your discussions. at the reserve bank we are doing our part to collect statistics on bank loans. since 2006, we have required commercial banks, credit institutions and the fiji development bank to provide us with data on how much is being lent to micro enterprises, to small businesses, to medium sized businesses and so on. access to finance another key issue on msmes is access to finance. is access to finance a problem for msmes? i think it is, probably more so for small and micro businesses than perhaps for medium sized ones. if so, then we must identify and implement ways to extend this access to financial services to small and micro enterprises. we welcome the announcements by several commercial banks that they are putting greater attention in this area. i am informed that the lending budget for the national centre is usually not depleted. does this imply that access to finance may not be the real issue? perhaps it is the business line or the business structure that is the binding constraint. we obviously need to identify this and find the appropriate solutions. i am pleased that the provision of rural banking services has been progressing well. this has been an initiative that the rbf has been actively encouraging. while much of the early business in this regard focused on savings, this has now progressed to small loans being given out. i commend the efforts of the bank that has been actively going out to the rural areas and | barry whiteside : promoting financial inclusion in fiji opening remarks by mr barry whiteside, governor of the reserve bank of fiji, at the launch of the financial services demand - side survey report, suva, 17 september 2015. * * * salutations the australian high commissioner, ms margaret twomey the un resident representative, ms osnat lubrani the uncdf executive secretary, ms judith karl excellencies and members of the diplomatic corps distinguished guests our financial inclusion partners and stakeholders members of the media ladies and gentlemen welcome and introduction bula vinaka and a very good afternoon to you all. it is my great pleasure to welcome you to the official launch of the demand - side survey report on financial services in fiji. thank you for taking the time to share this milestone event in our financial inclusion journey. after months of collaboration between the reserve bank and our partners, the pacific financial inclusion programme, the alliance for financial inclusion, the fiji bureau of statistics and other key stakeholders, the final version of the report is now ready to be unveiled. many of you present here will know that our financial inclusion journey effectively started back in late 2009 and early 2010, with the setting up of our national financial inclusion taskforce following a gathering of interested stakeholders. these stakeholders agreed to commit to an end - goal of helping our people to improve their lives and those of their families by providing easier access to financial services along with the necessary knowledge and skills to best utilize them. at the time we made a joint commitment to reach 150, 000 unbanked or underserved fijians by the year 2014. this was a priority goal of our first medium term national financial inclusion strategy, which also included incorporating financial education into the fijian schools ’ curriculum. it was extremely pleasing to note that both these targets were achieved well before the end of 2014. collaboration and partnership with all stakeholders has clearly been the key to our success and this must be recognized. and as taskforce chairman i would like to say how grateful i am for the total support given to me and to the reserve bank by the financial institutions, government ministries, civil society and donor agencies – all our stakeholder partners. we share a common vision of making fiji a better place for all our people. but while there have been some key achievements in the past few years, we believe that much more remains to be done to promote and facilitate financial inclusion in fiji. we are now in the process of formulating our 2nd medium term financial inclusion strategy which will | 0.5 |
. jp / en / announcements / press / koen _ 2014 / ko140423a. htm bis central bankers ’ speeches long - term fiscal sustainability. in trying to escape from deflationary equilibrium, i believe that the monetary and fiscal policies that used to be conducted independently under an inflationary equilibrium, need to be pursued using a different approach. the joint statement issued by the bank and the government in january last year may have been playing an important role as a coordination device to enable the collective conduct of monetary and fiscal policies. this joint statement is an important foundation of abenomics. close cooperation between monetary and fiscal authorities can be observed not only in japan, but also in other areas where unconventional monetary policy has been deployed. 5 for instance, when the bank of england introduced its asset purchase facility, a letter from the chancellor made it clear that the british government would provide an indemnity to cover any losses arising from the facility. however, this close cooperation does not necessarily imply the loss of central bank independence for the following two reasons. first, a clear mandate of inflation targeting guarantees active monetary policy down the road. the zero lower bound on the nominal interest rate ties the hands of central bankers when it comes to deflation. as for inflation, central bankers can and should adjust policy rates flexibly if inflation is likely to stay above the stated target. second, governments well understand the importance of fiscal prudence. in the recent g20 communique, the respective governments made a firm commitment to maintaining fiscal sustainability. as the second arrow of abenomics, the japanese government has already made an important step forward in this respect by raising the consumption tax rate in april this year. presumably because of this commitment to fiscal sustainability, survey figures for long - run inflation forecasts in advanced economies have not increased to levels much above targeted inflation rates, although these figures are subject to considerable uncertainty, as i mentioned before. these forecasts for japan have not yet reached even 2 percent, although they do seem to be on a steady rising trend. iv. importance of raising potential growth since i have talked about the first and the second arrows of abenomics, let me touch upon the third arrow before concluding my presentation. as i mentioned, the decline in potential growth in japan has limited the range of the negative output gap. together with demand recovery, lower potential growth seems to be contributing to the recent rise in inflation through the tighter capacity constraint. in fact, the latest output gap is | that the biggest effect for canada of a more negative global growth scenario would be a steeper drop in commodity prices and, as in 2015, a significant depreciation of the canadian dollar. in contrast to these adverse global developments, the canadian economy is demonstrating resilience overall. the economy continues to create new jobs at a solid pace, the unemployment rate is near an all - time low, many companies are reporting an acute shortage of skilled workers, and wage growth is picking up noticeably in the past six months or so. the housing sector is clearly on the rebound, having digested the various housing policy changes put into place during 2016 – 18, and is still being fuelled by relatively high rates of immigration. consumption spending has held up relatively well on average, supported by the solid labour market and low interest rates, even as the savings rate has been edging higher. at the same time, energy - producing regions continue to struggle, as the full adjustment to the decline in oil prices back in 2015 is not yet complete, and transportation constraints are making the situation worse. you may recall that back in 2015 we said that the full adjustment would take up to five years — that even with lower interest rates and a lower dollar, as well as fiscal stimulus, 1 / 2 bis central bankers'speeches the adjustment to such a large shock takes a long time. it is painful for individuals, as it involves extended layoffs and possibly interprovincial migration, which is costly for all concerned. all this adds up to a complex outlook for canada, with considerable variation across regions and sectors. the strong labour market points to sources of growth such as information technology and other professional services, tourism, education, health care and financial services. some of this growth is being offset by negative effects coming through business investment and exports, particularly in manufacturing and the resource sector. on the whole, however, it appears that our economy is still operating close to capacity but probably with a modest amount of excess supply. governing council agreed that, all things considered, this excess supply is probably not pervasive. furthermore, our situation differs from many other countries in that inflation is at our 2 percent target today and projected to remain very close to target, despite the presence of modest excess supply. however, we acknowledge the downside risks, as set out in our alternative scenario in box 3. governing council also devoted some time to a discussion of the evolution of financial vulnerabilities in canada. we have been encouraged by developments | 0 |
thus align adjustment processes across countries. in fact, recent research on the intra - euro area impact of structural reforms shows that the variance of the responses of national outputs to an interest rate tightening would be – at the peak and after the implementation of such reforms – roughly one - sixth of the level that it achieves in conditions of cross - country heterogeneity in terms of price and wage rigidity. 2 3. key features of past productivity growth when comparing the euro area ’ s economic performance with that of the us over the longer term, there is evidence of clear underperformance in output growth. since 1995, the annual growth rate for the euro area has averaged 2. 2 % per year compared with 3. 1 % in the us. one of the main reasons for the euro area ’ s disappointing performance is the low trend growth in labour productivity. between 1980 and 1995, hourly labour productivity in the euro area grew on average by 2. 3 %, and between 1995 and 2007, it grew by only 1. 3 %. in the us over the same periods, the figure went from 1. 2 % to 2. 1 %. 3 understanding developments in services is crucial to our understanding of developments in the economy as a whole. services account for 69 % of the euro area economy and 70 % of total employment. 4 private sector services represent roughly half of the economy, and government - related services make up the rest. and it ’ s the private sector services that mainly account for the gap in labour productivity growth between the euro area and the us. from 1995 to 2005 their hourly labour productivity in the euro area only grew by 1. 0 % compared with 2. 9 % in the us. of the private sector services, distribution services, including the these results are obtained using a multi - country dsge model of the euro area, which is calibrated to the three largest member states, namely france, germany and italy. structural reforms were simulated by reducing the degree of price and wage rigidity and sectoral mark - ups to the lowest level prevailing in the euro area. see altissimo, f., t. blattner and s. siviero ( 2008 ). “ a multi - country dsge model of the euro area : lessons for structural policies ”, forthcoming. figures at the sectoral level are from euklems database and are not fully comparable with figures for the whole economy mentioned earlier in the speech. eu klems database. | of reforms. on the contrary, it ’ s time to accelerate them. thank you very much for your attention. | 1 |
