text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
2025. 1 / 2 bis - central bankers'speeches what does all of that mean for inflation? we've come a long way from the 8. 1 % inflation we saw last summer. as i mentioned, annual cpi inflation was down to 4. 3 % in march, led by falling goods price inflation, and we see further declines ahead. that's good news. but many canadians are still struggling to manage the rising cost of living, and prices of many things that people need to buy are still rising too quickly. food price inflation is just under 10 %. we expect food price inflation to come down in the months ahead, but services price inflation will take longer. continued strong demand and the tight labour market are putting upward pressure on many services prices, and those are expected to decline only gradually. we expect it will take until the end of 2024 to get inflation all the way back to the 2 % target. when we met last week, the bank's governing council discussed whether we've raised rates enough, and we considered the likelihood that the policy rate may need to remain restrictive for longer to return inflation to the 2 % target. governing council also discussed the risks around our projection. the biggest upside risk is one i just mentioned - that services price inflation could be stickier than projected. the key downside risk is a global recession. if global banking stress re - emerges, we could be facing a more severe global slowdown and much lower commodity prices. overall, we view the risks around our inflation forecast to be roughly balanced, but with inflation still well above our target, we continue to be more concerned about the upside risks. let me conclude. our job at the bank of canada is to get inflation all the way back to the 2 % target. we are encouraged with the progress so far. and seeing inflation get down to 3 % this summer will be welcome relief for canadians. but let me assure canadians that we know our job is not done until we restore price stability. price stability is important because it restores the competitive forces in the economy and allows canadians to plan and invest with the confidence that their money will hold its value. that's the destination - we are on our way and we will stay the course. with that summary, the senior deputy governor and i would be pleased to take your questions. 2 / 2 bis - central bankers'speeches | tiff macklem : opening statement before the standing senate committee on banking, commerce and the economy opening statement by mr tiff macklem, governor of the bank of canada, before the standing senate committee on banking, commerce and the economy, ottawa, ontario, 20 april 2023. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report ( mpr ). last week, we maintained the policy rate at 4a½ % as we continue to assess whether monetary policy is restrictive enough to return inflation to our 2 % target. since the last time we were here with you, we've seen a steady improvement in inflation and modest economic growth. inflation is coming down quickly - data this week show it fell to 4. 3 % in march. and we forecast it to be around 3 % this summer. we are encouraged by that, but we are also seized with the importance of staying the course and restoring price stability for canadians. several things still have to happen to get inflation all the way back to the 2 % target. inflation expectations have to come down further, services price inflation and wage growth need to moderate, and corporate pricing behaviour has to normalize. we are focused on these indicators, and the evolution of core inflation, to ensure that consumer price index ( cpi ) inflation continues to progress toward the target. if monetary policy is not restrictive enough to get us all the way back to the 2 % target, we are prepared to raise the policy rate further to get there. before i take your questions, let me give you some economic and financial context for the decision. the canadian economy remains in excess demand. gross domestic product ( gdp ) growth in the first quarter of the year appears stronger than we projected in january, and the labour market is still tight. the unemployment rate, at 5 %, remains near its record low, and wages continue to grow in the 4 % to 5 % range. employment growth has been surprisingly strong, reflecting continued demand and increases in labour supply. past policy rate increases are working their way through the economy and restraining demand. households are slowing their spending, particularly on big - ticket items. as mortgages are renewed at higher rates, more households will feel the restraining effects of monetary policy. taking these forces into consideration, we expect canadian gdp growth to be weak for the rest of this year before beginning to pick up gradually in 2024 and through | 1 |
been propelled by strong domestic demand, while the contribution from net exports was either small or negative. in fact, the aggregate trade balance of the region has been gradually declining since 2007, and if intra - regional trade is excluded, it has declined notably from about 4 % of the regional gdp in mid - 2007 to less than 2 % at end - 2010, the lowest in more than a decade. this gradual change in trade pattern, with regional economies shifting their export markets from deficit countries like the us to surplus countries in the region, has also been contributing to global rebalancing. 8. we also should not overlook the positive attributes of capital flows. while challenging to manage, capital inflows present important opportunities for boosting broaderbased growth. the key is to channel the capital flows into good uses, and particularly towards productive investments. in this regard, promoting capital market development is important to open up additional channels of funding for long - term investments such as infrastructure. the good news is that the region is already taking steps in the right direction by improving the financial infrastructure of bond markets and expanding the investor base. meanwhile, many economies are also making greater use of public - private partnerships to promote critical infrastructure investment projects. 9. in the face of these significant uncertainties and challenges ahead of us, imf ’ s assessment of the prospects and risks, as well as advice on policy response for the region is particularly important at this juncture. we look forward to the presentation by imf and the dialogue during the panel discussions. 10. thank you. bis central bankers ’ speeches | achieved by market forces. i hope that, looking at the matter from a european perspective, you agree with me. the fact of the matter is that diversity or fragmentation leads to individual vulnerability, and interdependence is synonymous with contagion, particularly financial contagion. this is notwithstanding the low degree of financial integration and varying degrees of financial openness. the ingenuity of the financial community can be relied upon to establish financial linkages, where there is none officially allowed, through which what appears to be unmanageable financial risks can be managed and, consequently, financial contagion can be readily transmitted. the emerging markets of asia provide fertile ground for financial innovation. for example, we hear often that the hong kong financial markets provide a perfect hedge, or more modestly, a proxy hedge, for risks in the mainland of china or the region. there is an element of truth in this. after all, this is one of the roles of an international financial centre. but it does mean that, in asia, the dynamics of financial contagion can be quite complex. for example, financial crises do not necessarily erupt and manifest themselves at source - somebody sneezes and others get pneumonia. so, it is only prudent that asian monetary co - operation should be on the agenda of discussions on asian finance, and i have been urging for greater co - operation for some time. i am therefore glad that there has been increasing attention given to the subject in recent years. but, in terms of actual co - operative initiatives, progress has been slow and the scope rather narrow. to be fair, there is consensus on the need for diversification of financial intermediation channels, for enhancing efficiency and financial stability, and this consensus has been manifested in co - operative efforts to develop the bond markets in asia. there are three clusters of initiatives : " what is driving asian exports? ", hkma, august 2003. • the first is the apec initiative on the development of securitisation and credit guarantee markets, which is spearheaded by three apec member economies, namely, hong kong, thailand and korea, and sponsored by the world bank ; • the second is the asian bond market initiative ( abmi ) of the asean + 3 forum ; and • the third is the asian bond fund initiative of emeap, comprising eleven central banks in the region, which has successfully launched abf1, denominated in us dollars and has been working | 0.5 |
jose manuel gonzalez - paramo : the euro exhibition address by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the opening ceremony for the euro exhibition at the museum fur kommunikation, berlin, 19 november 2009. * * * ladies and gentlemen, distinguished ambassadors and members of parliament, it is a great pleasure for me to be here in berlin, at the beautiful premises of the museum fur kommunikation to inaugurate “ the euro exhibition ”. i would like to thank the museum for its fruitful cooperation with the european central bank, which has given us the opportunity to display our euro exhibition here. this year we are celebrating the tenth anniversary of the euro. let ’ s take a look back at the short but memorable history of our common currency. on 1 january 1999 stage three of economic and monetary union began with the irrevocable fixing of the exchange rates of the currencies of the 11 member states initially forming the euro area. the number of countries participating in economic and monetary union has grown over the years. today, the euro banknotes and coins are legal tender in 16 of the 27 member states of the european union and are used daily by almost 330 million citizens in the euro area. the single currency is used in an area that stretches from cyprus to ireland and from portugal to finland. we are actually celebrating another anniversary this year. it is 20 years since the process of german reunification began and we all remember 9 november 1989 as the day which marked the fall of the berlin wall. let ’ s not forget that berlin itself is a city that occupies a special place in german and european history. indeed, currencies can play an important role in shaping a national identity and the deutsche mark is one of the strongest symbols of german reunification. the foundations for political reunification were laid by the treaty establishing monetary, economic and social union, which came into force on 1 july 1990 and enabled the east german mark to be converted into the highly regarded deutsche mark. these days it is the euro that is shaping a european identity. for many, the euro only became a reality when the euro banknotes and coins first entered into circulation on 1 january 2002, replacing national currencies like the deutsche mark. in the eight years that we have been using the euro in our day to day lives, once complex transactions have now become effortless : there is no need to exchange money within the euro area and transferring money within | another example - which is especially telling of integration - can be drawn from the rapidly expanding new european markets for technology and growth companies. underwriting the initial public offerings ( ipos ) of this type of firm is the kind of service where we should expect the greatest degree of national segmentation, since the companies are usually accessing the capital market for the first time - possibly as captive customers of local banks. however, the new listings during the first months of the present year show that in most cases a foreign institution was present alongside a domestic one. there are significant economies of scale associated with the shift in the dimension of the capital markets from national to euro area - wide. this seems to have already been one significant motive behind the recent bank mergers and acquisitions, also in the case of the deals that have taken place within national borders. although most mergers have been domestic, cross - border deals also increased in importance in 1999. by contrast with the services provided to other financial institutions and large corporations, retail activities referring to personal customers and small and medium - sized firms are still quite strongly confined to national borders. within the euro area, both lending and deposit - taking by banks are largely conducted with domestic residents - 91 % of loans and 87 % of deposits still refer to domestic counterparties. nevertheless, internationalisation is also progressing in this area ; the business with customers located in other euro area countries is growing faster than the domestic business in respect of all major balance sheet items of banks. separation of central banking and supervision in emu i should like to discuss next the relation between central banking and supervision in the new institutional framework defined by the treaty. as i mentioned, the third stage of economic and monetary union introduced a geographical separation of monetary policy and banking supervision - in addition to the possible functional separation of the two functions that already existed in some countries. this is the case because, for the euro area as a whole, banking supervision is now entrusted to institutions that have no independent monetary policy functions ( even if they are central banks ) and the eurosystem has neither direct responsibility for supervising banks nor for banking system stability. the main risk entailed in this institutional setting is the potential absence of an area - wide perspective of the banking and financial sector for the euro area. the national central banks continue to be strongly involved in the supervisory tasks : only in three euro area countries - belgium, luxembourg and finland - is the national central bank not directly involved in banking supervision. in all other eight countries, they are | 0.5 |
, spread swiftly on the entire real sector of the global economy, public authorities of advanced economies took extraordinary actions to ensure financial market functioning and attenuate the financial distress. through central bank actions, low - cost liquidity was injected into the markets, while governments took extraordinary actions to provide backup capital to financial institutions and to support domestic aggregate demand. moreover, some emerging market economies, with robust economies and with an upward share to the global economy, have supported the domestic demand through their stimulating policies and have preserved their economic growth, playing an important role in mitigating the global crisis consequences. along with extraordinary measures taken to withstand the crisis effects in the short run, authorities of advanced economies and international financial institutions have been strongly committed to change the way of global financial system functioning and its regulating superstructure. many financial market regulation and supervision standards are expected to change, aiming at putting necessary boundaries to financial market dynamism and innovations, in order to ensure system ’ s stability and its resilience to various risks. in more details, the goals of these changes will be : strengthen the mechanisms that raise financial system stability ; duly orient the stimuli that determine decision - making in the financial activity and decrease procyclicality in it. changes to the regulatory and supervisory superstructure are aimed at strengthening the institutional mechanism, paying greater attention to systemic risks and global - wide financial institutions. better conditions will be set for supervisory standards convergence and the cooperation among regulatory authorities operating in different jurisdictions will be strengthened. at the same time, the role of international financial institutions will be oriented towards financial crisis management and their resources will be adapted to this end. for many reasons, which converge in ongoing processes of financial integration and economic globalization, no country can pretend to stand beyond these developments. in such a case, what at the very beginning could be perceived as a more relaxing financial environment that would provide a competitive priority, would soon leave the place to recycling of problems that were at the root of this crisis, decreased investors ’ confidence and increased financial and social costs for recovery. naturally, each country will adapt these standards to the degree of current financial system development, its composition and depth, as well as to its outlook. it is important to emphasise that these measures would be insufficient, if not accompanied by more general policies, aiming at diversifying sources that contribute to economic equilibrium growth, financing the economic agents, improving the legal framework of business development and following sound macroeconomic policies. allow me now to deal with the situation of our financial | janet l yellen : pursuing financial stability at the federal reserve speech by ms janet l yellen, vice chair of the board of governors of the federal reserve system, at the fourteenth annual international banking conference, federal reserve bank of chicago, chicago, illinois, 11 november 2011. * * * i am indebted to federal reserve board staff members rochelle edge, andrea kusko, andrew levin, and nellie liang for their assistance in preparing these remarks, which reflect my own views and not necessarily those of others in the federal reserve system. let me begin by thanking the federal reserve bank of chicago for inviting me to participate in this important conference on the role of central banks in financial stability. as you know, the dodd - frank wall street reform and consumer protection act of 2010 ( dodd - frank act ) assigned the federal reserve a central role in the new framework for achieving and maintaining financial stability. i am grateful for this opportunity to explain how we, together with other regulators, have been moving forward to fulfill our new responsibilities. the dodd - frank act instituted substantial changes to financial - sector supervision and regulation in the united states in direct response to the serious deficiencies in the regulatory framework that were revealed, all too painfully, by the financial crisis and the associated deep recession. one key change was the requirement that u. s. financial regulators take a “ macroprudential approach ” to supervision and regulation. in my remarks today, i want to describe how this approach is being put into practice at the federal reserve. i will touch on both our own regulatory and supervisory responsibilities and our responsibilities as a member of the multiagency financial stability oversight council ( fsoc ), which the dodd - frank act established to promote a more comprehensive approach to monitoring and mitigating systemic risk. i should note that an important part of putting the macroprudential approach into practice is establishing a new regulatory infrastructure, including the fsoc and its working - committee structure. in addition, individual regulatory agencies have made organizational changes needed to fulfill their new responsibilities. at the federal reserve, we have reoriented our supervision of large bank holding companies, and we have created a new office called the office of financial stability policy and research, which plays a key role in monitoring financial risks, analyzing the implications for financial stability, and identifying approaches for mitigating identified risks. overview of the macroprudential approach the explicit incorporation of macroprudential considerations into our structure for financial regulation and oversight represents a major innovation | 0 |