the target over the next one to two years. taking account of the evolving outlook for growth and inflation, the board eased monetary policy further in the last quarter of last year, following up its easing actions in mid year, and earlier actions in the last quarter of 2011. the cash rate has been reduced six times over the past sixteen months, for a total decline of 175 basis points. allowing for some change in the gap between the cash rate and other rates, lending rates nonetheless have fallen to be not far from their historic lows. the share of household income devoted to interest payments has bis central bankers ’ speeches likewise declined considerably. indeed housing “ affordability ” as conventionally measured, for purchasers, has improved a lot over the past two years. that represents quite a substantial change in policy settings. it is having an effect. housing prices have been rising since last may, having declined for a period prior to that. share prices have also risen quite significantly, and if anything by a little more than in comparable markets overseas. the returns available to savers on safe assets – like bonds and bank deposits – have fallen by enough to prompt australian savers to consider shifting their portfolios towards other assets. these are channels of monetary policy at work. at the same time, as we have noted repeatedly, the exchange rate remains somewhat higher than one might have expected given the decline in export prices so far observed. this has been a relevant factor in the setting of interest rates. it is not that interest rates are seeking a particular exchange rate response, but they are being set with a recognition of the exchange rate ’ s effect on the economy. overall, there is a good deal of interest rate stimulus in the pipeline. at its meeting earlier this month the board judged that it was sensible to allow it time to do its work. the board believed that the inflation outlook, at least as we assess it at present, would provide scope to ease further, should that be necessary to support demand. but for now, the board decided it was prudent to sit still. turning briefly to other areas of the bank ’ s responsibilities, in june last year the payments system board released the conclusions from its strategic review of innovation in the payments system. the review identified areas in which innovation in the australian payments system could be improved through more effective cooperation between stakeholders and regulators. one of the gaps identified in the review was the inability of businesses and consumers to make payments through the banking system that are received immediately, including when | , the gross stocks can change quite significantly even with low net flows. debt https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 08 - 27. html 4 / 12 8 / 28 / 2019 a balance of payments | speeches | rba on the liability side, there has been a large shift from short - term debt to long - term debt. in net terms, long - term debt liabilities are currently 52 per cent of gdp. they are slightly larger than australia's total net foreign liabilities. they have risen from around 25 per cent of gdp in the early 2000s. over the same period, the share of short - term debt has declined from 20 per cent to be just under 5 per cent of gdp now. as graph 3 shows, the movement in the net position masks, as it often does, different dynamics in the gross positions. the decline in net short - term debt is mostly due to the growth in short - term debt assets that we hold. but short - term debt liabilities have also declined from their peak. graph 3 what has been the driver of the increase in foreigners'holdings of australian long - term debt over the past decade or so? the main explanation has been the large accumulation of australian public sector debt by foreigners, including by central banks and other public sector asset managers. central banks increased their allocation to australia in their foreign reserves portfolios in the aftermath of the global financial crisis. foreign ownership of australian government bonds increased from around 40 per cent in the early 2000s, peaking at nearly 80 per cent in 2012 ( graph 4 ). [ 3 ] at the same time, the size of the australian government bond market grew significantly. https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 08 - 27. html 5 / 12 8 / 28 / 2019 a balance of payments | speeches | rba graph 4 as a result, foreign holdings of public sector [ 4 ] debt increased from 7. 5 per cent of gdp in 2009 to around 20 per cent by 2015 and has been relatively stable since then. correspondingly the public sector's share of gross debt liabilities increased from around 10 per cent in the late 2000s to around 20 per cent in 2012, where it has remained since ( graph 5 ). at the same time, the share of private financial debt ( mainly banks ) has fallen since the crisis. https : / / | 0.5 |
stanley fischer : the banking and financial system in israel address by professor stanley fischer, governor of the bank of israel, to the knesset committee of enquiry on bank fees, ( within the framework of the knesset economics committee ), jerusalem, 4 june 2007. * * * in recent months the bank of israel has conducted professional and comprehensive work into the field of competition in the banking system. this work is being held on two plains : a ) in - house teams of economists are discussing recommendations on ways to enhance competition in the financial system in general, and in the banking system in particular. in this framework, methods are being examined of bringing in new players into the banking system. b ) the bank of israel has drafted a legislative bill that would grant the supervisor of banks the authority that he currently lacks to regulate banking fees. competition in the banking and financial systems the financial system has undergone many changes since the late 1980s. these refer to the government's cessation of massive intervention in the capital market ; the removal of barriers and liberalization, changes in the taxation system, and the recent separation of provident and mutual funds from the banks ( the bachar reform ). these changes were manifold and important. however on the retail side, competition between banks should be strengthened. at present, as i mentioned, we at the bank of israel are examining new ways to boost competition in the banking system, with an emphasis on the household sector. why is the level of competition low? in israel there are only a limited number of banks, and in effect two large banks capture most of the banking market. on many occasions i meet international financial bodies, including foreign banks, in order to interest them in entering the local retail banking market. foreign banks have operated in israel for some years now, but most of their activities are in the corporate sector. one of the reasons for the fact that the foreign banks almost entirely ignore the household sector is that the local banks have a widespread branch network, and the local banks offer financial services based on advanced technological systems. this places a high barrier to entry to any potential newcomer in the market, whether local or foreign. furthermore, it is important to remember that the fact that the israeli economy is small, does have an influence on the decision by a financial institution to set up in the israeli market. against this background, we are examining the possibilities of bringing in a new type of player into the banking market, for example, an internet bank, or converting the postal bank | to earn a return on their capital. in this context, i would like to refer to the banks'profits. it is quite natural to regard the banks'profits in nominal terms of billions of shekels, but one should also examine the banks'profits in relation to their capital, in other words, one should look at their return on capital. in these terms, the return on capital for the israeli banking system is not particularly high, and even low in international comparison. the return on capital for the banking system in 2005, for example, was 14. 5 percent, compared to an average 15. 4 percent globally. finally i would like to ask the knesset to push forward with government - sponsored legislation on the supervision of banking fees by the supervisor of banks as soon as the bill is presented, which i hope will be soon. this is an important bill, and every effort should be made to have this legislation passed. | 1 |
in many emerging economies, income inequality is a significant cause of economic and social instability and could lead to widespread support of populist policies. unbanked and underserved people need to have access to financial services, which can help them raise their standards of living. emergence of fintech and techfin firms, along with their diverse platforms, can offer more targeted financial products at lower costs and improve financial access, especially to the underserved people. ladies and gentlemen, to fulfil these three key imperatives, the bank of thailand has taken on various initiatives during the past few years : on boosting productivity, we have many exciting projects underway. last year, the bank of thailand together with the ministry of finance and the thai bankers ’ association launched the promptpay faster payment infrastructure. with promptpay, funds can be transferred to a recipient ’ s preferred bank account in real time and at virtually no cost. promptpay provides a crucial payment infrastructure, which helps propel a wider adoption of e - payment. currently, there are almost 43 million registered user accounts and over 3 million transactions per day. the increasing usage of promptpay also served as a catalyst that led all banks in thailand to eliminate electronic fund transfer fees for online retail transactions. besides, being a common infrastructure, promptpay has also paved ways for many other digital payment features, including cross - bank bill payment, request - to - pay as well as e - donation services. another initiative to promote digital payment services is the standardized qr code. launched in collaboration with the five major global payment card network providers, thailand ’ s standardized qr code for payment allows acceptance of common qr code for e - payment on any platforms regardless of merchants ’ and consumers ’ service providers. its interoperability has led to remarkable speed of adoption ; in less than one year since its launch, qr code payment is accepted by over 2 million merchants all over thailand. more importantly, having common standards would improve competition and innovation, as they allow easy market entry for all players, especially small innovative players. ultimately, greater adoption of digital payment will 3 / 6 help facilitate the transformation from collateral - based lending to information - based lending for smes as their payment transactions information can be consolidated and analyzed. in addition, the bank of thailand also supports financial innovation through our regulatory sandbox. the sandbox serves as a platform for financial institutions and fintech firms to test new technologies and operating standards in a safe environment before | to remain vigilant. it is highly likely that, after a long period of a synchronised downturn in the economic performance of advanced economies, next year will be characterised by an asynchronised recovery. the us economy appears to be in the advanced stages of repair with a declining degree of slack in the labour market. while there is uncertainty about the pace at which discouraged jobseekers will return to work, there is optimism that wage and income growth will return in the course of the next year. us corporate investment is rising and the fiscal metrics look better than last year. the uk is in a similar situation, perhaps even more advanced in their recovery, evident in falling unemployment and rising productivity. it is quite likely that these two economies will begin tightening monetary policy in the first half of 2015 and while the rates normalisation process is likely to be gradual and prolonged, given continued fragility in the global economy, interest rates are likely to be on their way up. the monetary policy situation in the eurozone is vastly different. persistently low inflation threatens to unhinge long term inflation expectations, increasing the likelihood of deflation. europe ’ s leaders recognise that higher inflation, on average, is critical to enable the economic adjustment process in peripheral europe to continue. last month the ecb reduced their key policy rate to 0. 05 per cent and took their bank deposit rate further into negative bis central bankers ’ speeches territory. a commitment to purchase asset - backed securities from the commercial banks, designed to stimulate bank lending, was also announced. furthermore, the ecb made it clear that if these measures did not work, they would consider more generalised quantitative easing, including the purchase of government bonds. even though japanese inflation is at a five year high, long term inflation expectations in japan remain low and hence policy makers are unlikely to withdraw the current monetary policy stimulus. there is rising confidence that china ’ s transition away from investment and exports towards domestic consumption will be managed smoothly. risks in the housing market and related risks in the shadow banking sector remain a concern but, to date, the authorities have managed the adjustment without significant negative shocks. china ’ s adjustment process does have a dampening effect on commodity prices, which impacts many emerging markets including those in sub - saharan africa. however, the possibility of higher chinese consumption could provide a boost for the world economy over the longer term. foreign investment on the african continent is diversifying towards sectors outside of mining and oil. investment | 0 |