competition. the bank should therefore endeavour to keep its customers satisfied by offering superior products and delivering excellent service. today ’ s customers are becoming sophisticated and can only distinguish institutions through quality of service. i have no doubt that you will succeed in this endeavour. i would like to challenge banks in malawi to devise deliberate policies aimed at improving access to credit by our private sector, especially malawians, as this is the only way malawi can sustain its current level of social and economic development. in conclusion, the central bank, as a stakeholder will continue to complement efforts by banks to improve service delivery systems for the betterment of all stakeholders especially the less privileged rural masses who struggle to access banking facilities as most banks concentrate in the urban areas. our guest of honour distinguished invited guests ladies and gentlemen. i thank you all for your attention. | perks ligoya : improving access to credit in malawi speech by dr perks ligoya, governor of the reserve bank of malawi, on the occasion of the official launch of lilongwe branch of malawi savings bank ( msb ), lilongwe, 27 february 2010. * * * our guest of honour, the minister of finance, honorable ken kandodo, mp the chairman of the board of directors of malawi savings bank, mr. joseph mwanamvekha who is also the secretary to the treasury the chief executive of lilongwe city assembly, mr. kelvin m ’ mangisa the chief executive of lilongwe district assembly directors of malawi savings bank here present valued customers of the bank management and staff of the bank here present members of the media distinguished guests ladies and gentlemen : our guest of honour, on behalf of the directors, management and staff of the reserve bank of malawi and indeed on my own behalf, i would like to congratulate the board, management and staff of malawi savings bank limited for their untiring efforts to influence the presence and outreach of the bank. some of us may have read in the papers last week that malawi savings bank moved out of post office premises to occupy modern and spacious office space in ntaja, mangochi and monkey bay. furthermore, those of us who ply the blantyremulanje road via thyolo, may have seen a magnificent branch at bvumbwe complete with modern amenities like an atm. to put the icing on the cake, today we are here to bear witness to the official opening of lilongwe branch. these are major milestones. the initiatives present solid evidence that the bank is well poised to effectively perform its roles relating to savings mobilization and financing of investments in both the rural and urban sectors of our economy. the business and economic environment is looking good for malawi. the imf has just approved a 3 year financial assistance program for the country. this is clear testimony that malawi is pursuing good macro economic policies and fiscal discipline under the visionary leadership of his excellency, ngwazi dr. bingu wa mutharika. government through the reserve bank of malawi is sparing no effort in creating an enabling environment for banks to operate effectively in the country. as a result, more banks have come on the market and are willing to serve the rural, urban and semi - urban communities owing to the ever improving rural infrastructure and conducive fiscal policies. the | 1 |
will be very difficult to reverse. finally, the holding company framework of the bills would keep the federal reserve as the umbrella supervisor. i believe that the fed has an important role to play in banking supervision in order to carry out its responsibilities for monetary policy, economic stabilization, and crisis management. i cannot grasp how we could possibly understand what is happening in banking markets, what innovations are occurring and their implications, and the nature and quality of the risk exposures and controls so critical for crisis management and policy formulation without the hands - on practical exposure that comes from supervision. an umbrella supervisor is needed for complex organizations in order to assure that the entire organization and its policies and controls are well managed and consistent with financial stability. at least for the large organizations, i believe that supervisor should be the federal reserve so that we can play our role as a central bank and international crisis manager. conclusion the rapid changes in banking and financial services markets are creating opportunities and challenges. increased competition in the financial services industry and increased synergies provided by financial services firms promise important benefits to consumers. but the increased size, breadth, complexity, and geographic scope of banking have increased the challenge of managing and of regulating and supervising banks. banks have responded by developing new approaches to measuring and managing risk. now it is time for regulatory standards and supervisory practice to catch up. this catching up must involve updating the legislative framework underlying banking. it must also involve updating the international capital standards that have been the foundation of the regulatory framework. and it may also be useful to reinforce the role of market discipline. working together, the markets, the political process, and the regulators can ensure that we take advantage of the new opportunities while maintaining the safety and soundness of our banking system. | , which by their nature require minimal funding and create minimal risk. these limitations, it seems to me, are crucial for several reasons. banks have a lower cost of funds than other financial entities because of the safety net. as i discussed earlier, this federal safety net, and the subsidy that goes along with it, are provided by the government in order to buy systemic stability. but it has a cost : increased risk taking by banks, reduced market discipline, and consequently the need for more onerous bank supervision in order to balance the resultant moral hazard. the last thing we should want is to extend that subsidy over a wider range of activities, which is, i believe, exactly what would happen if bank op subs could engage in wider nonbank financial activities. not only would that increase the moral hazard - - and the need for bank - like supervision - - but it would also unbalance the competitive playing field between bank subs and independent firms engaging in the same business, a strange result for legislation whose ultimate purpose is to increase the competition for financial services. both bills would require that organizations that conduct both banking and other financial businesses organize in a holding company form where the bank and the other activities are both subs of the holding company. profits and losses of the business lines accrue to the holding company and thus do not directly benefit nor endanger the bank, the safety net, or the taxpayer. the safety net subsidy is not directly available to the holding company affiliates and competition is thus more balanced. moreover, traditional regulators like the sec and the state insurance commissioners still regulate the entities engaged in nonbank activities as if they were independent firms. functional regulation is desirable not only for competitive equity, but is a political necessity and a practical reality in the process of balancing that is required to pass financial modernization. in principle, functional regulation could also be applied to op subs, but the safety net, i submit, would soon create regulatory conflict with that structure. importantly, both bills would prohibit commercial affiliations with banks. there is no doubt that it is becoming increasingly difficult to draw a bright line that separates financial services from nonfinancial businesses ; it will only become more difficult to do so. but, the truth is that we are not sure enough of the implications of combining banking and commerce - potential conflicts of interest, concentration of power, and safety net and stability concerns - - to move forward in this area. better, i think, to digest financial reform before moving in an area that | 1 |
in the negotiations. in this context of uncertainty, within the ssm framework, banks are considered to be responsible for taking the necessary steps to obtain all authorisations required for them to carry out their activities in a timely manner to make sure that they can continue to serve their customers after 30 march 2019. they are expected to present credible brexit plans and to use the possible transition period to implement their plans, not to delay planning. it is acknowledged that adapting to a scenario where the uk becomes a third country is challenging. conclusion to sum up, capital markets - like banks - are facing major challenges at a time of farreaching transformation. one of those challenges is the uncertainty that a structural change such as brexit generates. but capital markets also find themselves at a juncture where, first, efforts made in recent years to reactivate specific markets may start showing results and, second, the european political context is such that there appears to be an opportunity to foster the capital markets union and to contribute to deeper and more integrated markets in the european union. thank you for your attention. 6 / 6 | in all, i would conclude that the financial sector in asia is still lagging behind when compared to other very dynamic and exemplary sectors in the region, such as certain industries, education and technology. i believe that this imbalance may eventually become a drag for the consolidation of a sustained growth path. therefore, the development of the financial system is of central importance for the long - term growth perspectives. under these circumstances, banking reform and restructuring is an important challenge that many asian economies are inclined to face. let me tell you that in spain we know well this challenge and its rewards. the highly successful performance of the spanish economy over the past 20 years cannot be explained without taking into account the significant contribution by the financial sector and, in particular, by the banking system. in turn, the transformation – and improvement – of our banking system in this period has been outstanding. this is evidenced, for example, by its favourable performance in terms of profitability, efficiency and solvency, both on an absolute basis and in comparison with other countries. taking advantage of hindsight, i would like to stress two chief lessons learned from this twenty - year process of modernisation. the first is that regulator and banks have formed a “ joint partnership ”, prompting a fruitful “ virtuous cycle ” and matching goals and efforts in order to attain efficiency and soundness. close communication and constant exchanges of views are the principles currently governing this relationship. the second lesson is that, at the end of the day, there has been no trade - off between profitability and soundness : the competitive capacity of spanish banks has not been dented by supervisory policies. these policies have been oriented towards enhancing the solvency and internal governance of banks, and to increasing the confidence of the public and the markets in the banking sector. however, this transformation has not been painless. it has to be recalled that the spanish financial system had to overcome a deep - seated crisis in the mid - seventies to early eighties. by the end of the 70s, our banking system was weak, closed, corporatist, old - fashioned and highly regulated. such regulation affected many of their operating areas, curtailing competitiveness. interest rates were set administratively and credit institutions were obliged to meet investment ratios to finance certain economic sectors with maximum interest rates. this environment made for weak structures with no incentive to compete and no professional teams or systems to accurately identify and manage risk. at that time a range of new banks were allowed to set up. most | 0.5 |
, which were adapted after hearing their input. other federal reserve partnerships with indian country include initiatives on access to credit ; native community development financial institutions ; financial education programs tailored to early childhood, secondary, and higher education ; workforce development ; housing ; social services ; and elder programs. and as part of our ongoing effort to deepen our understanding of tribal economies, last year, the federal reserve board announced that we had joined the central bank network for indigenous inclusion, along with the reserve bank of new zealand, the bank of canada, and the reserve bank of australia. this is part of our commitment to learning best practices and expanding our international partnerships with central banks that are similarly invested in supporting indigenous people and communities. - 3the federal reserve works for all of us, and our research and analysis must reflect the specific needs and circumstances of all of our communities. i am grateful for our partnership with the national center for american indian enterprise development, and i want to thank you, as well as all our colleagues, advisors, and stakeholders who help us work toward a stable and inclusive economy for all. thank you. | for these effects we cannot predict future asset price movements and we certainly cannot seek to control them. they remain a major source of uncertainty. they also, of course, represent a major potential threat to financial stability which is a necessary concomitant to monetary stability. in the rest of my remarks i should like to comment briefly on the evolving international consensus on the approach to maintaining financial stability. the 1994 madrid declaration, to which i referred earlier, had already welcomed " the growing trend towards currency convertibility and encouraged imf member countries to remove impediments to the free flow of capital. " one might have supposed that the subsequent eruption of the asian financial crisis – which was certainly aggravated, if not provoked, by volatile international capital flows – might have resulted in something of a reaction to further evolution in that direction. in fact, in the midst of the turmoil, in september 1997, the imf's interim committee confirmed the consensus view that : " private capital flows have become much more important to the international monetary system, and an increasingly open and liberal system has proved to be highly beneficial to the world economy. by facilitating the flow of savings to their most productive uses, capital movements increase investment, growth, and prosperity. " in other words, while markets may not be perfect, they are in general the best means we have of allocating financial resources efficiently. the impact of the crisis was instead to give fresh impetus to defining and establishing the conditions that are necessary for financial markets to function more efficiently, and that would help to reduce the risks of and limit the damage from, volatile shifts in market sentiment, with their potentially disruptive effect on both economic and financial stability. it goes without saying that macro - economic stability is our first line of defence. but, beyond that, a huge amount of work has been undertaken in a variety of international fora to develop codes and standards of best practice in a whole range of more specific areas relevant to improving the functioning of the international financial system. the imf has produced codes of good practice on data dissemination, on transparency of monetary, financial and fiscal policies, and guidelines for public debt and reserves management. the main basel committee has put forward proposals for revising its capital accord designed to align regulatory capital requirements more closely with economic capital and has drawn up core principles for effective banking supervision. the basel committee on payments and settlement systems has developed core principles for systemically important payments systems. the international organisation of securities commissions has developed objectives and principles for securities regulation | 0 |
. when making a comparison with the measures of other central banks, people often forget that monetary policy measures, including unconventional ones, have to be adapted to the institutional conditions, economic specifics and financing structure which make up a currency area. measures which are appropriate in one currency area can be ineffective elsewhere. what seems like the first option in one place can be the very last resort elsewhere, without the actual aim of the measures having to differ much from one another. instead, we should ask : would such purchases have the desired effect on the rate of inflation? what “ quantities ” would need to be purchased to have an effect? how long would such effects last? the euro area is characterised by a bank - based financial system which makes it considerably different from more strongly market - based financial systems, particularly in the united kingdom and the united states. this explains our focus on refinancing operations, which have enabled the banking system to overcome liquidity bottlenecks, maintain credit relationships and enter new credit arrangements. our measures from june and september 2014 also serve to support the credit channel. in essence, it is about improving funding bis central bankers ’ speeches conditions for borrowers in the real economy. the same logic can also be applied to the selective purchase programmes for covered bonds and asset - backed securities. the eurosystem is currently faced with 18, soon to be 19, issuers of government securities. should we not take into account during a broad purchase programme of securities the fact that government securities in the euro area are not without credit risk? there are very few shared competencies in fiscal policy. as long as this is the case, the ecb ’ s purchase of government securities is inevitably linked to a serious incentive problem. after all, the required cost - benefit considerations should also take into account the fact that other central banks bought government securities in a different economic environment with considerably higher long - term interest rates. in the euro area, the long - term interest rates on spanish and italian government bonds, for example, are already lower than those from the united states or the united kingdom. it is therefore questionable whether we should “ depress ” interest rates for the securities class even further. moreover, the interest on national government bonds in the euro area doesn ’ t operate as a benchmark for all further refinancing operations, as is the case in the united kingdom or the united states for example. besides, the effect of intervening in capital markets in a bankbased financial system is weaker | path of inflation, even if there is room for discussion about the some of the measures and their design. the list of our crisis management measures is long. in june and september this year we lowered key interest rates further. the main refinancing rate is now just 5 basis points. the interest rate channel has thus been exhausted. for the first time in our history we have resorted to a negative deposit rate in an effort to achieve the desired monetary policy accommodation within the tried and tested corridor system. this justified monetary policy step – which favours investment – was not an easy decision for us, not least because of its possible side effects for the financial sector and for savers. at the same time, we have the tool of forward guidance, which we have used and later reaffirmed : with regard to the inflation outlook, based on current data we expect that the central bank interest rates in the euro area will remain at the current level for an extended period. in addition we have taken a number of targeted unconventional measures which should improve the monetary policy transmission mechanism. one of these is targeted longer - term refinancing operations ( tltros ), with which banks can obtain liquidity for a fixed interest rate for up to four years. we have drafted two purchase programmes, one for covered bonds and one for asset - backed securities ( abs ). the purchase programme for covered bonds started in october. so far purchases of around €16 billion have taken place. we started the abs programme just last week. i anticipate that together the longer - term refinancing operations and both purchase programmes will have a strong impact on the balance sheet of the eurosystem. innovation or imitation every month there are fresh calls for further measures. but is it appropriate to contemplate further measures at this moment in time? under normal conditions, central banks are in a position to ensure price stability in an environment of positive nominal interest rates by means of conventional interest rate policy. once interest rates are at zero, a central bank is left with only unconventional measures in order to fulfil its mandate. central banks all over the world have indeed been anything but idle. in particular they have significantly expanded their balance sheets, and by making changes in their balance sheet structure they have taken various measures to make targeted investments in submarkets affected by liquidity shortfalls, maintain important credit relationships and ensure a functioning monetary policy transmission. bis central bankers ’ speeches we, too, have turned to innovative measures | 1 |
ghana association of bankers - 17th annual working luncheon keynote address by dr. ernest addison - governor, bank of ghana 13th september 2019 kempinski hotel, accra mr chairman ; the executive secretary ; members of the general council ; managing directors of banks ; fellows and associates of the ghana association of bankers ; members of the banking fraternity ; distinguished guests ; ladies and gentlemen ; 1. a very good afternoon to you all and let me extend my warm greetings and welcome you to the 19th annual working luncheon of the ghana association of bankers ( gab ). it is indeed a great pleasure to be invited to address this working luncheon of the ghana association of bankers, bringing together chief executives of banks in ghana. 2. to begin, allow me to highlight the critical role of the banking sector to the national development agenda. the growth experience of the banking industry is necessarily intertwined with that of the economy as a whole. and the industry has necessarily been central to economic policy and structural reforms because a sound and efficient banking system is indispensable for financial stability and indispensable for a healthy and robust economy. 3. mr. chairman, we have gathered here at a time of completion of actions to reform our financial sector and a time when a lot of gains have been made in country ’ s monetary and financial stability, and confidence is being restored. these gains should begin to translate into lower interest rates that ghana pays for issuing debt, as well as lead to further anchoring of inflation expectations at the low and stable levels and financial stability. 4. however, our ability to maintain this confidence depends on the freedom with which the central bank is able to take necessary but unpopular decisions to restore price and financial stability. i would want to say that the bank of ghana has enjoyed considerable political support enabling it to be effective to implement these rather difficult measures to comprehensively reform the banking and specialized deposit taking institutions sectors of the financial system. these have involved, increases in the minimum capital of universal banks, resulting in some cases mergers and acquisitions, to ensure orderly consolidation of the sector. and in some cases involving insolvent institutions without any franchise value, where licenses were revoked. these reforms have rather sadly been misconstrued as being driven by some unseen hands to score political objectives. 5. ladies and gentlemen, i would like to place on record that these difdficult decisions taken by the bank of ghana were based on its technical assessment and judgment of the conditions facing the financial sector. | have replaced typewriters, and electronic libraries are enabling access to a large pool of modern learning and teaching resources beyond the confines of the famed balme library that was once so intimidating for students. 12. under its current administration, the university is making even greater strides pursuing its overall vision of becoming a “ world - class research5 intensive university ”. the vice chancellor ’ s bold and audacious vision to ‘ create a culture that promotes research, teaching and learning, administrative processes and extension activities driven by technology and anchored in humanism ’ have led to the launch of key activities including the ‘ vice - chancellor ’ s programme for enhancing the ug student experience through digitalisation ’. 13. emerging from the ravages of the covid - 19 pandemic, the new emphasis on nurturing resilience : adopting technology, and embracing humanism, is welcome and in the right direction. the pandemic underscored the importance of constant investments into the future to build resilience and strong safety nets in order to reduce inequities and exclusion from our socio - economic development efforts. 14. while technology enabled the adaptations that were necessary to reduce the fallout from the pandemic including the impact on teaching and learning, existing gaps in access to technology introduced disparities in the extent to which some were able to cope with disruptions from the pandemic. for example, students who had no access to electronic devices and / or had no access to cost - effective and reliable internet connectivity to support their online learning were suddenly facing new hurdles in pursuing their educational dreams. 15. there were also gendered dynamics to the impact of the pandemic, such that female lecturers or students were disproportionately saddled with responsibilities for childcare, care of relatives, and housework, with schools closed and labour markets disrupted, while at the same time having to keep up with online teaching and learning. 16. it is against this backdrop that the big push for investments in technology to promote resilience going forward and in a human - centred manner is critical. equitable access to reliable and cost - effective technology will go a long way to promote teaching and learning in a more sustainable manner and ensure than no one is left behind. hence, the recently launched ‘ one student, one laptop ’ ( 1s1l ) programme, where about 120 students have been provided laptops, deserves applause. it is my hope that many corporate bodies and well - | 0.5 |
of development and natural assets. a surplus may be justified by a country ’ s need to have a high level of domestic saving – for example due to an ageing population – but also means that consumption will be held back, thus reducing the demand for other countries ’ exports. however, some underlying problems, such as a too low level of saving linked to a too optimistic view of the future, may be reflected in a weakening of the current account. this can also contribute to generally low interest rates which, in combination with other factors such as shortcomings in the supervision of the financial sector, generate the potential for a financial crisis of the type we have just experienced. the factors that above all led the imbalances to grow in the years before the crisis were above all increased saving in the public sector and the corporate sector in china, together with increased saving in the oil - producing countries. investment, on the other hand, remained at approximately the same level as previously. 8 it appears that the increase in saving exerted a worldwide downward pressure on long - term interest rates, which may have led investors to turn to higher - risk assets in the hunt for higher yields. in the united states, however, saving was low and investment was high partly because of the low interest rates. the low interest rates also stimulated the housing market which, in combination with decades of an china has had a very high investment ratio, but aggregate saving is even higher. bis central bankers ’ speeches expansionary housing policy, led to the build - up of a bubble that eventually burst. many observers therefore believe that the global imbalances were one of the causes of the financial crisis. 9 there are better and worse reasons for current account surpluses and deficits in the 1970s and 1980s, large current account surpluses or deficits were generally regarded as something negative. this period was marked by fixed exchange rates and by the regulation of capital flows across national borders. a deficit was often seen as a sign of an approaching devaluation. however, after the capital markets were deregulated and the exchange rates began to float to a greater extent, the view became more positive. it was assumed that changes in the current accounts reflected an optimal redistribution of the freely - moving capital. in the 2000s, however, we began to hear warnings that, above all, a rapid correction of the imbalances could have serious consequences for the value of the dollar, resulting in rising long - term interest rates, recession and a possible financial | period ahead. 25 the krona does not need to be strengthened, but sweden is still affected by the global imbalances despite the fact that sweden has had a substantial current account surplus for 15 years there is nothing to suggest that this surplus must become a deficit within the near future to see for example lane and milesi - ferretti, 2002. for a more detailed discussion of the long - term development of the krona see lagerwall and nessen, 2009. bis central bankers ’ speeches prevent sweden from accumulating a large net claim in relation to the rest of the world. nor is there anything to suggest that the swedish krona should appreciate in real terms to enable a shift in the current account from a surplus to a deficit. as sweden, as far as we can see, does not have any significant positive net external position, there is nothing to say that the real exchange rate needs to be strengthened for reasons relating to the net position. a general reduction in the global imbalances could, however, have consequences for sweden. apart from the fact that this would reduce the risk of a new international crisis, it would mean that a larger part of global demand would come from those countries that currently have a surplus, for example china, and a smaller part from the united states. it is difficult to know, however, what impact this would have on the demand for swedish export goods. to the extent that chinese households and companies demand different types of goods than households and companies in the united states, this largely depends on whether swedish companies are flexible enough to adapt their production to meet changes in the pattern of demand. the asian countries that have surpluses are a long way from sweden and geo - graphical distance is a factor that has a clear negative link to the propensity of countries to trade with each other. 26 however, there are countries with substantial surpluses that are close to sweden, for example germany. it is therefore not obvious what the overall impact would be on the demand for swedish exports if there was a general reduction in current account surpluses and deficits. it is also conceivable that the united states would import more investment goods if its current account deficit decreased, as this would probably entail an expansion of the export - oriented industrial sector at the expense of the more domestically - oriented service sector. this in turn would entail an increased demand for the type of industrial goods that sweden exports quite a lot of. reduced global imbalances could also en | 1 |