the review of the cbb corporate governance requirements has already finished its first stage of internal review. the next will be consultation with the financial sector. coupled with governance is shari ’ a. this is one of the themes of this conference. from the perspective of the cbb as a regulator, we have noted that all too often, the approach of banks, particularly conventional banks has been to start with a conventional transaction or product and then try to give it a finishing coat of shari ’ a compliant paint. financial institutions must not regard shari ’ a compliance as the finishing touch to product development. instead, product development needs to start from shari ’ a principles : i. e. islamic financial institutions must become shari ’ a driven. and that is why this conference and the next set of consultations by aaoifi are going to be so important. if financial institutions and standards setters can address the interest of customers, governance and shari ’ a compliance satisfactorily then we can look forward to islamic finance continuing its growth and reaching its full potential. thank you. bis central bankers ’ speeches | rasheed mohammed al maraj : corporate governance and shari ’ a compliance in bahrain welcome speech by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the aaoifi ( accounting and auditing organisation for islamic financial institutions ) annual shari ’ a conference, manama, 7 may 2012. * * * excellencies, distinguished guests, ladies and gentlemen, this conference comes at an important time for the islamic financial sector. this conference is focussing on six key areas that both the standard setters and the financial sector must work together upon if islamic finance is to continue to grow and achieve its full potential. so i thought in this welcome address i would talk about one area where the central bank, as a regulator and as a member of aaoifi has a special interest. and that subject is governance. aaoifi currently has issued seven standards relating to governance and two standards with respect to ethics. deficiencies in governance at financial institutions have been repeatedly highlighted in the past five years following the commencement of the global financial crisis in 2007. three of the standards issued by aaoifi specifically refer to governance. the first of these standards concerns the audit & governance committee. in practice, this standard requires the audit committee to do rather more than just to review a financial institution ’ s accounting practices and audit plan. it requires the committee to review the use of restricted investment accounts ’ funds. it emphasises the need to ensure that funds are invested in accordance with terms agreed with the customer. too often over the past five years we have seen how the interests of customers at both conventional and islamic banks have been neglected as bank management have focussed on bonuses and share price. if banks neglect customers ’ interests, then they will lose those customers. this theme of looking after the interests of customers is carried on in the aaoifi governance principles paper issued in 2005. in particular principle 3 of this paper warns against inequitable treatment of fund providers. the 2009 aaoifi corporate social responsibility paper also focuses on dealing responsibly with clients and “ par excellence ” customer service. if you couple the governance standards with the ethics paper for employees of financial institutions, you find a formidable set of requirements, principles and standards relating to putting the interests of customers first. so against this background of improving levels of disclosures, the cbb will be making further efforts through its review of its corporate governance and business conduct rules to raise the bar for corporate governance. | 1 |
ideas and conclusions in relation to the further recovery of the economic activity. the support of the bank of albania will be unconditional in this regard. as in the past, we will be constantly in search to adopt strategies and rules that aim at having a financially sound banking sector capable of supporting economic development in albania. i am fully confident that the future cooperation among all the stakeholders : the banking industry, the government and the banking will be strengthened, for the economic and financial prosperity of the country. i thank you for your attention and i wish the conference all success! 3 / 3 bis central bankers'speeches | gent sejko : overview of economic and financial developments in albania address by mr gent sejko, governor of the bank of albania, at the 2nd conference of the albanian association of banks, tirana, 14 november 2017. * * * your excellency prime minister, honourable minister ahmetaj, dear chairman of the albanian association of banks, ladies and gentlemen, it is a special pleasure for me to participate in the second conference organised by the albanian association of banks ( aab ). i take this opportunity to compliment the aab for the selected theme, as economic growth in albania is cross - cutting topic of interest to all of us. this conference takes place at an interesting moment from the perspective of the performance of economic activity in albania. the most recent assessments show that our economy has entered into a long - term recovery trajectory. as mentioned in the last statement of the supervisory council of the bank of albania, the albanian economy grew 4. 1 % in the second quarter, driven mainly by the recovery of private domestic demand, improvement of the international trade balance, and increase in public spending and high foreign direct investments during this period. the accommodative monetary policy of the bank of albania has been one of the key driving factors for the recovery of domestic demand. it has constantly guaranteed a financial environment with low interest rates and ample liquidity. it has also been aided by the consolidatory fiscal policy, which, in addition to reducing risk premia, has increased the space for financing the private sector. our expectations for the short and medium - term economic developments in albania remain positive. we aim at having sustainable growth rates in the course of the years. in this context, the banking sector represents a key industry for supporting economic recovery. the instruments it avails have a substantial contribution in this regard, with lending being among the most important ones. notwithstanding occasional volatilities, the banking industry has played a significant role in supporting economic activity. that was notably the case at the early 2000s, following the privatisation of the then savings bank. during that period, the outstanding credit increased at considerable annual growth rates. anyhow, such high growth rates and the outburst of the global crisis revealed a number of inconveniences, and led to the perpetual increase in the level of non - performing loans. thus, the ratio of non - performing loans to total loans peaked 25 %, extremely deteriorating the system's lending capacities. the reasons that led up | 1 |
boards and top management must set the “ tone at the top ” by creating an organizational culture that places high priority on risk management, compliance with policies and regulations, and high standards of ethical behavior at every level. this is done through ensuring that comprehensive policies, procedures, limits and controls are in place for all activities and ensuring that expectations for compliance are fully communicated throughout the organization. secondly, financial institutions ’ it systems and operational risk management processes must be up to date to reduce the risk of fraud due to system breakdowns, hackers, and processing errors. as you all are probably aware, customer information theft is rapidly increasing around the world. technology is one area where perpetrators can often get ahead of under - prepared institutions, gaining access to databases and mainframe systems, and accessing sensitive information including confidential customer data. key preventive measures include ensuring that it systems and software are updated frequently to defend against hacking attempts, viruses, and other breaches. robust system controls that carefully grant and monitor system access are equally important. sound operational risk management goes beyond technological controls. financial institutions should have well defined policies, procedures, and limits related to all transaction processing. in particular, those units responsible for executing cash or other transactions on behalf of their companies must ensure that controls include a segregation of duties that allows for an appropriate check and balance process. the lack of segregation of duties is usually a driving factor in fraud from trading activities. in both the barings episode in the 1990 ’ s and the most recent losses at societe generale, fraudulent transactions occurred as the traders found a way to control the execution and reconciliation of their trades. that leads to the third and final critical element of fraud avoidance : sound risk management and internal controls. financial institutions must be able to effectively identify and assess risk across their entire organization and ensure that process are in place to ensure compliance with internal policies and limits, laws, and regulations. in addition to the systems controls and the segregation of duties i have already mentioned, financial institutions need to have effective physical control of assets, clearly defined authorization limits and exception processes, and comprehensive risk management reporting to management and the board of directors. after management and the board of directors, the institutions ’ internal audit and compliance units should be the first line of defense in preventing and identifying fraud. those are the key responsibilities for institutions in the fight against fraud ; however, one of the bank of thailand ’ s key mandates is to ensure the safety and soundness of the financial system. an essential part of | s education is observed to be more important than household income for her child ’ s survival ( hdr, 2013 ). 34. the combined expenditure of central and state governments on education is just about 3. 3 per cent of gdp, while that on health is another 1. 3 per cent of gdp. in contrast, the european union countries spend from their general government account, 5. 5 per cent of gdp on education and 7. 5 per cent of gdp on health. canada ’ s public spending on health alone is over 11 per cent of its gdp and that on education is nearly 5 per cent. india needs to step up its public spending on education and health considerably over the next five years. even in the united states, average income of 20 per cent at the top of the distribution is almost 8 times higher than that of bottom 20 per cent. bis central bankers ’ speeches in addition to higher spending, quality of such spending is important. right skilling of our work force by adequate focus on technical education is the need of the hour. our technical institutes should get connected to the industry and the market and take inputs from there. 35. in the face of various constraints, the expenditure by the central and state governments on education alone will not be sufficient to make a difference. the private sector would also need to pitch in for improving the quality of education and educational system in the country. the banks have a very crucial role in facilitating pursuit of education by the resource - constrained youth. as we are all aware, the cost of education, in particular that of higher education, has risen very substantially. this is likely to result in exclusion of poor, but meritorious and deserving youth from obtaining quality education unless suitable funding is made available to them. in the year 2001, indian bank association ( iba ) prepared a model educational loan scheme ( since revised ) which forms the basis for banks ’ loans to students for pursuing various educational courses. rbi, on its part, has permitted banks to classify loans and advances granted to individuals for educational purposes, including vocational courses up to 10 lakh for studies in india and 20 lakh for studies abroad, under “ priority sector ”. further, the loans granted to educational institutions are eligible to be classified as “ priority sector ” advances under micro and small ( service ) enterprises, provided they satisfy the provisions of msmed act, 2006. the banks have been mandated not to obtain collateral security in the case of educational loans up to 4 lakh. 36. the statistics | 0 |