federal reserve's periodic survey of consumer finances ( scf ) suggest that a higher level of education significantly increases the chances that a household will use an electronic banking product. in particular, in 1998, the typical user of an electronic source of information for savings or borrowing decisions had a college degree - a level of education currently achieved by only about one - third of u. s. households. the most recent data from the survey reveal a good news - bad news picture of the financial status of households, providing evidence that we need to reach further to engage those who have not been able to participate fully. for example, while the median real net worth for all families increased 17 - 1 / 2 percent between 1995 and 1998, this trend did not hold true where the head of the household had a high - school level of education or less, family earnings were less than $ 25, 000 annually, or the ethnicity of the respondent was non - white or hispanic. that families with low - to - moderate incomes and minorities did not appear to fully benefit from the highly favorable economic developments of the mid - 1990s is, of course, troubling, and the survey results warrant a closer look. in the details, we find that families with incomes below $ 25, 000 did increase their direct or indirect holdings of stock, and more reported that they had a transactions account. however, they were less likely to hold nonfinancial assets - particularly homes, which constitute the bulk of the value of assets for those below the top quintile according to income. at the same time, one encouraging finding from surveys conducted by the bureau of the census is the increasing homeownership rates for minorities. for example, the homeownership rate for blacks increased from 42. 9 percent in 1995 to 48. 6 percent through the second quarter of 2001. the homeownership rate for hispanics also rose, from 42. 0 percent in 1995 to 46. 1 percent through the second quarter of 2001. this trend may be a sign of improved access to credit for minorities. other recent findings of the scf include a rise in families'median level of debt burden, financial stress ( defined as debt payments that represent more than 40 percent of income ), and incidence of late payments on debt. the findings showed increases in each of these categories across all income and age groups, with the highest levels of financial stress among households headed by people 65 and older and earning less than $ 25, 000 annually. | proposed policy statement detailing the framework the board would follow in setting the countercyclical capital buffer ( ccyb ), ” press release, december 21. buiter, willem h., and nikolaos panigirtzoglou ( 2003 ). “ overcoming the zero bound on nominal interest rates with negative interest on currency : gesell ’ s solution, ” economic journal, vol. 113 ( october ), pp. 723 – 46. caballero, ricardo j., emmanuel farhi, and pierre - olivier gourinchas ( 2008 ). “ an equilibrium model of ‘ global imbalances ’ and low interest rates, ” american economic review, vol. 98 ( 1 ), pp. 358 – 93. carlson, mark, burcu duygan - bump, fabio natalucci, william r. nelson, marcelo ochoa, jeremy stein, and skander van den heuvel ( forthcoming ). “ the demand for short - term, safe assets and financial stability : some evidence and implications for central bank policies, ” international journal of central banking. champ, bruce ( 2008 ). “ stamp scrip : money people paid to use, ” economic commentary. cleveland : federal reserve bank of cleveland, april. fisher, irving ( 1933 ). stamp scrip. new york : adelphi company. goodfriend, marvin ( 2000 ). “ overcoming the zero bound on interest rate policy, ” journal of money, credit and banking, vol. 32 ( november ), pp. 1007 – 35. gordon, robert j. ( 2014 ). “ the demise of u. s. economic growth : restatement, rebuttal, and reflections, ” nber working paper series 19895. cambridge, mass. : national bureau of economic research, february. — — — — ( forthcoming ). the rise and fall of american growth : the u. s. standard of living since the civil war. princeton, n. j. : princeton university press. hall, robert e. ( 2014 ). “ quantifying the lasting harm to the u. s. economy from the financial crisis, ” in jonathan parker and michael woodford, eds., nber macroeconomics annual 2014, vol. 29. chicago : university of chicago press. hamilton, james d., ethan s. harris, jan hatzius, and kenneth d. west ( 2015 ). “ the equilibrium real funds rate : past | 0.5 |
furthermore, we must avail of the efficiency provided by the technology, in sharing our information. a joint web - site can be established, where we can find important information, interpretations, or share its experience regarding supervisory issues or financial stability issues. when mentioning this ways of cooperation, i am not trying to neglect what is already happening and i am mindful of the fact that there is a trade - off between the advantages of such cooperation and its costs. we should also point out that memoranda of understanding ’ s can not act as a substitution for cooperation in practice. it is important we maintain close contacts with our counterparts, on exchanging regular information on general trends and issues of respective banking systems in normal times, as it serves to establish confidence for future cooperation, particularly during distress times. otherwise, such official cooperation agreements will do little in making a real difference. let me conclude by saying that the objective of reaching and maintaining the financial stability is not an easy task but we could contribute a lot in its achievements by enhancing our efforts to make sure that financial market institutions are performing soundly in a stable macroeconomic environment. our contribution can be much more effective if it is properly coordinated regionally. such cooperation will ease our efforts in improving supervision capacities, avoid cross - border regulatory arbitrage and will serve our efforts to meet our objective of integration in european financial markets. we can enrich the modalities of such cooperation, keeping in mind that the basis of good cooperation is established in normal times, through regular contacts. thank you. | financial market has also triggered new ideas on how financial institutions and particularly banks intend to adjust their business volume and size to position themselves better in the marketplace. but this is something where we would like to see a more active and consistent approach, in both establishing active business development policies and bringing in good quality and experienced management in applying those policies. it is indispensable for our supervisory authorities to be informed of the policy of different important financial or banking groups that operate throughout our region. host to host cooperation can help in this regard because some of us enjoy better communication links with the home country supervisory authority and they can share this information with the rest of the supervisory authorities in the region, within ethics and transparency principles. in practise, this can turn out to be a very valuable approach, because these regional foreign banks tend to adopt similar policies in countries with similar characteristics. another area where we could establish a strong cooperation is the discussion that should occur when any of us is adopting certain measures that are intended to control risks that appear from trends in the financial business developments. in return, we would be able to adopt similar supervisory policies, thus reducing damaging regulatory arbitrage possibilities and other risks associated with it. one implication of the supervision / regulation heterogeneity across counties in the region is the ineffectiveness of indirect measures to control for credit growth. therefore finding ways and pushing homogeneity in this regard would at the same time be also important to compensate the lost effectiveness of monetary policy and the eventual demand pressures. there are also a few other ideas that stress the importance of pre - emptive regional cooperation, in bringing us as a region closer to fulfilling our target of european integration. by setting up and pursuing coordinated financial market development policies, we help to integrate our national financial markets into the international financial markets, and pave the way for other economic and social reforms to follow. the modalities of such cooperation vary. ad - hoc periodical meetings of governors in the region, supported by more frequent meetings in a technical level to support the discussion agenda, could be one way of approaching the objective for stronger cooperation. in addition, through a more consistent communication, we can try to identify particular issues which are relevant for our regional financial markets, and pose those issues to our counterparties, being common home country authorities, other supervisory authorities where we turn for assistance, or even professional organizations where our supervisory authorities participate. i am sure our concerns can be taken more seriously if raised as a region. | 1 |
and sound financial foundations, aggregate demand has been weak during the first nine months of 2012. both domestic and foreign demand suffer from high uncertainty, relatively tight lending standards, and limited space for discretionary and stimulating policies. in the domestic context, the economy continues to face relatively low consumption and private investments and an absent stimulus by the public sector resulting from the orientation of the fiscal policy towards maintaining long - term stability of the public debt. bis central bankers ’ speeches on the other hand, the banking and financial system remains sound and liquid and capital indicators are at relatively satisfactory levels. the activity of the banking sector continues to be strongly supported by the increase of publics ’ deposits. banks have reinforced their capital position to boost resilience against risks arising from banking operations. as at the end of june 2012, the capital adequacy ratio stood at 15. 6 %. credit developments, however, remain a problem that is subject to the performance of economic activity and expectations for the future. slowdown of economic activity and decline of demand for investments and consumption by businesses and households are determinants of private sector credit and credit quality performance. on their side, banks have evidently increased their prudence as regards lending. periodic stress tests show that the banking sector is resilient and can withstand any adverse events to economic performance. however, we are aware that the banking industry is facing difficult challenges. besides recovery of economic activity and confidence for the future, improvement of credit quality requires also the completion of legal issues to enable and facilitate collateral execution. selling impaired assets at their real market value is the starting point of the process for making financial correction and enriching the private sector ’ s balance sheets and the financial system a whole. cleaning up balance sheets would promote economic activity through consumer investments, by ensuring a constantly improved credit quality. currently, the mutual influence of economic activity and credit quality is the main concern to monetary policy. efficiency of successive interventions by lowering the key interest rate is overshadowed by negative expectations. consequently, the effects of business and household consumption and investments on domestic demand are not at the desirable level. in spite of these problems, economic growth remains in positive territory, but below the potential. according to our estimates, it will remain positive even in the future. economic and financial operators ’ inflation expectations remain anchored around the bank of albania ’ s target. good liquidity condition and capitalization of the banking sector, and stability of macroeconomic indicators have led to harmonised economic policies for maintaining the status quo | to firms with growth potential and lending without conventional collateral or guarantees. for the latter, the lending method that is considered most likely is asset - based lending ( abl ). abl takes firms ’ assets that are closely tied to their businesses – such as their inventories, equipment, and machines, as well as accounts receivables – as collateral. abl currently plays a limited role in japan but is a quite popular lending method in the united states. the greatest merit of abl is that it enables firms that do not have sufficient real estate collateral or corporate managers ’ personal assets to raise financial resources. for example, start - up firms tend to have a high ratio of accounts receivables to total assets. they will be able to raise funds for business expansion more smoothly if they can make use of their accounts receivables as collateral. abl is said to be more time - consuming compared with lending against real estate collateral. viewed in another way, however, the process of utilizing abl allows a borrower firm and a financial institution to take more time and have closer communications regarding the characteristics and future vision of firms ’ businesses. this will encourage a borrower firm to make business decisions based on more accurate analysis of its growth potential and profitability. furthermore, the bank has taken various measures in terms of supporting the disaster areas. one example is the funds - supplying operation that provides financial institutions in disaster areas with longer - term funds at a low interest rate, with the aim of supporting these institutions ’ initial efforts to meet demand for funds for restoration and rebuilding. going forward, in the phase when demand for funds for the purpose of restoration and rebuilding becomes full - fledged, the bank will examine how to provide additional support appropriately as the central bank, based on the specifics of such demand, measures by private financial institutions, and support from the government. in this manner, the bank has continued to make various efforts on the monetary policy front, taking into account the time horizon of short - term and medium - to long - term periods. the bank will continue to carefully examine the outlook for economic activity and prices, and take appropriate actions as necessary. concluding remarks i see i am running out of time, so i would like to conclude my remarks. the earthquake has posed additional challenges to japan ’ s economy, which had already faced significant problems to tackle. it is true that japan ’ s economy is facing very difficult challenges. however, we should avoid falling into pessimism | 0 |
to ensure that risks to price stability do not materialise, thereby making an ongoing contribution to sustainable economic growth and job creation. as regards fiscal policies, while the budgetary results reported for 2005 are mostly better than anticipated a few months ago, the budget balances planned for 2006 imply no significant progress in fiscal consolidation for the euro area as a whole. given the economic outlook, a faster pace of deficit reduction is necessary. delaying fiscal consolidation in times of improving economic activity implies risks for the medium term, as has been observed in the past. speeding up deficit reduction on the basis of credible and fully specified measures as part of a comprehensive reform programme would help to enhance confidence in the medium - term prospects of the euro area and prevent a repeat of past experiences, when complacency in good times contributed to persistent budgetary disequilibria. as regards structural reforms, the governing council welcomes the call by the european council, which met in brussels on 23 - 24 march 2006, to maintain the momentum of the re - launched lisbon strategy for growth and employment. as emphasised by the european council, the focus should now be on ensuring the effective, timely and comprehensive implementation of the measures agreed in the national reform programmes presented by member states and, if necessary, on strengthening them. these measures are designed to, among other things, enhance the sustainability and quality of public finances, promote flexible labour and product markets, support a favourable business environment, and ensure a fully operational eu internal market, including the markets for energy and services. applying comprehensive structural reforms is of particular importance for the euro area countries, in order to increase wage and price flexibility and the resilience to shocks, facilitate structural adjustment, raise potential output growth and job creation, and reduce price pressures, thereby facilitating the task of the single monetary policy. we are now at your disposal for questions. | developments, according to eurostat ’ s flash estimate, annual hicp inflation was 2. 2 % in march 2006, compared with 2. 3 % in february and 2. 4 % in january. in the short run, inflation rates are likely to remain above 2 %, with the precise levels depending largely on developments in the more volatile components of the index. beyond the short term, changes in administered prices and indirect taxes are expected to significantly affect inflation in 2006 and 2007, and an upward impact may also be expected from the indirect effects of past oil price increases. at the same time, wage dynamics in the euro area have remained moderate over recent quarters and growth in wages is expected to remain contained, partly reflecting strong global competitive pressures, particularly in the manufacturing sector. over the recent past, moderate wage trends have helped to dampen domestic inflationary pressures ; looking ahead, it is crucial that the social partners continue to meet their responsibilities in this regard, also in the context of a more favourable economic environment. risks to the outlook for price developments remain on the upside and include further increases in oil prices, a possibly stronger pass - through of oil price rises into consumer prices than currently anticipated, additional increases in administered prices and indirect taxes, and – more fundamentally – stronger wage and price developments than expected due to second - round effects of past oil price increases. turning to the monetary analysis, the latest developments confirm that the stimulative impact of the low level of interest rates remains the dominant factor behind the high trend rate of monetary expansion. moreover, the annual growth rate of credit to the private sector has continued to increase over recent months, with borrowing by households – especially loans for house purchase – and nonfinancial corporations rising rapidly. overall, strong monetary and credit growth in an environment of ample liquidity in the euro area continues to point to upside risks to price stability over the medium to longer term. to sum up, annual inflation rates are projected to remain elevated in 2006 and 2007, and the economic analysis indicates that the risks to price stability remain on the upside. given the strength of monetary growth and the ample liquidity situation in a context of improving economic activity, crosschecking the outcome of the economic analysis with that of the monetary analysis supports the assessment that upside risks to price stability over the medium to long term prevail. it is essential that medium - term inflation expectations remain firmly anchored at levels consistent with price stability. accordingly, the governing council will continue to monitor very closely all developments | 1 |
this is a good sign. thank you for your attention. 4 / 4 bis central bankers'speeches | as the outlook for the norwegian economy has improved. economic activity is now approaching a normal level, and inflation is projected to move up in the period ahead. our latest analyses, presented in march 2018, suggest that the key policy rate will most likely be raised after summer 2018. at the same time, the executive board has given weight to the consideration that uncertainty as to the effects of a higher interest rate suggests a cautious approach to interest rate setting. chart : consumer prices looking at the wider picture, we can, 17 years after inflation targeting was formally introduced in norway, draw the conclusion that the system has functioned well. we can now look back on a quarter of a century of low and stable inflation. chart : fluctuations in output and employment a monetary policy oriented towards low and stable inflation has not compromised stability in the real economy – in fact, the opposite is true. employment variability has been lower since 2001 than in previous periods, despite the substantial shocks that have impacted the norwegian economy. 2 / 4 bis central bankers'speeches however, lessons have been learned along the way. initially, most inflation - targeting central banks emphasised the importance of steering inflation towards the target within a clearly defined time horizon. experience of this regime provided useful insight, and ambitions were later adjusted. international events, such as falls in global commodity prices and other major changes in export and import prices, can have a considerable impact on small open economies. this can result in wide fluctuations in inflation that cannot be counteracted without having a substantial impact on the real economy. norges bank has addressed this concern by giving greater weight to output and employment. the inflation target horizon has been extended and monetary policy has gradually become more flexible. chart : monetary policy mandate the benefits of flexible inflation targeting were emphasised when the government in march 2018 presented a new regulation on monetary policy. the new regulation specifies that inflation targeting shall be forward - looking and flexible, so that it can contribute to high and stable output and employment and to counteracting the build - up of financial imbalances. in the interest of long - term economic stability, fiscal policy, monetary policy and the wage formation process must complement each other. a shared understanding of how these components interact is very important. monetary policy ’ s most important contribution to economic stability is to maintain monetary value through low and stable inflation. both too high and too low inflation can involve costs to society, with arbitrary wealth redistribution, underinvestment and scarce resources that may be misallocated or | 1 |
box - ticking ” attitude. therefore, rather than focusing on establishing ethics offices as a “ second line of defense ”, we should focus on the ethics of the “ first line of defense ” : the bankers themselves. another option would be to impose more rules on the financial sector. of course, some of the extra regulation that has been introduced was necessary. for instance, the basel iii rules which provide that capital ratios have to be raised. yet, in my opinion, extra rules cannot solve all of our problems. for every new rule will lead to creative solutions to evade that rule. by making new rules, we won ’ t make bankers less greedy, nor will we make them more ethical. instead of overregulating every detail, we should focus on the decisions bankers make. this point – how decisions are to be made – deserves to be discussed in greater detail. a bank is governed by a board of directors and by senior management. these officers decide on the bank ’ s strategy and key targets. their decisions have far - reaching consequences for the bank ’ s operations, as the example of “ managing for value ” demonstrates : a misguided decision may have undesirable effects. this considered, i would like to focus on the way bankers should make their decisions. the classical virtue “ prudentia ” – in modern english, “ prudence ” – can help us here. prudentia is the virtue that stands for “ making careful decisions ”. it requires a capacity for reflection, careful analysis, and balanced judgment. this sounds like a goal worth striving for, but what does it mean in banking practice? in banking practice, it means that, instead of focusing on one interest in particular, bankers have to balance all of their stakeholders ’ interests. they should neither focus on their shareholders alone, nor on a specific category of their clients. bankers practicing prudence take their societal responsibility to heart, which is : to be a trustworthy intermediary. bis central bankers ’ speeches therefore, to be “ prudent ” decision - makers, bankers should : • scan which interests are at stake, • balance the different interests involved, • reflect on the consequences of their actions, • and show themselves “ moderately risk - prone ”. by making careful and balanced decisions, and reflecting on their societal responsibility, bankers will regain the trust they need to function optimally. what does dnb do as prudential supervisor to improve the “ prudence ” of | bankers? in recent years, we have focused more heavily on good corporate governance, and expanded our supervisory scope to include business models, behavior and culture. by looking closely at business models, we want to increase our understanding of how banks actually make money and become better able to discern high - risk strategies. in our supervision of behavior and culture, we aim to make banks ’ senior management more capable and more careful decision - makers. let me give you two examples. first, our “ fit and proper ” tests for aspiring board members have become more thorough. we have added requirements such as : • being sensitive to external developments ; • being able to take balanced decisions ; • and taking responsibility for the outcomes. we have done so as we want banks to have more competent decision - makers on their boards. second, our supervision of governance now also covers board effectiveness. we measure this aspect by observing the behaviour of board members during meetings. we analyze their performance, and reflect on the way they operate, asking challenging questions like : • is the chairman too dominant? • is the board really “ in control ”? • how does the board communicate? and • is there room for differing points of view? • through these new developments, we aim to foster prudent decision - making and stimulate reflection. ladies and gentlemen, i ’ m going to summarize the main points of my speech. i ’ ve approached the theme of this gathering, “ ethics and the crisis in the financial sector ”, from my perspective as executive director responsible for prudential supervision. i ’ ve made a case for how banks can restore confidence as an essential building block for a healthy economy. the remedy for the current confidence crisis neither lies in bashing bankers, nor in a charm offensive, nor in establishing ethics offices, nor even in imposing more rules. bankers need to become prudent decision - makers again. this will restore the balance required for them to function optimally. bis central bankers ’ speeches this is how i look at the issue. i ’ m aware that others may hold different views and will be happy to answer questions during the panel session. finally, i wish all students and faculty members gathered here good luck in their new academic year and hope to see some of you back at de nederlandsche bank one day, when your career takes you where maybe you hadn ’ t expected to go. ; ) thank you. bis central bankers ’ speeches | 1 |
window of opportunity to take preventative and proactive action may be closing faster than we realise. impacts from damage are alleviated by insurance. insurers play a critical role in society, providing individuals and businesses with security and confidence in their daily lives and activities. the insurance market, however, is facing major challenges. without adaptation, rising physical risks have clear implications for insurers and policyholders : more frequent and severe events will bring more claims, higher premiums and lower insurance coverage in risky areas. furthermore, diversifying country - level risks through the reinsurance market is becoming more costly and restrictive17 given that climate risks are rising in many regions simultaneously. recent large increases in household insurance costs in the united states could be a warning sign for other regions. while it is important to acknowledge these challenges, it is equally important to highlight that there are still opportunities for insurers to continue to play a crucial societal role, create sustainable business models, and remain relevant in this fast - changing world. in areas where defences are neither economically or technically feasible, or in situations where defence infrastructure will take many years to complete, lessons from international policy innovations may help prevent a squeeze on underwriting here. consideration could be given to interim measures that could mitigate flood risk until defence infrastructure is in place. reducing risk through adaptation allows insurers to retain a risk - based pricing approach18 and potentially expand risk appetite and offers of insurance. this might be achieved through recognition of measures put in place by policyholders to lessen the risk. similarly, public - private collaboration, whether it is through provision of expertise or another mechanism such as a partnership, also enables insurers to retain a risk - based approach to pricing. it may be possible to set up risk sharing / solidarity schemes where funds are pooled to support insurance provision in risky areas. adaptation in the financial sector the financial sector must also adapt from within, which means embedding climate risks into our models, systems, processes and policies. climate change has forced the financial sector to consider risk over considerably longer time horizons. for example, up until very recently, a bank stress test would explore resilience to economic shocks over the course of a typical business cycle. with climate change, we are now looking at risk over decades rather than years. this brings new challenges, and has required new data collections and new models. the financial sector ’ s information environment is also adapting to the transition, and we appear to be in the midst of a | technologies, and these investments will probably require external financing. for the financial sector, these ‘ transition risks ’ encompass the negative changes to business costs, revenues and profits as a result of future climate - related shifts in consumer or investor sentiment or of government policy. like physical risks, transition risks are also unevenly spread, and will be higher in sectors with carbon intensive inputs, processes or outputs. some highly intensive sectors will be required to make very dramatic changes to their business models if they are to survive in the new, sustainable economy. there will also be winners in the coming decades. sectors and countries that offer loweremission products and services will be more resilient. transition risk differences are prevalent for households, too : a family living in an apartment within walking distance to services will have a considerably less expensive transition than one in a large, isolated, detached house. it is important that transition supports consider these cost inequalities if we are to bring everyone along on this journey, although we must accept that some types of business models and assets may no longer be viable commercially. planning for uncertainty to plan a safe path through the 21st century we must forecast risk. while the world will reach net zero this century, there is considerable uncertainty regarding when exactly. it is, however, certain that the frequency and severity of weather and climaterelated damages will increase over the next forty or so years, and sectors and communities will need to adapt to these changes. how much we need to adapt to physical risks depends on which damage pathway the world is on, which of course depends on emission reductions outside our borders. while ireland ’ s greenhouse gas emissions per capita puts us in the top fifth of most emitting nations, our small population and land area means we play a minor role in total global emissions ( about one tenth of one percent in 2022 ). 5 ireland is therefore a ‘ physical risk taker ’ and we must monitor global trends to understand our own future physical risks. moreover such statistics should not be used to reduce the urgency of meeting our own mitigation targets : the net zero objective will, regardless of what happens abroad, decouple our economy from fossil fuels and put us on the lowest risk pathway. over the coming decades, it is of course vital that all countries push towards targets together, if we are to avoid a very dangerous ‘ prisoner ’ s emissions dilemma ’ where the pursuit of individual country gains leads to worse long - run outcomes for all. limited past global progress – both | 1 |
- term inflation expectations are little changed. that said, taken together, the evidence suggests that measures of expected inflation are at the lower end of a range that i consider to be consistent with our price - stability goal of 2 percent pce inflation. while my baseline outlook for growth, employment, and inflation is a positive one, a number of crosscurrents that are buffeting the economy bear careful scrutiny. global growth is slowing, particularly in china and europe. global policy uncertainty remains elevated. and financial conditions have been volatile, making efforts to extract signal from noise more challenging. monetary policy as i have indicated in recent speeches, monetary policy at this juncture needs to be especially data dependent, with the federal funds rate now in the range of federal open market committee ( fomc ) participants'estimates of its longer - run neutral level. moreover, with employment and inflation now at or close to our dual - mandate objectives, the fomc in its january statement indicated it can afford to be patient as we assess the need for further adjustments in our policy stance. 2 going forward, we need, i believe, to be cognizant of the balance we must strike 1 / 2 bis central bankers'speeches between ( 1 ) being forward looking and ( 2 ) maximizing the odds of being right given the reality that the models that we consult are not infallible. for example, were a model to predict a surge in inflation, a decision for preemptive hikes before the surge is evident in actual data would need to be balanced against the considerable cost of the model being wrong. given muted inflation and stable inflation expectations, i believe we can be patient and allow the data to flow in as we determine what future adjustments to the target range for the federal funds rate may be appropriate to strike this balance. we also decided at our january meeting to maintain our current operating regime a " floor " system - - for implementing monetary policy. 3 the fomc will continue to set the stance of policy by establishing the target range for the federal funds rate. the interest on excess reserves rate will be our primary tool to keep the federal funds rate in the target range. in this regime, we will provide an ample supply of reserves in the banking system to ensure that we remain on the flat portion of the reserve demand curve and that the federal funds rate is insulated from shocks to reserve demand and supply. with this decision on our operating regime made, the committee can now decide on the appropriate | joachim wuermeling : digital transformation - opportunities and risks for the financial sector speech by prof joachim wuermeling, member of the executive board of the deutsche bundesbank, at the banking and corporate evening ( banken - und unternehmensabend ), munchen, 23 may 2019. * * * 1 introduction ladies and gentlemen, my speech today is about digital transformation. we have all heard about this subject before, and banks and savings banks are currently in the midst of change – i doubt i need to elaborate on that for the benefit of anyone in this room. what i would like to do today is raise a number of questions that concern not only individual enterprises but also the evolution of the sector as a whole and thus its regulatory framework, too. we have to realise that many of the developments that are still individual projects at present and are taking place gradually are part of a major upheaval. what is more, it is up to us to help shape this transition, which some are calling the fourth industrial revolution. this is challenging, because our objective – successfully shaping digital transformation in the financial sector – is in flux and the processes involved are complex. so i am not here simply to lecture you on this topic in my supervisory capacity ; rather, i am in favour of all parties involved – banks and supervisors – working together to think about how this is all going to evolve. i would like to talk to you today about three aspects of digital transformation : first, the opportunities ; second, the risks ; and, finally, the matter of the right framework. 2 opportunities presented by digitalisation let ’ s first take a look at the opportunities. i ’ m not talking about business specifics here, but rather developments in the wider context. the term “ digitalisation ” is difficult to grasp, and the language in which the term is wrapped obscures what it is ultimately really all about : innovation that translates into productivity and benefit. i say this because, generally speaking, digitalisation and technological progress do not automatically lead to productivity growth. in order to unleash a technology ’ s potential, we need to get to grips with the technology itself, what we ourselves do with it as well as the environment in which it operates. this is where the actual innovation takes place. this is what i am alluding to when using the term “ digital transformation ”. essentially, the idea is to re - evaluate the things we do every day. for the most part, we | 0 |