that is now close to zero. growth in demand and output is expected to remain high in the near term. unemployment may fall somewhat more quickly than has been the case over the past year. the output gap is expected to be positive in 2005. higher demand for companies ’ goods provides scope for increasing prices. experience shows that inflation is directly influenced by the level of capacity utilisation in the norwegian economy. some of the rise in prices for domestically produced goods and services can be attributed to higher margins in the business sector. the effects of the interest rate decline on demand, output and employment have been pronounced. it has taken time for inflation to pick up. this partly reflects low external interest rates and high oil prices, which have moderated the impact on the krone exchange rate. higher imports from low - cost countries, competition and improved efficiency in norwegian production have also kept inflation at a low level. initially, it was the fall in prices for imported consumer goods that pushed down underlying inflation. after a period, the rise in prices for domestically produced goods and services also decelerated. this was due in particular to increased competition in some goods and service markets. at the same time, wage growth slowed as a result of lower capacity utilisation in the economy. a slower rise in house rents also contributed. inflation measured by the cpi - ate reached its lowest level in the first months of 2004. inflation remained at less than ½ per cent until after the summer before picking up in autumn. inflation moved up primarily as a result of a slower decline in prices for imported consumer goods, but the depreciation of the krone since the beginning of 2003 has also contributed. in addition, the rise in prices for domestically produced goods and services stabilised, and towards the end of 2004 there was a tendency towards a higher rise in prices for these goods and services. at the beginning of 2005, inflation measured by the cpi - ate was lower than expected. prices for imported consumer goods fell more than expected. it is uncertain whether this price decline was due to abnormal seasonal patterns or a fall in underlying inflation. the fall in prices may be related to an unusually warm winter, which has made it more difficult to sell winter clothing and sports equipment at ordinary prices. on the other hand, there are indications that prices for imported consumer goods in foreign currency may have fallen somewhat more than previously assumed. the wide variations in prices for some imported consumer goods, especially clothing and footwear, may entail wide monthly variations in | no indication that growth in imports from low - cost countries is declining. for example, china ’ s share of footwear imports to norway increased by 4 percentage points to 20 per cent in 2004. the share of clothing imports increased by 2 percentage points to 32 per cent. the decline in prices for clothing and footwear will probably continue in the coming years. prices for audiovisual equipment are still falling as a result of strong international competition and high productivity growth. we assume that the effects of structural changes in these markets will gradually be exhausted towards the end of the projection period. external price impulses via consumer goods are expected to increase in pace with unit labour costs among our trading partners. the projections in inflation report 1 / 05, published on 16 march, are based on a gradual increase in the interest rate. this is in line with financial and foreign exchange market expectations. the krone exchange rate is assumed to move in line with the forward exchange rate. this implies that the krone will remain fairly stable around the current level in the years ahead. growth in private consumption is expected to remain buoyant both this year and next, primarily reflecting low real interest rates, strong growth in real disposable income and a continued rise in house prices. in the period ahead, higher employment and wage growth will continue to fuel household demand. on the other hand, household debt has risen sharply. this implies that a normalisation of interest rates will increase household net interest expenses. after a period, growth in consumption may be fairly low. however, we assume that households will spread consumption over time so that the savings ratio will continue to fall in spite of an increase in interest rates. growth in housing investment is expected to ease through 2005. however, the projection for housing starts is also very high for 2005. such a high level of housing starts over several years probably means that more dwellings will be constructed than implied by underlying demand. as a result, housing investment is expected to decline after a period. higher interest rates and weaker developments in the norwegian economy may also lead to a fall in residential construction after a period. the upturn in mainland fixed investment is broadly based. stronger profitability, higher capacity utilisation and solid export growth will contribute to continued investment growth in goods - producing industries. demand for services is expected to continue to grow for a period ahead with an attendant increase in investment in service sectors. when growth in the economy gradually slows down, investment growth will probably slacken. mainland exports | 1 |
banking system. in our economy, banks play such a dominant role that non - standard measures need to be implemented – first and foremost – through the intervention and with the active participation of banks. this is why i have sometimes referred to our non - standard measures as those of enhanced credit support. they aim at supporting banks in providing credit to firms and households on an ongoing basis. this goes a long way towards explaining events in the past. as regards the possible further additional non - standard measures, i have been very clear. on behalf of the governing council, during my last press conference in frankfurt : we will decide in our next monetary policy decision governing council meeting on 7 may. and it is on 7 may that i will make public the decision of the governing council. at this stage, as a porte - parole of the governing council, i think it is important not to create or encourage expectations. be sure that what we will decide will fully take into account the financing structure of the euro area economy and will be fully in line with our medium term strategy. when taking all our decisions, we are inspired by our remit to provide a solid nominal anchor for the economic system. as you know, the ecb ’ s quantitative definition of price stability is a key element of its monetary policy strategy. we define price stability as a year - on - year increase in consumer prices of below 2 % over the medium term. in 2003 the ecb ’ s governing council clarified that, within its definition, it aims to keep the inflation rate close to 2 % over the medium term. this clarification was aimed at confirming the robust anchor for long - term inflation expectations that the ecb had provided since the setting up of the euro. in the first ten years since the introduction of the euro, the ecb ’ s quantitative definition of price stability has proved to be an invaluable asset, guarding against undesirably high inflation and against deflation. long - term inflation expectations in the euro area, whether based on surveys or extracted from financial indicators, have been and continue to be firmly anchored at levels consistent with our definition of price stability. conclusions more than ever, in the present very demanding circumstances, confidence is key. the global economy was hit in mid - september 2008 by an unprecedented sudden loss of confidence. it was perhaps the first time in economic history that a single adverse event was able, in just a few days, to have a simultaneous adverse effect on all private economic agents in every | jean - claude trichet : restoring confidence in the global financial system speech by mr jean - claude trichet, president of the european central bank, at the annual meeting of the research institute of japan, tokyo, 17 april 2009. * * * ladies and gentlemen, i am honoured to be invited to address the naigai josei chousa kai. today i would like to share with you my views on the roots of the current financial crisis, and the policy responses which aim to address it and to inspire a new sense of direction. the g - 20, at its meeting a fortnight ago, sent a strong signal of reform that can provide the basis for a more resilient and stable global economy, in the period to come. swift implementation of this important agenda will be key. i will explain the ecb ’ s response to the financial crisis. i will also note, en passant, how our policy compares with those of other major central banks. in my view, differences in crisis management approaches between major central banks reflect differences in economic structures rather than conflicting views on fundamental principles. the ecb ’ s guiding principles are very simple and very clear. in the medium term, the ecb ’ s policy is geared towards preserving price stability in line with our objective and in so doing, creating the conditions for enduring financial stability. this policy is essential to revive a resource that has become much too scarce over recent months : confidence in the future. financial excesses – at the root of the financial crisis in the last ten years finance has seen a dramatic shift of focus away from facilitating trade and real investment to unfettered speculation and financial gambling. the assumption and hedging of genuine economic risk – the risk that companies face when engaged in product and process innovation – gradually ceased to be the main concern of international finance. over time, the creation and assumption of financial risk became the core activity of the financial industry. this is the risk posed by arbitrage and deliberate exposure to asset price changes. it reached a point where it seemed that the financial system no longer existed primarily to hedge existing economic risks, but, increasingly, to create and propagate new risks on its own. in the past two decades financial innovation and liberalisation have made important contributions to the overall productivity of our economies. but, as the demand for finance increased throughout the 1990s, intermediaries had growing incentives to develop innovative funding techniques. the securitisation of assets, for example – the transformation of | 1 |
only for hospitality, but also an infinite opportunity for cooperation, assistance and devotion. thank you once more. 2 / 2 | has been drafted and is pending approval by the parliament. this law regulates the licensing, supervision and activity of the slas in compliance with the best standards. in close collaboration with the albanian deposit insurance agency, amendments to the law on deposits insurance have been drafted. these amendments consist in new norms addressing the slas and include legal persons in the insurance deposits scheme. the past year was successful also regarding the information technology. although such projects are less visible to the public, they are of key importance. at the beginning of 2015, the afisar system started operation - this is the central electronic register for the documentation of each element that accompanies the issue and transactions with securities issued by the albanian state. in the meantime, other successes achieved with regard to information technology include : • automation of the reporting system of banks to the bank of albania ; • integration and optimisation of the it network utilisation, thus reducing operational costs of the bank of albania ; • automation of accounting operations at boa branches ; • and increase of information processing and storing capacities. bis central bankers ’ speeches bigger challenges lie ahead of us in 2016. another important objective is boosting credit to support the private sector, certainly at lower interest rates. the business plans of banks for 2016 render us optimistic in this regard. meanwhile, once again i emphasise that our monetary policy stance will remain accommodative in 2016. furthermore, private sector's demand will be low throughout 2016, thus creating premises to increasingly channel the banking system's liquidity to the private sector. i would like to guarantee the banking system in albania that the bank of albania will be a reliable, open and serious partner, in compliance with its mandate, implying its supervisory function. one of the main aspects in our work will be the compilation of a particular law to deal with banks facing a difficult financial situation, also known in our daily jargon as the resolution law. this is in the light of an important contemporary directive of european union, which we are working to introduce in our banking legislation. last, but not least, we will continue our efforts during 2016 for the further institutional perfection the bank of albania, aiming a fast approximation to the model of escb central banks. the new organisational structure and the three - year development strategy of the bank of albania will guide a set of decisions of the bank of albania's supervisory council to improve legal and sub - legal acts. the daily activity of the bank of albania's departments, | 0.5 |