stephen s poloz : opening statement before the house of commons standing committee on finance opening statement by mr stephen s poloz, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 29 october 2013. * * * thank you for the opportunity for tiff and me to be with you today to discuss the october monetary policy report, which the bank published last week. the bank aims to communicate our objectives openly and effectively and to stand accountable for our actions before canadians. one of the best ways to do this is through appearances such as this one. allow me to spend a few minutes on the report ’ s highlights. i ’ d like to flag some important changes introduced with this issue. • we are modifying the report ’ s format and style in order to explicitly capture the uncertainty that is inherent in our outlook. the goal is to present to canadians a reflection of the evolution of the risks to the inflation outlook that are embedded in our policy, rather than simply compare a snapshot of the current forecast with that of our previous forecast. • the picture is not always perfectly clear and so we have added new measures of ex ante, or before the fact, uncertainty to our five most critical projection variables. we have added “ rule of thumb ” ranges around the base - case projection for the growth of canadian and u. s. gdp and for canadian total cpi inflation, as well as for the current level of the output gap and the growth rate of potential output in canada. • with this, we are reminding ourselves – and those who watch us – that economic projections are subject to considerable uncertainty and are revised over time as new economic data become available. • our policy formulation process is more of a process of risk management rather than one of engineering. in our policy deliberations, we evaluate and assess all of the risks, both positive and negative, and use judgement to determine the balance among them. • as is customary in october, we reviewed the forecast for potential output. due to lower - than - expected labour productivity growth in the past year, as well as the delay in the expected pickup in demand for exports and investment, the forecast for potential output growth has been revised down slightly. • looking forward, we expect the global economy to expand modestly in 2013. however, its near - term dynamic has changed and the composition of growth is now slightly less favourable for canada. • uncertain global and domestic economic conditions are delaying the pickup in exports and business | lisa d cook : exploring careers in economics welcoming remarks by ms lisa d cook, member of the board of governors of the federal reserve system, at the " exploring careers in economics " conference, sponsored by the board of governors of the federal reserve system, washington dc, 4 april 2023. * * * good afternoon, and welcome to " exploring careers in economics. " i am disappointed i cannot be with you in person, but i am thrilled you will hear from boston fed president susan collins. she is an outstanding colleague and economist, a good friend. you are in for a fantastic discussion. this event has a fairly self - explanatory title - exploring careers in economics. but the broad range of opportunities is anything but straightforward. economics touches every aspect of daily life, and you can see its impact in the world outside your door - and inside as well. some of you are veterans of economic study, while some of you are just " econ - curious. " either way, i hope that when you sign off today, you will have a totally different view of what economics can offer you. i was raised by academics in a college town, but even that access and insight did not give me the full picture of what was out there. a career in economics can take you in directions you never thought possible. we live in a constantly changing world, which means there is always new research to undertake, questions to be posed, and ground to break. my own studies allowed me to investigate everything from the impact of patents on the nation's economic growth to the banking system in post - soviet russia. they also took me to the archives of the kremlin and to university in the united kingdom and senegal. and that was just during my education! my career has taken me all over the globe. economics can take you just about anywhere, figuratively and literally. so i do hope that we do a good job of showing you the world of possibilities in the field. because economics needs you. any field that studies the behavior of an entire population, as economics does, should reflect the population it studies. we all come to the table with different experiences and backgrounds, which give each of us unique perspectives. your generation has seen two once - in - a - century economic events within two decades. your economic experiences are different from anyone else's. that insight and understanding will be critical to policymakers. the economics profession needs your perspective. future fed staff, governors, and chairs may | 0 |
the cost of building the physical infrastructure required for traditional banking. that said, it should be noted that these benefits come with new risks. for example, large - scale system problems and cyber - attacks can negatively affect corporate management and the daily lives of individuals. privacy protection is important, and we should be mindful that these new technologies might be used for money laundering and tax evasion. moreover, policy makers should consider carefully the possible impact of the broader use of digital technologies on financial stability and the effectiveness of monetary policy. authorities should endeavor to maximize the benefits of new technologies while appropriately addressing the accompanying risks, through close cooperation, both domestically and internationally. b. achieving sustainable growth the second topic is the achievement of sustainable growth. since the industrial revolution, the global economy has undergone remarkable development. at the same time, however, a number of issues have emerged that require international cooperation to solve, such as those related to poverty, inequality and the environment. in 2015, the united nations adopted the sustainable development goals ( sdgs ), a set of goals to be achieved by 2030 targeting poverty, the environment, and other issues. here, i would like to provide two observations on social and environmental issues in relation to achieving sustainable growth. first, the enormous effort and cost involved in dealing with social and environmental issues is justified by the expected returns. in other words, there is no trade - off between solving social and environmental issues and achieving economic growth. rather, they are complementary to each other. for example, significant progress has recently been made in reducing poverty. according to the world bank, in 1981, more than 40 percent of the world's population was living in extreme poverty, but the figure has fallen to around 10 percent in 2019. 3 while economic growth leads to a decline in the poverty rate, the reduction of poverty and the resulting inclusive growth will in turn enhance economic growth, leading to a further reduction in poverty. the relationship between economic development and poverty reduction can be regarded as mutually - reinforcing. consensus has not yet been reached on the causal relationship between income disparity and growth rate in economies with a low poverty rate, as much theoretical and empirical research shows differing results. 4 that said, i believe an increase in the number of people who are given the opportunity for higher education and to learn advanced skills would lead to an accumulation of human capital, positively affecting economic growth from the supply side. with the digitalization of the economy, human capital becomes more important as the industrial | aging of the population occurs over a shorter period and at a faster pace than you might expect. 8 the good news about demographic change is that we can forecast prospective changes well in advance and with a certain degree of accuracy. in addition, emerging countries can learn from the precedents set in those advanced countries that are already experiencing problems related to an aging population. it is not too early to start preparing for prospective aging. although population aging has a wide range of economic implications, i would like to focus today on one of the main issues associated with aging, the pension system, by reviewing national institute of population and social security research, " population projections for japan. " japan's experience. the pension system is at the core of the social security system. as the pension system has a significant impact on people's lives, careful and detailed consideration is necessary before implementing reforms. for over 20 years in japan, we have been discussing various issues, including how to secure the financial resources necessary to support the pension system, and have made steady progress with reforms. the japanese pension system is largely based on the so - called pay - as - you - go scheme, where benefits for the elderly are paid out of premiums collected from the contemporary working age population. therefore, the aging of the population demands a regular review of the balance between premiums, benefits and government subsidies. after long and intensive discussion, a number of reforms have been adopted, including a raise in the pension age and an increase in the subsidy from the government. a mechanism called the " macroeconomic slide " has also been introduced, which automatically adjusts the amount of pension benefit by taking into account changes in the number of people insured and average life expectancy. at least once every five years, the government must carry out a comprehensive review of the financial conditions of the pension system, including its long - term prospects. the aging of the population has huge implications not only for the pension system but also for public finances in general. expenditure on health and elderly care has increased significantly in japan. the proportion of social security expenses to total annual expenditure has soared from around 14 percent in 1970 to around 35 percent at present. maintaining the credibility of public finance by ensuring medium - to long - term fiscal sustainability is essential. to this end, planning and reviewing the social security and tax system so that they can adapt to demographic changes is critically important. maintaining economic vitality amid an aging and shrinking population is also a critical issue. from a macroeconomic perspective | 1 |
jean - claude trichet : the euro area and its monetary policy address by mr jean - claude trichet, president of the european central bank, at the conference “ the ecb and its watchers ix ”, frankfurt am main, 7 september 2007. * * * ladies and gentlemen, television dramas tend to be made about medical rescue teams, hospital emergency rooms and heart surgeons, not about the internists who regularly take your blood pressure and check your cholesterol. a central bank has one emergency room which – sporadically – tackles casualties of car accidents and applies angioplasty and bypass surgery. these are, for example, the exceptional decisions on the refinancing on the money market to help it normalize its functioning. but these activities – critical as they are to the functioning of the system – make up a small fraction of their duties. central banks are for the most part made up of legions of internists who stare at your x - rays and engage in sober consultations. at the end, they write diagnostic statements based on regularities and new facts – facts that can change your conditions in the longer run. we call regularities the “ deep structure of the economy ”. we call the new facts “ shocks ”. the deep structure is formed by economic institutions, which take considerable time to develop. so central banks, not unlike doctors, take them largely as given. shocks occasionally surprise economic agents, causing them to revise their medium - term outlook. because constant monitoring of regularities and new facts that can change the outlook in a long - lasting fashion is what we practice most often in central banks, central bank watchers should resist the temptation to focus on the drama of emergency medicine. central banking is prevention and regular, unglamorous assistance – the better part of cure. it is concerned always with life - time health conditions, only occasionally with emergency interventions, and never with the application of quick fixes. so i will concentrate on structure and facts that can change the outlook in a long - lasting fashion, not on the drama. and i will give you a diagnosis and draw an inference for monetary policy. diagnosis the diagnostic part of my observations has two elements. one is a basic stylised fact that can be shown – like an x - ray – in a simple picture. the second element consists in a substantial body of evidence on the deep economic structure that forms the landscape in which monetary policy in the euro area has to operate. i will argue that | area inflation has been appreciably lower and more stable, thus benefiting consumers and allowing businesses to make decisions within an economic environment unclouded by the “ fog ” that inflation inevitably creates. in the volatility scatterplot, you would agencies – all data are from the international monetary fund ’ s international financial statistics database. we have considered all the economies for which we could obtain data for both cpi inflation and real gdp. the average value of euro area detrended output under emu, at 0. 5, is exactly equal to the median of the distribution across countries ( see the left - hand panel of the chart ). to put it differently, over the period following the start of emu, half of the countries in the sample experienced, on average, weaker economic conditions, while the other half had stronger pressures on economic resources. it could be noted that the favourable performance of the euro area might be due in part to the fact that the euro area is a collection of economies still lacking complete economic integration and thus over different cyclical phases. however, we have evidence of an increasing synchronisation of cycles within the euro area, which would weaken the argument. find the euro area at bottom - left corner, close to the zero point : low inflation volatility has not come at the cost of larger swings in activity. now, moderate real and nominal volatilities are hard to square – at first sight – with the second element of my diagnosis : a structural environment in the euro area characterised by pervasive rigidities. while the sources of structural rigidities in the euro area are manifold, i will single out one dimension on which we have access to high - quality information, nominal rigidities. here i can build on an extensive body of empirical research into price flexibility that has been assembled by staff of the european central bank ( ecb ) and of the entire european system of central banks in a monumental analytical effort to identify the main microeconomic facts on which the workings of emu are founded. 3 this research comes to one main conclusion. in the euro area, prices are distinctly less flexible than, say, in the united states. prices change infrequently. the frequency of price adjustments – the share of prices in a representative sample of product categories that are changed each month – is low relative to the us record [ table 1 ]. the average duration of a consumer price spell – a measure of the time that it takes for | 1 |