kingdom also pose another major challenge to the functioning of the single market. situation of the spanish economy let me now move on to the spanish economy. the strength of the recovery is proving notable. on the latest estimates, our gdp is estimated to have grown by around 3. 1 % in 2017, that is to say, similar growth to that in 2015 and 2016 ; for the third year running, the growth of our economy is expected to have clearly exceeded that observed for the euro area as a whole. indeed, last year we regained the level, in real terms, of our pre - crisis gdp. there are two key features of this recovery. firstly, it is proving to be most job creationintensive. however, we are still far from attaining the employment levels prior to 2008. the second notable feature is that our recovery, which has been intense and prolonged, is proving compatible with the correction of the imbalances that emerged in the years running up to the crisis ; in particular, it is proving compatible with the maintenance of a substantially positive external balance. 4 / 6 in 2017 we posted a current account balance of around 2 % of gdp, a figure not far removed from that observed in the four preceding years. admittedly, transitory or temporary factors – such as low oil prices and low interest rates, for instance – have exerted an influence on this surplus ; but largely it is due to gains in external competitiveness and also to the reduction in the economy ’ s financing costs, a development in which the eurosystem ’ s monetary policy has played a crucial role, as have the structural reforms made since 2011. outlook on the latest banco de espana projections, which we published last december, the current upturn may be prolonged over the coming years with significant growth in activity and employment, albeit at lower rates than those observed in the last three years. this moderation in the increase in activity would be firstly attributable to the lesser momentum of demand - side policies. specifically, we expect the impulse derived from fiscal and monetary policy to be lower, as well as lower growth of private consumption compared with that in recent years. as regards gross capital formation, investment in housing will be spurred by the generation of employment and the availability of low - cost financing. this latter factor will also be conducive to business investment, further to the far - reaching clean - up of corporate balance sheets in recent years. with respect to external demand, exports may be expected to continue out | ##growing the rate of expansion of the very markets on which they are targeted, which reflects the gains in competitiveness i referred to earlier. but i believe mention should also be made of a structural change, namely the most notable growth in the number of spanish companies permanently – not just occasionally – orienting their activity towards foreign markets, without forgetting the gains in market share in their domestic markets, as gains in competitiveness enable firms to compete better not only abroad but also, obviously, in the domestic market against imports. risks the spanish economy has moved into 2018 on the back, we may say, of significant expansionary inertia. on the external front, and in europe as a whole, we do not yet know and it is not easy to estimate the impact that the united kingdom ’ s exit from the european union may have, the impulses that the protectionist policies in various countries are prompting and the effects that may stem from the re - balancing of the chinese economy. in the financial domain, the valuations of certain assets in some jurisdictions and segments of the capital markets have increased most markedly, suggesting that there has been an increase in the risk of there being corrections in the coming years potentially affecting financial stability. i would also like to refer to the economic risks posed by the political situation in catalonia. in our financial stability report, published early last november, the banco de espana estimated a range for the economic impact of the tensions in catalonia drawing basically on assumptions about their duration and intensity. the conjunctural information for the final 5 / 6 quarter of 2017 indicates that economic activity is expected to have slowed in catalonia in the closing months of the year to a greater extent than in the other main regions with the greater gdp ; at the same time, it seems clear that the application of article 155 of the constitution has contributed to easing economic tensions, as shown by recent developments on financial markets, where a correction has been observed in the higher volatility and more negative dynamics that stock markets and the spanish sovereign debt risk premium had experienced in the opening weeks of october. indeed, the risk premium stood today below 85 basis points relative to the german benchmark, the lowest level since 2010, following the upgrade announced by a rating agency. if in the coming months we achieve normalisation, understanding by normalisation a situation in which political agents act with a real observance of our entire legal framework to the letter, and i would stress real observance, that would very likely lead to a | 1 |
ardian fullani : prevent rather than recover greeting speech by mr ardian fullani, governor of the bank of albania, at a technical seminar on surveillance systems to assess and monitor economic and financial stability, tirana, 24 july 2006. * * * honourable participants, i would like to thank you all for your participation in this very important seminar. allow me first to welcome ms. alvarez - plata and mr. kholodilin, two experts representing the distinguished german institute for economic research diw, who will be holding presentations over these two days and discuss the introduction and implementation of early warning systems for the financial markets and the exchange rate stability. over the recent years, the bank of albania has been working closely with prominent international partners, such as the gtz, in various projects, which aim at enhancing and further consolidating the work of the bank in achieving our main objectives. i avail myself of this opportunity to thank prof. bolle, who has been coordinating our cooperation with the gtz and ms. guda, local gtz coordinator, for making this seminar possible, as a series of activities we have been organizing jointly with the gtz. today ’ s seminar focuses on an issue we have already begun working on. last year in april, we organized a regional seminar in tirana with the topic “ stress - testing ”, wherein were discussed the ways of identifying timely the financial system weaknesses, which may jeopardize the maintenance of its stability in case macro and microeconomic conditions are unexpectedly aggravated. today ’ s seminar focuses on similar issues, but it provides more progressive approaches as far as early warning systems are concerned. such approaches and discussions bear a high level of technique, however, allow me to explain briefly and somehow simply the purpose of their implementation. last week, the bank of albania changed its core interest rate. as you may have already been informed of from our statements, the increase in the interest rate came as a consequence of future expectations effect and of a variety of factors which relate to inflation. what is important to the policies we conduct is the anticipation and prevention of destabilizing pressures in advance, rather than their correction after they have already occurred. waiting to take the proper measures after the signals have become a fact may be costly in two aspects. first, the maintenance of stability is not stable, as long as the measures are taken upon the aggravation of the macroeconomic situation. second, post - destabilization measures generally have their effects after | the g8. after years of virtually fruitless discussions, there are now signs of progress in the long overdue reforms to the governance and functions of the bretton woods institutions, the world bank and international monetary fund. however, less progress has been made on reforms of the regulation and supervision of financial institutions. and yet, there is a need to curb the excessive risk - taking by these institutions. after all, it was their behaviour which threatened the collapse of the global financial system in 2008, that then triggered the recession. similarly, there is little sign of reviving the global trading system under the doha round of trade talks. and yet it is clear that even - handed trade relations that could emerge through these negotiations could boost world trade and fulfill the g20 commitment to discourage countries from pursuing policies that restrict trading through protectionist measures. here at home, one of the main lessons derived from the global financial turmoil and economic recession is that reliance on the one dominant sector is far from safe. clearly a concerted effort towards diversifying the economy is even more urgent, and the government needs to partner with the private sector in this endeavour. many of the building blocks are already in place for diversified investment and development. we have macroeconomic stability ; we have strong and robust structures for sound policy formulation ; we have no exchange controls ; and the banking system is stable, soundly managed and offers diverse products. these positive attributes have been consistently recognised by the sovereign credit rating agencies and other international organisations. at international level, the country scores highly in indicators of international competitiveness, such as the heritage foundation ’ s “ economic freedom ”, the world bank ’ s “ ease of doing business ”, the world economic forum ’ s “ global competitiveness “, and transparency international ’ s “ corruption perception index ”. as you will readily agree, despite these impressive scores, there remain challenges in attracting foreign direct investment outside the mining sector. therefore, the time has come to address the remaining constraints to broadbased investment. in particular, the cost of doing business in botswana is high compared to other landlocked countries. businesses should lobby for necessary changes that reduce production costs, but not seek generous subsidies or clamour for imposition of additional obstacles that favour a particular interest group. equally important, businesses should not always look up to the government for solutions to their problems, as such an approach tends to entrench a culture of dependency. all - in - all, business should embrace the benefits that accru | 0 |
so far unlikely – if the bulk of payments are made using digital wallets rather than bank deposits and are denominated in private digital currency with weak links to sovereign currency, monetary sovereignty could be weakened. in a digital world, consumers must have the possibility to pay with sovereign money. in china, for example, within a decade payments have shifted from cash to mobile payments, which are controlled by two large private technology firms. the planned introduction of a public digital currency can be seen as a means of managing the risks of this digital transition, in order to maintain trust in payments. state backing is essential for there to be trust in payments and money. money held in bank deposits can be seen as a form of private digital currency, but it is widely used because people trust that they can readily convert their deposits into central bank money. in the euro area, these deposits are also insured by guarantee schemes up to an amount of €100, 000, effectively making them public money. private digital currencies would not necessarily allow the same kind of convertibility and are unlikely to have the same state backing. without a monetary and regulatory anchor, the stability of payment systems would essentially depend on the safety of private money issuers. people are clearly aware of these risks. a recent survey by the official monetary and financial institutions forum shows that central banks enjoy a higher level of trust than commercial banks, credit card companies and technology firms, including as potential issuers of digital currency. 2. initiatives to strengthen european payments so what are the implications for european payments? first, we must ensure that how we pay, and the systems that support our payments, continue to modernise along with the people who use them – european consumers, in other words. here at the ecb, it is our duty to ensure that people have access to riskless, low - cost means of payment, as well as state - of - the - art payment services that reflect our changing economy. and second, given our size and influence, in europe we have a responsibility to ensure that our citizens have choice and cannot be excluded from the payments ecosystem due to the unilateral actions of others. we need to ensure that european payments are fit for a global digital economy so that, in the face of changing risks, we can preserve the autonomy of european payments. the eurosystem has already reacted to technological change by launching innovative back - end payment solutions with a pan - european reach, such as the target instant payment settlement ( tips | emerged related to stagnating earnings per worker, declining social and economic mobility, social dysfunctions such as drug abuse and distrust of political institutions. rectifying the situation requires interventionist policies, such as community re - development, infrastructure spending, job training and addiction programmes. for europe, bernanke recommended that the continuing labour market reforms that are necessary should be accompanied by training and other work force development ; that structural reforms should be accompanied by demand policies ; and that political legitimacy should be ensured through subsidiarity. whilst against the background of ever faster technical progress and structural change it was relatively uncontroversial that the traditional “ once - in - a - lifetime schooling strategy ” has to give way to continuous updating of knowledge and skills ( “ lifelong learning ” ), dietmar harhoff ( 2017 ) warned that so far there is little systematic implementation and institutional development. sergei guriev ( 2017, chart 1 ) presented “ elephant curves ” ( a la milanovic 2016 ), suggesting that the crisis recession acted in a regressive way in southern european countries ( see also buti 2017, chart 3 ), whereas in other euro area countries asset price declines implied that the recession ’ s cost were mostly borne by the better - off. but in terms of popular support for economic policies, guriev ( 2017, table 1 ) provided evidence that it is not inequality per se but perceived “ unfair ” inequality ( defined as uneven opportunities, such as parental background, gender, ethnicity or place of birth ) that leads to the rejection of a market economy ( and also 13 / 16 bis central bankers'speeches corruption ). other factors captured in the residuals of the estimation, such as lack of effort or bad luck, do not have this effect. agnes benassy - quere ( 2017 ) perceived an imbalance in europe between trade and competition policies being centralised at the area - wide level but social and tax policies being left at the national level. when the federal level promotes free trade and competitive markets, then member states are left to bear the social consequences. in her view member states could be better empowered by coordination in tax and social policies. one idea is to make the eu ’ s globalisation adjustment fund more effective ; another is to introduce us - style tttts ( timely, temporary, and targeted transfers ). references adler, g., duval, r., furceri, d., kilic celik, s., | 0.5 |
; they are not under the control of the government. the government has a majority stake in only one of the new banks. others have claimed that iceland defaulted and got away with it. the opposite is true. the credit of the sovereign was preserved, and all debt obligations have been paid on time. this is why the sovereign has been able to tap international capital markets twice so far since the crisis struck, and why its five - year cds spread is currently below 180 points. why did the government give a verbal blanket guarantee for domestic deposits only and not for deposits in the banks ’ foreign branches? after all, this distinction probably added fuel to the fire of the so - called icesave dispute about the settlement of deposit guarantees in landsbanki ’ s dutch and british branches. the short answer is that such a guarantee would never have been credible. as a result, it would not have stopped the run on these deposits and, if attempted, might have bankrupted the government. at the time, the central bank of iceland ’ s fx reserves amounted to 2½ billion euros, while the foreign currency deposits in landsbanki ’ s dutch and british branches totalled 11½ billion euros and payment of the eu minimum deposit insurance would have required 4½ billion euros. the sovereign was completely closed off from foreign capital markets at that point. furthermore, in economic terms, given that these deposits were used to a significant degree to finance illiquid assets in these same countries, such a payment, if possible, would have amounted to a net transfer of resources from iceland to these countries at a time when iceland was going through its deepest financial and economic crisis in the post - war period! that made no sense. this case also highlights the link that must exist between the lolr function and deposit insurance, which, in the absence of clear prior arrangements for currency swaps or another such mechanism, must be mostly in the same currency in order to work. the eu framework for this was therefore deeply flawed, as is currently being recognised in the plans for a banking union. bis central bankers ’ speeches why were these huge risks in the icelandic banking system allowed to build up? i do not think we yet have the research and the consensus to provide a reasonably undisputed list of the main causal factors in this process ; however, i think four factors will rank highly on that list. these are iceland ’ s membership in the european economic area ( eea ) in 1994, privatisation of the icelandic banking system | sigurðsson was appointed governor from october 1, 2003. he therefore served on the board of governors for almost three years. before that he was a member of the supervisory board for just over two years. on behalf of the supervisory board i would like to thank jon sigurðsson for our pleasant work together during his terms as both a member of the board of governors and a member of the supervisory board. ingimundur friðriksson was temporarily appointed governor from june 15 to august 31, 2006, then appointed governor for a seven - year term from september 1, 2006. ingimundur friðriksson had been assistant governor since 1994 and held a temporary appointment as governor for one year from 2002 to 2003. a number of changes took place in central bank staffing during 2006. fifteen employees left or retired from the bank and ten were hired, so their number decreased by five during the year. at the end of 2006 there were 111 employees at the central bank of iceland, while the number of full - time equivalent positions was just over 102. among the retirees was sveinn erling sigurðsson, director of the statistics department. lilja steinþorsdottir left the post of chief auditor during the year. the chief auditor is directly accountable to and appointed by the supervisory board. on behalf of the supervisory board i would like to thank lilja steinþorsdottir for our pleasant work together. in her place, the supervisory board appointed stefan svavarsson chief auditor. financial institutions compete fiercely for talented employees, which is not surprising given the pace at which the icelandic banks ’ activities have expanded. it is vital for the central bank to have as capable employees as possible in its service. it must take prevailing conditions into account to ensure that this is the case. on the supervisory board in 2006, olafur g. einarsson resigned from the post of chairman which he held since 1998. helgi s. guðmundsson was elected chairman in his place. on behalf of the supervisory board i would like to thank olafur g. einarsson for his particularly successful leadership during his years as chairman. the supervisory board held 22 meetings during the year. i would like to thank the members of the supervisory board for their pleasant cooperation and fine work. i also thank the board of governors and employees of the bank for their very good work during the year and fruitful collaboration with the supervisory board. | 0.5 |
this balance between efficiency and stability. an organizing framework it is meaningful to analyze the performance of the indian economy over the past decade or so in terms of the simple framework displayed on slide 1. the 2x2 matrix shows four scenarios emerging from favourable and unfavourable global and domestic conditions. it is quite easy to classify the period from 2003 to 2010 into two of the boxes. the first five years of this period, i. e. the years preceding the crisis, clearly fall into the top right - hand box, reflecting favourable conditions both globally and domestically. from a growth perspective, this was a dream run for the indian economy, which averaged 8. 9 per cent per year over those five years. to illustrate the power of this rate of growth, gdp would increase by over 50 per cent during a five - year run at this rate and double in about eight - and - a - half years. many sectors in the economy have experienced the impact that this can have on the demand for their products and services. from both economic policy and business strategy perspectives, this period provides a benchmark for future performance. however, the framework should inject a dose of reality into those expectations. it highlights the fact that this rate of growth was achieved in a clearly favourable global environment, which may not be a characteristic of the next few years! getting back to the framework, the crisis period, 2008 – 10, clearly falls into the bottom lefthand box, reflecting unfavourable global and domestic conditions. the financial crisis, of which the tipping point was perhaps the collapse of lehman brothers in september 2008, was the most vivid feature of the hostile global environment, but there were several other threats that also manifested themselves in that period. food inflation soared around the world in the first half of 2008, as did oil prices. both these trends reinforced the inherent inflationary pressures that were being felt domestically as a result of the sustained high growth. in these circumstances, the monetary policy stance had to be firmly anti - inflationary, culminating in the repo rate reaching its highest ever level of 9 per cent in july 2008. the combination of global turbulence and domestic demand compression would have undoubtedly caused growth to fall, which it did. however, what may have come as a surprise is that it didn ’ t fall by very much. the economy grew by 6. 8 per cent in 2008 – 09 and by a relatively robust 8 per cent in 2009 – 10, at a time when much of the global economy was | mario draghi : structural reforms in the euro area introductory remarks by mr mario draghi, president of the european central bank, at the ecb conference " structural reforms in the euro area ", frankfurt am main, 18 october 2017. * * * it is my pleasure to welcome you all to this conference on structural reforms in the euro area. as you know, “ structural reforms ” has become something of a contested term in recent years. for many, it describes a pragmatic policy agenda to raise long - term growth and accelerate adjustment to shocks, which is essential for countries in a monetary union. but for others, the term is viewed as a “ catch - all ” for a wide range of policies, some of which have potentially negative short - run costs and adverse distributional effects. in view of these discussions, it is important to assess – first – whether countries with more flexible structures and more resilient institutions do indeed recover more quickly from shocks and grow faster over the cycle. second, we should evaluate how the design of reforms and the overall policy mix affect the impact of structural policies, especially during a downturn. and third, we should assess the distributional effects of reforms, and consider how we can ensure that they benefit everyone in society. these are the themes i will focus on in my remarks this morning. economic structures, adjustment to shocks and long - term growth first of all, the crisis has helped us better understand a key question for the euro area : are economies that are more flexible also more resilient to adverse shocks, and do they experience faster recoveries and higher long - term growth? by and large, the experience of the crisis has shown the answer to be “ yes ”. what we have seen is that more economic flexibility and sound institutions do lead to more resilience and higher longterm growth, including when countries face a common shock. indeed, euro area economies that were more flexible at the start of the crisis – as measured by the world bank doing business indicator in 2009 – subsequently showed a stronger recovery. gdp per capita rebounded faster and unemployment fell more. 1 and looking at the last 15 to 20 years – so over the full cycle – euro area countries with sound economic structures at the outset have shown much higher long - term real growth. confirming this relationship, countries that reformed their product and labour markets during the crisis have also seen good results afterwards – and the full effects are still materialising. focusing just on the labour market, a | 0 |