brian wynter : economic issues and short - term trends for jamaica speech by mr brian wynter, governor of the bank of jamaica, at the quarterly press briefing, kingston, 15 february 2011. * * * ladies and gentlemen : welcome to this the release of the first quarterly monetary policy report for 2011. my presentation will follow the usual format. there will be a brief review of macroeconomic developments in the december 2010 quarter, followed by the bank ’ s view of the near - term prospects for the economy. in this report we have also included an article on inflation targeting, an alternative monetary policy framework that has become increasingly popular in recent years because of the success achieved in reducing inflation. this article comes in light of the success the government has had to date in its effort at fiscal consolidation and the commitment to a fiscal responsibility framework, which are important pillars of an inflation targeting framework. we encourage you to read the article and let us have your feedback. recent developments when we last met on 10 november 2010, i indicated that the process of transformation was continuing in line with the objective of lower volatility in domestic prices, lower interest rates and stable financial markets. the objectives set out in the financial programme continue to be met. to date, the government and the boj have met all the quantitative targets under stand - by arrangement ( “ sba ” ) with the international monetary fund ( “ imf ” ) and are set to meet those for end - december 2010. the reviews that the country has received from the imf have been encouraging and we continue to make progress on the structural benchmarks which are aimed at increasing efficiency in fiscal management and the financial system. in the context of these developments, the outlook for inflation remains favourable, interest rates continue to trend down, the foreign exchange market remain relatively stable and net international reserves continue to be robust. however, although there are signs of improvement in domestic output, the economy remains weak. money and financial markets on 15 november 2010, the bank reduced the interest rate on its 30 - day open market instrument by half of one per cent to 7. 5 per cent. on 01 february 2011 we reduced this rate by a further quarter of one per cent. these rate reductions were done in the context of continued weakness in the domestic economy and the favourable prospects for inflation. in addition, investors have continued to show a preference for jamaica dollar instruments, signifying their confidence in the positive near - term prospects for continuing stability in the economy. market - determined | with? what instruments does it trade? with this as our starting point, i shall take you on a brief journey back in time. what is a central bank? after the napoleonic wars, norway gained its independence following a five - hundred - year union with denmark. the country got its own constitution on 17 may 1814. according to the constitution, the norwegian parliament was “ to supervise the monetary affairs ”. when the major powers used force to implement the provision of the treaty of kiel uniting norway with sweden, the constitution needed to be adapted to the new realpolitik. however, the parliament managed to insert a new article in the november version of the constitution. it established an independent central bank, ensuring that norway would have its own independent monetary system. the actual norges bank act was not established until 1816. the first deposits were recorded in the books in 1817. at the time there were no functioning banks in norway. however, there was manufacturing, consumption, barter, investment and trade. there was also a rudimentary credit market and monetary system. commercial credit was available, savers met investors and bills of exchange were discounted. but these markets were rather inefficient : their margins were high, the supply of credit meagre and uncertainty high. most activities associated nowadays with a monetary system took place in the “ unregulated markets, ” to use the current term. accounts were kept, but not always in the numeraire we think of today. for example, this is described in the local history of karlsøy and helgøy, up in northern norway, where at that time accounts were sometimes kept in commodities such as cod liver oil, saithe or flour. however, one of these unregulated markets functioned even more poorly than the others, namely the long - term credit market. for that reason, norges bank ’ s initial activity was to enter this market. norges bank provided loans secured by real property. at its birth, the bank was, to use current terminology again, “ market maker of last resort ”. a private banking system gradually took shape. the first savings bank was founded in 1822 and the first commercial bank in 1848. in 1852 the first state mortgage bank was established. these developments allowed norges bank to withdraw from the mortgage market and concentrate instead on providing liquidity to the short - term money market. however, it was not until the 1860s that the bank ’ s predominant task was supplying short | 0 |
amando m tetangco, jr : strengthening the bonds of partnership for better education remarks by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the ceremonial turn over to deped of computers under “ tulong barya para sa eskwela ” and teachers ’ guides on saving & money management, manila, 31 july 2007. * * * secretary jesli lapus, monetary board members juanita amatong and alfredo antonio, dr. cielito habito, our other partners from the department of education, fellow central bankers – good morning and welcome to our turnover ceremony with the department of education. i am very pleased that you all took the time to join us in this simple but significant event. a warm welcome to all! today, we see, in very concrete terms, the results of the successful partnership of the department of education and the bangko sentral ng pilipinas. first, we have the symbolic turnover of more than 500 brand new computers from bangko sentral to public elementary schools under the department of education. these computers were funded from the award - winning “ tulong barya para sa eskwela ” the joint program of the deped and the bangko sentral to promote efficient recirculation of our coins by encouraging coin donations for public elementary schools. if you recall, schoolchildren were at the forefront of the campaign, serving as agents of change in their homes and communities in the proper appreciation of the value of coins. over a six - moth period, “ tulong barya para sa eskwela ” generated benefits worth p14. 88 million : p6. 65 million in cash donations from the public which have been turned over to deped and p8. 23 million in coin production savings for bangko sentral. in recognition of the schoolchildren ’ s role in the successful campaign, the members of our monetary board unanimously approved the donation of bangko sentral ’ s entire savings of p8. 23 million through the purchase of computers for public elementary schools. ladies and gentlemen, let us thank our schoolchildren and our monetary board with a round of applause! based on our initial estimates, we would be able to donate 472 computer units from our savings. but because of the close cooperation of our it department, the corporate affairs office, and our bids & awards committee we are getting a total | october 2008, overnight money market activity rapidly occupied the lower half of the corridor, and in fact, with few interruptions, the overnight rate has been close to the floor of it ever since. for all practical purposes, the relevant portion of the corridor for daily market activity has shrunk to the space existing between the rate on the main refinancing operations – on the upside – and the rate on the deposit facility – on the downside. bis central bankers ’ speeches should the corridor be brought back to its standard width – spanning the entire distance between the marginal lending rate and the deposit facility rate – not only de jure but also de facto? in other words : should we go back to the standard quantity - based technology of liquidity provision which was founded on the principle of balanced liquidity conditions? or should we maintain excess liquidity and operate the system through parallel adjustments to the deposit facility rate and the rate on the main refinancing operations? i am asking this question, because observers – marvin goodfriend1, for example – have been arguing for a system where the monetary authorities adjust a policy floor – the rate paid on reserves or the deposit facility rate – and the system is saturated with excess liquidity, so that overnight market rates are kept close to the floor. let me expound the merits and drawbacks of the discussed system, again upon the premise that i do not have a quantitative scale to weigh the ones against the others. • first advantage : the volatility of the overnight rate would likely be squeezed to minuscule numbers. true, our overnight rate has been more – rather than less – volatile since it moved to the floor of the corridor. but it is also true that excess liquidity conditions have been unsteady and uncertain in the past. here, i imagine a scenario in which the liquidity supply would be kept steady and reasonably predictable. a more stable overnight rate, it has been argued, could enhance the transmission of policy shifts – adjustments to the deposit facility rate – throughout the term structure of money market rates. • second advantage : the central bank would maintain one important acquisition from the crisis period : that is, its capacity to disentangle interest rate decisions from decisions concerning the scale of its own liquidity operations in order to remain resilient to large - scale liquidity shocks. this possibility may come in handy at the time of exit, in situations when inflation risks would call for a tightening of policy, while concerns about the | 0 |
for example, the differential between interest rates in interbank markets and bond markets has narrowed drastically, cross - border bond and mutual funds holdings have been increasing very rapidly, a market for private bond issuance has developed within europe and equity price fluctuations have been converging. these factors have induced a rapid growth of the financial markets and have facilitated the direct access of borrowers and savers to the markets. our traditional bank - oriented financial systems are gradually turning into a mixed organisation with substitution possibilities between bank and market - based financial products. the co - existence of and the competition between the two systems for allocating financial flows and risks in the economy should enhance economic efficiency, provided appropriate regulations, monitoring and supervision create the conditions for fair competition. against this background, the banking sector has experienced major changes. consolidation in the banking industry has been substantial. at the same time, banks have diversified their activities through mergers or by creating bank insurance groups. they have also been trading parts of their balance sheet assets and risks through financial markets. in addition, they have expanded their activities abroad, although further developments towards cross - border mergers and the creation of larger europe - wide banks can be expected. so the banking sector is now characterised by higher concentration, stronger competition from foreign banks and direct competition with financial markets. but what precisely will be the future role for banks in this new financial environment? theory and empirical evidence support the view that, as providers of finance, banks have the advantage of being in a position to acquire information on the borrowers and to monitor them thanks to long - lasting bank - lending relationships. this mitigates the effect of asymmetric information and moral hazard problems on the provision of funds. it is especially relevant to newly set up, small and medium - sized enterprises. this debate is not only important for banks, but for corporations themselves. indeed, it is regularly asserted “, - in various countries, not the least in belgium, that sme face increasing difficulties to get bank financing and that this problem could be compounded by the revised capital requirements imposed by the new basel ii agreement. i would like to emphasise two points. first, the new basel rules take expressly into account the specificities of sme. second, recent figures for belgium clearly indicate that, while large corporations have recently shifted to market financing, bank loans to sme keep increasing, and, moreover, are priced to rates which compare rather favourably to the ones applied in the rest of the eurozone. | also insufficiently decisive supervision played an important role. 1 / 5 bis - central bankers'speeches to ensure the stability of the us banking system and prevent a further expansion of the crisis, us authorities had to intervene, securing uninsured deposits, providing liquidity, and ultimately taking control of these banks. subsequently, credit suisse also lost confidence of financial markets and had to be rescued, through a remarkable, publicly supported'private'operation, of which the swiss insisted a la magritte : " ceci n'est pas une resolution. " so what happened to the credo " higher interest rates are good for banks "? let's not exaggerate. the long period ( 2019 - 2022 ) with very low ( and even negative ) interest rates put downward pressure on banks'interest margins, as the cost of a large amount of liabilities reached a floor, while the yield on assets continued to decline. this led to a drop of their net interest margin. banks compensated this negative impact on their profitability by boosting lending volumes, which partly compensated declining margins in the core business of banks, and definitely of co - operative banks : deposit - taking from and lending to the retail sector and small businesses and corporates. but since the second half of 2022, as interest rates increased, there was a significant recovery of the net interest margin. it contributed to a significant increase in bank profitability, to levels not seen since 2014, also driven by a lower than expected repricing of retail deposits in some countries. so, apart from the accidents in switzerland and the united states, the credo of higher interest rates being good for banks remained valid, although the current inverse yield curve is not helpful. good asset quality and low loan losses also contributed to this increase of bank profitability in europe. so far, the higher interest rates do not yet seem to have led to an important increase in loan defaults, notwithstanding rising debt service costs for debtors with variable interest rates or for debtors needing to refinance a maturing loan. the immediate conclusion on the impact of monetary policy tightening on eu banks hence seems to be a message of " so far, so good ". but we might have not yet seen all the consequences of the transition from an ecb deposit facility rate at - 0, 5 % in july 2022 towards 4 % in september 2023, in 14 months'time. transmission to the real economy takes time and is not yet complete. | 0.5 |
for the third time in succession germany would exceed the reference value for the deficit ratio laid down in the eu treaty, namely 3 %. in accordance with the stability and growth pact, the next step in the excessive deficit procedure should therefore have been launched against germany. however, the ecofin council rejected a recommendation to this effect from the european commission on 25 november last year. this precedent has greatly undermined the commission ’ s credibility with respect to the threat of using sanctions when a country continues to pursue an undesirable fiscal policy. i share the european commission ’ s concern about the action of the ecofin council and respect its decision to take the matter to the european court of justice for legal clarification. the ecofin council ’ s decision reveals an in - built flaw in the pact, namely that to some extent sinners are passing judgement on sinners. even so, i am sceptical about amending the eu treaty or the pact. there is a danger in every amendment to the stability and growth pact, especially in the present situation, that the existing rules will be relaxed. by contrast, the potential advantages seem to me to be comparatively small. however, i do think that the implementation of the pact could be improved. in my opinion, undermining the pact poses considerable risks in the medium to long term, not least for growth potential. if fiscal policymakers are given politico - economic incentives to borrow, it could mean that in some countries excessive deficits would in the future tend to become the rule rather than the exception. they may also feel more inclined to neglect the objective laid down in the pact, namely of achieving a budgetary position which is at least close to balance in the medium term. it is not only on account of the growing interest burdens that rising government debt ratios restrict the available budgetary policy options for growth - promoting investment in, for example, education and make it harder to tackle the challenges posed by the foreseeable budgetary burdens arising from demographic developments. persistently increasing government borrowing might push up capital market interest rates, and this would have a negative impact on economic growth potential and employment trends. it is precisely in the present situation that unresolved budgetary problems give rise to uncertainty about future fiscal policy. this encourages consumers and investors to adopt a wait - and - see attitude and thereby possibly curbs economic growth in the short term, too. for that reason, i do not consider consolidating public finances and | njuguna ndung ’ u : financial market and payment system developments in east africa remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the 17th ordinary meeting of the east african community monetary affairs committee ( mac ), nairobi, 16 may 2014. * * * my fellow governors ; deputy secretary general, eac secretariat ; delegates from the eac central banks ; eac secretariat officials present ; imf officials present ; distinguished guests ; ladies and gentlemen : good morning. it is a pleasure to welcome you to nairobi for the 17th ordinary meeting of the east african community monetary affairs committee. it is an honor for me to host this important meeting that will deliberate on pertinent issues aimed at driving forward the eac integration agenda. we are also grateful to have the eac central bank governors grace the official launch of the east african payments system ( eaps ), later today. the launch of eaps marks a key milestone in the eac integration process and will improve the efficiency of the payments system in the region. this is one of the targeted quick wins by the eac central banks. fellow governors, we have managed the financial sector in a commendable manner since the onset of the financial crises in 2008, a period beset with structural shocks, both external and internal. despite the challenges, the conduct of monetary policy in the region has continued to take effect, and is delivering expected results. we have in the recent past managed to coordinate among others, market expectations on inflation, which is a great boost to the credibility of central banks in discharging the principal mandate of price stability. this outcome partly reflects implementation of appropriate operational frameworks that have strengthened both the signaling of the policy stance and fining - tuning interbank liquidity management. however, a few challenges, though no less important, still remain especially in the conduct of open market operations where interventions to stabilize interbank liquidity are at times misinterpreted by money market participants as an attempt to defend a particular level or direction of the value of the currency. it appears we have to strive even more to improve our communication on monetary policy operations in order to enhance the market ’ s understanding of our use of available tools for monetary policy operations. reverting to the purpose of this meeting, we are here to : review progress on the implementation of the decisions of the 16th mac meeting held in kampala on may 23, 2013 ; consider strategic objectives to operationalize | 0 |