2002, and even more so in 2003, was a clear vote of confidence in the actions and the instruments the central bank employed to maintain price stability. the bank succeeded in managing a relatively smooth moderate decline in the exchange rate until october 2002. the turnaround in macroeconomic management was the introduction of a supplementary budget by the somare government in september 2002, which successfully reduced the budget deficit to sustainable levels. the 2003 budget was a further step in fiscal responsibility by reducing the budget deficit to below 2. 0 percent of gdp. in early 2003, the public realized that the government is willing to take the hard decisions to maintain a highly responsible fiscal stance, complemented by major increases in the prices of papua new guinea ’ s internationally traded commodities, the path to stable prices, low inflation and interest rates was set. based on the highly responsible fiscal stance of the government, a steady appreciation of the kina and the increase in the foreign exchange reserves ensured in late 2003 and early 2004. then i asked the bank of png staff and advisors to prepare for the liberalization of foreign exchange controls. the bank of png considers that the main preconditions for liberalization of the controls were sufficiently achieved, mainly the stable macroeconomic environment shown by : low inflation levels to those similar to the industrial nations, reduction in the budget deficit to sustainable levels, significantly high level of foreign exchange reserves, sustainable current account deficit, a stable and competitive exchange rate regime and flexible use of indirect instruments for monetary policy. in addition, the financial sector has the capacity to ensure bank soundness and prudent management of interest rate risk. after the passing of the 2005 budget, which maintains the continued responsible fiscal stance of the previous three budgets, there is nothing preventing the bank of png from finalizing the exchange control liberalization that was started in 1994, by floating of the kina. i ’ m pleased to announce today that effective from january 2005, for all practical purposes, many of the requirements for foreign exchange control approvals will be replaced with exemptions and reporting obligations by authorized dealers will be tightened. to be more precise, let me give you some details : 1. all remaining trade and services transactions ( such as limits on remittances ) or what we define as current account transactions will be liberalized ; 2. there will be no timing, such as 3 months retention period, for the repatriation of export proceeds. we will closely monitor the inflows reported by the authorized dealers reports | benny b m popoitai : commitment to total quality assurance address by mr benny b m popoitai, deputy governor of the bank of papua new guinea, at the divine word university 2013 open day, port moresby, 5 may 2013. * * * fr. jan czuba, president of the divine word university ( dwu ), dwu community ( administration, staff and students ), dwu development partners, invited guests, ladies and gentlemen. good evening to you all. it is indeed an honour to be invited to make the key note speech at your 2013 open day celebration and activities. the theme of your 2013 open day is " commitment to total quality assurance ". i note that this theme is consistent with dwu's mission and core values that strives for academic excellence and quality academic programs. it is a theme that is not only appropriate but very relevant given the stage we are in with our nation's development and the many challenges we face in nation - building. equipping our young people not only with the required academic qualifications but the necessary and important societal values of living and working together harmoniously before they enter the workforce and mainstream society is very important. i therefore at the outset must thank the dwu for its commitment, drive and vigour in striving for total quality assurance in preparing the next generation of workers and leaders of our country. if you google total quality assurance or tqa, you will get about 29. 2 million entries or results on the internet. the results throw up other related terminologies like total quality management ( tqm ) and total quality control ( tqc ). why so many results? it is because tqa, tqm and tqc are not only hot topics in management and performance benchmarking but also vital in driving excellence and ensuring competitiveness in the fiercely competitive workplace we face today, whatever the industry or service you may refer to. tqa in short, as many of you would be aware, relates to ensuring a product or output meets required or expected standards in a suitable delivery time. education, as we all know, is at the heart of every nation's strives to develop. providing access, opportunities and quality education is therefore very important for the prospects of our young nation. our educational institutions should not only aim at turning out quantities of students but more importantly, a high quality of graduates. this is where dwu fits in well with the engagement of the australian universities quality agency in 2011 | 0.5 |
lending support to consumer demand. various central banks eased their monetary policy in the autumn in light of modest inflation and the economic risks. moreover, they signalled that they would probably leave their policy rates at a low level for an extended period of time. the snb is maintaining its existing baseline scenario for the global economy, and expects momentum to remain modest over the short term. the monetary policy easing is likely to contribute to the economy – and thus also inflation – picking up again over the medium term. risks to the global economy remain tilted to the downside. chief among them are still trade tensions and the possibility of the persisting weakness in manufacturing activity spreading to the economy as a whole. swiss economic outlook according to the initial estimate, the swiss economy grew by 1. 6 % in the third quarter. this growth was primarily driven by manufacturing, where value added increased significantly thanks to strong growth in the exports of pharmaceutical products. the other industries in the manufacturing sector recorded a more modest expansion, in line with the slowdown in manufacturing worldwide. the labour market continues to be a mainstay of the economy. employment figures rose again slightly, and the unemployment rate persisted at a low level through to november. gdp is likely to expand by around 1 % in 2019, and the snb expects growth of between 1. 5 % and 2 % in 2020. the stronger expansion next year reflects the gradual firming expected in global economic activity as well as an exceptional effect. the latter stems from the fact that the forecast includes the revenue generated by major international sporting events, which is likely to increase growth by around half a percentage point. monetary situation and inflation expectations let me now move on to address monetary conditions – that is to say, exchange rates and interest rates – as well as inflation expectations. page 2 / 6 berne, 12 december 2019 thomas jordan news conference the external value of the swiss franc has remained stable since the monetary policy assessment in september. there has also been scarcely any change in the trade - weighted exchange rate over 2019 as a whole, although it initially declined before appreciating again in the summer. the swiss franc thus remains highly valued, and the situation on the foreign exchange market is still fragile. short - term interest rates are close to the snb policy rate. the long - term swiss franc rates reached new lows in the summer, and have recovered only slightly since. this pattern reflects global interest rate movements. the yield on 10 - year swiss confederation bonds currently | while people ’ s faith in the currency is an essential precondition for successful monetary policy, organising public lectures on religion may seem a little farfetched. however, allow me to reassure you that ben has also published over 150 academic articles on monetary policy, macroeconomics and financial markets. he is therefore a most logical candidate to give the karl brunner distinguished lecture, even on a topic that may seem unusual at first sight. born in louisville, kentucky, benjamin friedman went to harvard university with the intention of studying law, but soon realised that economics suited him better. he pursued his studies at harvard and at cambridge university in england. early in his career, ben worked for various entities of the federal reserve system and at morgan stanley. in 1972, at the age of 25, he was appointed assistant professor of economics at harvard university. ben has remained a loyal faculty member at harvard for five decades, including a three - year spell as the chairman of the economics department. page 2 / 4 when ben recently celebrated 50 years as a professor at harvard, many of his former students travelled from all around the world to attend the occasion. the interaction with his students has been of utmost importance to ben, and he would remain in contact with them for decades following their graduation. a number of these former students today occupy leading positions in academia, central banking and government. this shows that ben has been not only an outstanding researcher, but also an influential teacher of economics. spending 50 years in the same place is not as unusual as one might think, at least not when we consider some of the great enlightenment thinkers ben so deeply admires. take immanuel kant, who developed his philosophy without ever leaving his hometown of konigsberg. according to legend, kant became such an integral part of the city that people would set their watch by the time he left his house for his afternoon walk. whether ben ’ s daily routines have the same effect on the people in cambridge, massachusetts, we do not know. what we do know is that, fortunately for us, ben is not quite as averse to travelling as kant was. most importantly, he lets his mind travel, exploring not only the world of economics but many other disciplines as well. but let me say a few more words about ben ’ s contributions to monetary economics. his research covers all aspects of monetary policy. it spans everything from the technical details of how central banks steer short - term interest rates in money markets to fundamental questions about the mandate | 0.5 |
amando m tetangco, jr : convergence in a divergent world speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the aci phils - fmap - ihap - mart - toap joint general assembly, makati, 23 september 2014. * * * introduction last time i addressed your general assembly, i did a little “ word association ” game with you. i don ’ t know how many of you recall that, but i did that last year to highlight the fact that often, the same words we hear have different meanings to us. often, this is so because of our individual “ positions ” in the market. in other words, that adage “ where we stand depends on where we sit ” is very true among you. last time, i highlighted the bsp ’ s desire to get everyone on the same page, wherein the same words would mean the same thing. because clearly that ideal situation of common understanding makes for more effective and efficient bsp policy implementation. this year, i will not do that game anymore. rather, let me focus on just two words. can anyone hazard a guess as to what these two words would be? any guesses? the first word the first word is divergence. i chose this word because of late, it has become quite an important word that describes some of the remarkable features of the current global economic environment. first. divergence in the growth paths among major economies. we have seen that in the us there continues to be a sprinkling / sputtering of positive economic indicators, while both the eu and japan are still struggling for their economic growths to gain traction. second. divergence between the current growth path of emerging market economies and the previous forecasts for the growth path of these economies. eme growth has broadly slowed down from the earlier anticipated growth trajectories. together, these two “ divergences ” have important implications for the speed and manner of global growth rebalancing and policy normalization. third. divergence in the monetary policy stances among the aes. major central banks ’ policy rates have remained at historic lows. but while the fed has kept the phrase “ considerable length of time ” in its statement, it raised its expectations on the future path of the target rate ( i. e., those infamous dots ). it also reiterated its | , in my view, the most immediate and significant challenge facing emu is to reinforce the integration of both banking systems and capital markets. reinforcing the banking union when the euro was launched, there was actually an expectation that many banks would become truly european, providing retail services across the whole euro area. the reality is quite different. 6 / 11 cross - border consolidation remains very limited and most firms and households in the euro area remain largely dependent on their domestic banking systems to maintain investment and smooth consumption profiles. although no formal barriers to foreign banks exist, relevant distortions arise from stillsignificant specificities in banking regulations across countries. some of the existing savings banks, government - owned banks or regional banks in the eu are protected by national legislations hampering incentives to compete or effectively sheltering them from competition. moreover, regulation fails to fully acknowledge the benefits generally arising from geographical diversification in a single market. we also need to address the current deadlock on the third pillar of the banking union, the european deposit insurance scheme ( edis ). some experts argue that this third element may not be essential once we have in place a stringent resolution framework with homogeneous bail - in requirements ; but in my view, it remains crucial to make edis a reality. such a scheme would have a strong impact on trust and contribute to increased risksharing, insofar as it is designed as a fully fledged mutualised edis. contributions to edis taking into account bank - specific risks could limit the risk of permanent crosssubsidisation and would also help deal with the sovereign - bank nexus. this would contribute to reducing the link between national governments and banks and preventing destabilising cross - border flights to safety in the event of difficulties. moving towards a capital markets union the other key initiative to increase the integration of europe ’ s financial markets and to facilitate risk - sharing capacity in emu is the capital markets union project. the project aims at providing firms with the same funding opportunities, and households with the same saving opportunities, irrespective of the member state in which they are located. 7 / 11 however, inconsistent regulations, as well as varying market practices and industry standards across eu countries, prove to be key impediments in developing a truly pan - european capital market. as a result, country savings and investments are still highly correlated, a fact known as the feldstein - horioka puzzle. this correlation has subsided over time in the case | 0 |
rate and entry into erm2. in this respect there may be cause to say something about what has happened earlier. the question of erm participation and the possibility of combining it with the policy of inflation targeting that we have followed for some years has engaged the riksbank earlier, above all in the period 1995 - 97. at that time the riksbank was legally responsible for the choice of exchange rate regime and erm participation was considered simply as a way of preventing the flexible exchange rate regime from becoming a formal obstacle to sweden's possible full participation in the monetary union. when the government then judged that there was insufficient public support for sweden's adoption of the euro, the question of altering the exchange rate regime ceased to be relevant. when the independence of the riksbank was formalised in 1999, the legislation on exchange rate policy was amended. today the exchange rate regime is chosen by the government, while the riksbank decides on issues of its implementation. so it is the government that decides if and when the krona is to join erm2, whereupon the finance ministry and the riksbank discuss the sek / eur exchange rate that is compatible with a stable economic development. i want to make it clear that, contrary to the impression one is liable to get from reports in the media, this process is not to be seen as a struggle between the riksbank and the finance ministry. there are extremely good reasons for these two institutions to agree on a joint line of action. otherwise it is likely to be difficult to argue sweden's case effectively in the subsequent discussions with our european partners. decisions about erm2 participation and the exchange rate on entry are made jointly by the finance ministers of the euro countries, the ecb and the central bank governors and finance ministers of other erm2 participants ( at present denmark ). the first step is taken in practice in the framework of the eu's economic and financial committee. it is only if this committee fails to reach a consensus that the central bank governors and finance ministers concerned engage in direct negotiations. when the time comes - in the event of full participation in the monetary union - for the conversion rate with the euro to be locked irrevocably, this is decided unanimously by the euro - country members of the ecofin council together with sweden. on every previous occasion, these decisions have been based on the central rates in erm / erm2. the choice of a central rate and a | out on interest - free funding, as the riksbank pays interest on the monetary policy liabilities. although this is not so relevant at present when the repo rate is at zero, in the long run the riksbank ’ s profits will shrink in line with the decline in the use of cash. i should perhaps take the opportunity to say here that the riksbank is in general positive towards developments on the payments market that in many cases lead to both safer and more efficient payments. but one cannot disregard the fact that a decline in the use of cash will also reduce the riksbank ’ s opportunities for interest - free funding. the riksbank borrows instead of lending the changes in the riksbank ’ s balance sheet that i have mentioned here have led to a major change in the liquidity position of the banking system towards the riksbank. ten years ago, the banking system had a structural deficit of liquid funds with regard to the riksbank. this means that the riksbank had to regularly lend money to the banking system. since 2010, the banking system has instead had a structural surplus of liquid funds and the riksbank now borrows these funds from the banking system. the most important explanations for the banking system moving from deficit to surplus are that the dividend payments to the government have not been taken from the assets ; the riksbank has instead borrowed money to pay the dividends, and that the general public ’ s demand for cash has declined. this change is reflected in the riksbank ’ s balance sheet in that we now carry out our monetary policy operations on the liabilities side of the balance sheet. but it makes no difference to our ability to implement monetary policy. 4 regardless of whether the banking system has a deficit or a surplus of liquidity in relation to the riksbank, our monetary policy system works by means of our determining the conditions for the banks ’ deposits and loans with the riksbank, which determines the shortest interest rate – the overnight rate – so that it comes closer to our policy rate, what is known as the repo rate. the repo rate thus states which level the riksbank wants for the overnight rate, which is currently zero per cent. the overnight rate in turn affects interest rates charged to the general public and thereby activity and prices in the economy. the riksbank ’ s need for funding is increasing the most important fundamental consequence in the changes to the balance sheet between 2004 and 2014 | 0.5 |
in agricultural towns in senegal. whether i am on vacation or a community visit, i read neighborhoods the way that some people survey land for planting or spreadsheets for weak links or legal briefs for inconsistencies : boarded up rowhouse, not a grocery store in sight, multilane highway splitting the old commercial district. as i have traveled around this country from milwaukee to the mississippi delta, from atlanta to appalachia, from detroit to the colonias, and from scranton to the pine ridge reservation, in urban and rural areas alike, it is striking how much the opportunities and challenges facing families are shaped by the health of their communities and the broader economy. at the most foundational level, what animates - 4my job at our nation ’ s central bank is the opportunity to lift up the livelihoods and lives of working families in communities across america. as central bankers, we don ’ t think of inflation or unemployment as blue or red. we focus on data and proven solutions, and our mission is to serve all americans. we see time and time again that the families that have the smallest financial buffers and the communities with the least resilience suffer the most when turbulence strikes. the risk that turbulence will strike is always present, as i have learned from the many financial crises that have punctuated my own career. in the past decade alone, our communities have contended with the devastation of the global financial crisis, the european debt crisis, the covid - 19 pandemic, and now the burden on stretched household budgets from russia ’ s war of aggression against ukraine. the arc from the collapse of the berlin wall to the response to the covid - 19 pandemic is this : ideas and actions can change the course of communities and countries. let me share with you three examples of how individuals have come together to shape policy for the greater good. ninety years ago, the first woman cabinet secretary, frances perkins, convinced a skeptical franklin roosevelt that unemployment insurance wasn ’ t a handout but a smart investment. not only would it be an effective self - financed approach to help families smooth through periods when work was hard to find through no fault of their own, but it also would support the health of the broader economy when demand weakened. so, two years ago, when a global pandemic struck, the application of perkins ’ s logic through an expanded set of programs and facilities sustained millions of families and saved countless small businesses. after returning from a meeting in europe | commencement remarks lael brainard vice chair board of governors of the federal reserve system at 2022 commencement of the school for advanced international studies johns hopkins university washington, d. c. may 25, 2022 it is an honor to be here today. thank you, dean steinberg, members of the faculty and staff, members of the board, distinguished guests, parents, and family members. to the class of 2022, congratulations. i am honored to be here with you to celebrate this day for which you have worked so hard and on which you go out to make your mark in the world, fortified with an incredible intellectual arsenal and lifelong friends from your time at the johns hopkins school for advanced international studies ( sais ). as a parent, i would like to extend a special welcome to the parents and families who have joined this celebration today. i ’ m sure many of you must be filled, like i am often, with awe and admiration for our amazing offspring and the good they will do in the world. to be honest, when dean steinberg invited me to speak, i was concerned that you might not be excited to hear from a central banker. central bankers are dull by design. we use 17 words when 2 would suffice. we make a virtue of using language that is prosaic and concrete. our pronouncements are carefully calibrated so they are understood exactly as intended, leaving nothing to the imagination. in short, we are the opposite of the poetry, drama, and inspiration that are the stuff of launching gifted graduates on their career quest. but a friend reminded me that if there ’ s anywhere a central banker might be a good fit for graduation, it ’ s sais. at sais, you are required to not only take, but pass monetary theory. no doubt your parents must be wondering — monetary theory? how is that going to help your career? is it too late to become a doctor or a lawyer? but that is the point. you have chosen a different path. two years ago, when a novel coronavirus struck, when fear and panic spread, you decided you wanted to learn - 2more. when economies and markets struggled, you chose to focus on developing solutions. when travel and trade trickled to a stop, you made a commitment to a life in global affairs. you have endured lockdowns and zoom lectures to get an education that will help you understand and address the complexities of our world. your generation has | 1 |
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