implications of intensive nitrogen use. in a world where customers pay increasing attention to the environmental footprint of production, this is a serious issue. other impacts on nz activity there is some evidence to suggest that prices for agricultural commodities are becoming increasingly linked to prices for other commodities, particularly energy. figure 15 : oil prices and world prices for new zealand ’ s key export commodities strong growth in demand for biofuels suggests greater convergence between agriculture commodities and energy commodities in future. arbitrage from the oil market may support some agricultural commodity prices ( in new zealand ’ s case mostly dairy prices and, to a lesser extent, beef prices ) at structurally higher levels, as long as high oil prices are sustained. but, if we are going to see dairy prices remain at high levels, there are some other “ winners ” and “ losers ” to bear in mind. we know that higher world commodity prices are typically associated with a higher exchange rate. and, while the recent appreciation in the exchange rate has dampened returns to dairy farmers to a degree, it has, at the same time, effectively distributed some of these income gains to consumers via lower import prices. however, as the increase in commodity prices has mostly been in dairy, the higher exchange rate has reduced new zealand dollar returns for many other exporting industries, including some farm production. this phenomenon is known as “ dutch disease ” : very high prices for one export sector can crowd - out competitiveness in other export sectors. monetary policy implications it bears repeating that we cannot be sure about the path of dairy prices over the next few years following their recent run - up. assuming dairy prices do remain at elevated levels there are likely to be many benefits for new zealand, including higher growth and a reduced trade deficit. however, from a monetary policy perspective, a terms of trade shock of this magnitude poses some challenges. it is likely that higher dairy prices will affect inflation in a number of ways. firstly, as alluded to previously, increases in world dairy prices will lead to higher domestic dairy product prices. this has already begun to occur. milk and milk based products are part of the cpi, increases in domestic dairy prices are likely to have a fairly prompt ( though likely small ) impact on cpi measured inflation. secondly, and most importantly, higher dairy prices will provide a substantial boost to rural incomes. of course, for many this is very good news. however, we are dealing with a stretched economy at present. domestic demand is already strong. capacity is tight. | ##ilient – which was plain wrong. i must say, i never shared the view that we were in a world where there was no risk. that being said, when the first diagnosis was made at a global level with china, india, brazil, russia around the table, as well as of course japan, the us and the europeans, we didn ’ t challenge the fact that a market economy was the best recipe for producing growth. bis central bankers ’ speeches in germany there ’ s a very strong belief in the market, which is why german conservatives opposed crisis measures taken by the ecb. we ’ ve had two resignations by germans – axel weber and jurgen stark – from the governing council. if you ’ re talking about further steps towards european integration, are you in danger of losing the germans? first of all, i don ’ t know what “ the germans ” means, i don ’ t know what “ the english ” means, i don ’ t know what “ the french ” means. we are living in cultures that are very deep, very profound and very complex, obviously, and where fortunately you have a lot of different opinions. we have a legitimate debate – in europe as well as in the us and in japan – about whether the central bank is doing well on this, well on that. the governing council of the ecb did all what was necessary to be faithful to its primary mandate and to take into account, in transmitting our decisions on interest rates, that we were in the worst crisis since 66 years, a crisis which was disrupting some markets. jurgen stark has been a very close friend for 18 years. he has worked for europe for the past 18 years. i have great esteem for jurgen and all that he has done and is doing. if you look back on all the years that you ’ ve been involved in european construction, is this the most serious crisis that you ’ ve had to deal with? i was involved in many crises : the real economy crisis after the first oil shock, the sovereign risk crises of the 1980s, the crisis of the exchange rate mechanism in 1992 and 1993, the asian crisis in particular. but what we are experiencing presently is bigger and has hit directly in at the heart of the advanced economies. so it is undoubtedly an historical event of the first magnitude, the worst financial crisis since the second world war. it could have produced a great depression had appropriate decisions not been taken at the appropriate. this is also the moment of maximum peril | 0 |
gabriel makhlouf : centenary of the establishment of the irish state remarks by mr gabriel makhlouf, governor of the central bank of ireland, at the centenary of the establishment of the irish state, dublin, 23 november 2022. * * * minister donohoe, minister fleming, deputy governors, distinguished guests, ladies and gentlemen, good morning. i'm delighted to welcome you all to today's important event. we are at another important point in the irish state's decade of centenaries programme. since its initiation in 2012, the central bank has been very proud to play its part. this is the third commemorative gold coin that we have issued during the decade of centenaries. we issued €100 gold coin in 2016, to commemorate the centenary of the 1916 easter rising, and again in 2019, to commemorate the centenary of dail eireann. it's important to recognise that the years from 1921 to 1923 mark a more complex period in ireland's history. included in these years are the struggle for independence, the civil war, the foundation of the irish state and partition. remembering these events appropriately, proportionately, respectfully and with sensitivity matters. so much of the recent programme has focussed on promoting a deeper understanding of the significant events that took place during this period and recognising that the shared historical experience of those years gave rise to very different narratives and memories. the free state was founded in 1922 under the terms of the anglo - irish treaty of 1921. its establishment was the major turning point in modern irish history when irish people took control of their own destiny and built the country that ireland is today. the central bank is proud to have played a very important part in that history. from the administration of exchange controls, to the management of the sovereign debt market, from decimalisation, to the euro changeover. throughout all of this time, guided by the 1942 central bank act, our constant and predominant aim has been the welfare of the people as a whole. it's also worth noting the direct historical links of the central bank's early leaders to the important event we have recently commemorated. our first governor, dr joseph brennan, was introduced to michael collins during the war of independence and was financial advisor to the team negotiating the anglo - irish treaty. bringing things back to our current role, we act as the agent for the minister of finance in issuing all irish coins, both circulating and commemorative. 1 / 3 bis - central bankers ' | deleveraging needs and better labour market conditions. furthermore, the recovery in business investment is supported by improvements in corporate profitability and the very favourable financing conditions. at the same time, euro area exporters are benefiting from the ongoing global economic expansion. these figures give some comfort as to the eu ’ s economic future. and i personally am confident that this trend can and will continue. however, challenges are looming : two particularly serious ones are brexit and euro area reform. the current, upbeat trajectory has to be harnessed as we set about mastering these historical challenges. 4. brexit looming the first challenge, brexit, began in june 2016, when the majority of uk voters decided to leave the eu. where are we now? brexit is definitely happening, and it is more and more likely to be a hard brexit – by which i mean that there will be a complete exit rather than a partial one. the uk and the eu will go their separate ways. since december of last year, there is a better chance of reaching a sensible agreement before the deadline of march 2019. the eucouncil agreed in december on the brexit divorce issues : basic compromises were reached on three fundamental questions, namely the rights of eu citizens in the uk after brexit ( and vice versa ), the border between ireland and northern ireland, and the uk ’ s financial contributions to the eu budget over the coming years. this compromise allows us to move forward to negotiate the terms of our future partnership. but let ’ s keep in mind that substantial progress has yet to be made on the details of the three 2 / 5 bis central bankers'speeches separation issues i just mentioned. now, since negotiations have been going rather slowly, there may be a transition period of two years from 2019 to 2021 – during which the old rules would still apply and the terms of the new partnership could be implemented. what kind of economic partnership this will be has yet to be determined. if no solution is found, the eu and the uk will trade under rules set by the world trade organization – which is in nobody ’ s interest, but is likely to be particularly harmful to the uk economy, while the economic impact on europe will be limited by comparison. take germany for instance. the uk is an important export market, accounting for ca. 7 % of german exports. but this implies only 2 % of value added to the german economy. my hope is that all the | 0 |
in many decades, inflation was low and financial systems were stable ( graph 1 ). these are positive outcomes. we should not lose sight of this. graph 1 1 / 13 bis central bankers'speeches there was, though, a change in momentum in the global economy late in the year. this change was particularly evident in europe and it was also evident in china. it has been widely reported in the media, but it is important to keep things in perspective. some slowing in global growth was expected, given that labour markets are fairly tight and the policy tightening in the united states was aimed at achieving a more sustainable growth rate. so, i have been a little surprised at some of the reaction to the lowering of forecasts for global growth, which has been quite negative. we need to remember that the imf's central forecast is still for the global economy to expand by 3. 5 per cent in 2019 and by 3. 6 per cent in 2020 ( graph 2 ). if achieved, these would be reasonable outcomes and not too different from the recent past. graph 2 2 / 13 bis central bankers'speeches what is of more concern, though, is the accumulation of downside risks. many of these risks are related to political developments : the trade tensions between the united states and china ; the brexit issue ; the rise of populism globally ; and the reduced support from the united states for the liberal order that has supported the international system and contributed to a broad - based rise in living standards. one could add to this list the adjustments in china as the authorities rein in shadow financing. the origins of these diverse issues are complex, but there is a common economic element to some of them : that is, the extended period of little or no growth in real incomes for many people. in a number of countries, growth in real wages has been weak or negative for years. advances in technology and greater competition as a result of globalisation also mean that many people worry about their own future and that of their children. politicians, understandably, are responding to these concerns. time will tell, though, whether the various responses help or not. i suspect that some of them will not. over recent months, the accumulation of downside risks has been evident in business and consumer surveys. it was also evident in increased volatility in financial markets around the turn of the year, with declines in equity prices and an increase in credit spreads ( graph 3 ). since then, though, markets | the global slowing we have seen has, so far at least, been of the more ordinary variety. that is not to make light of these developments, only to keep them in some sort of perspective. the kind of growth envisaged for the world as a whole is close to its long - run average. of importance to australia, and as we noted at the february hearing, the chinese economy looks like it has slowed to a pace of growth that is likely to be more sustainable. this is, though, clearly below the pace seen for much of the recent past and the implications of this new pace of growth for the trajectory of demand for various commodities are still being worked through in the relevant markets. commodity prices have declined. australia ’ s terms of trade peaked about a year ago. however, they remain high in comparison with most of the past century. overall, the developments in key commodity prices do not seem out of line with what we can observe about the progress of the global economy. of late, financial market sentiment has again recovered somewhat. this is seen most clearly by share prices in most markets recovering the losses seen in mid - year, while interest rates on “ peripheral ” european debt have fallen. it could not be said that confidence is strong : uncertainty is high and much of this stems unavoidably from the situation in europe. european policymakers have continued their efforts both to stabilise the immediate situation, and to craft stronger pan - european structures for financial management so as to provide a more enduring stability. their actions and commitments to future actions have been bis central bankers ’ speeches important but expectations for further progress are high. realistically, it will be quite some time before the europeans will be able to say these problems have been put behind them, even if things go well. turning to the domestic economy, the sequence of changes in assessment has tended to be the obverse of what we have seen internationally. at the previous hearing we believed, on the basis of the available data, that overall growth had been close to trend over 2011. subsequently we could not avoid revising that view downwards a bit, as there seemed to be some emerging evidence that growth had been weaker than that. the most recent data, on the other hand, are suggestive that the earlier assessment may, in fact, have not been too far off the mark. as recorded, domestic final demand rose by 5 per cent in real terms over the year to the march quarter, even with a small contraction in public | 0.5 |
offering of customized products etc address the supply side factors while the financial literacy initiatives address the demand side factors by sensitizing the people of the need for and benefits of joining the formal financial system. ucbs, by their structure and nature of clientele, are well designed to cater to financial inclusion. the very basis of co - operative structure is mutual help and thrift. considering the specific features of ucbs such as their organizational structure ( member driven ), clientele, easy access and reputation as a friendly neighbourhood bank, these highly localised institutions have the potential for widening and deepening financial inclusion in their area of operation. measures undertaken to promote financial inclusion it has been rbi ’ s endeavour to remove all hurdles in the way of its regulated entities in achieving financial inclusion objectives. some of the salient measures undertaken in this regard are : bis central bankers ’ speeches introduction of new products ( i ) opening of “ no - frills ” accounts : a “ no frills ” account is one for which no minimum balance is insisted upon and for which there are no service charges for not maintaining the minimum balance, introduced as per rbi directive in 2005. banks have been advised to provide small over drafts in these “ no frill ” accounts. ( ii ) general credit cards ( gcc ) / kisan credit cards ( kcc ) : gccs / kccs help purvey credit where the credit facility is in the nature of a revolving credit entitling the holder to withdraw up to the limit sanctioned., limits are sanctioned without insistence on security or purpose, based on the assessment of household cash flows. interest rate on the facility is completely deregulated. relaxed regulatory requirements i. relaxed regulatory dispensation on know your customer ( kyc ) norms : kyc requirements for small accounts were relaxed in august 2005, by stipulating that introduction by an account holder, who has been subjected to full kyc drill, would suffice for opening such accounts, or, that the bank can take any evidence to its satisfaction as to the identity and address of the customer. during the year, it has been further relaxed to include job card issued by nrega duly signed by an officer of the state government or the letters issued by the unique identification authority of india containing details of name, address and aadhaar number as a valid identity proof. ii. simplified branch authorisation : to increase the reach of banking network, domestic scheduled commercial banks have earlier been permitted to | ishrat husain : the asian clearing union welcome address by mr ishrat husain, governor of the state bank of pakistan, at the inaugural ceremony of the 34th annual meeting of the board of directors of the asian clearing union ( acu ), lahore, 16 may 2005. * * * it is a great honour for the state bank of pakistan to host the 34th annual meeting of the board of directors of the asian clearing union. i welcome you all to pakistan and wish you a pleasant and productive stay in our country. it is also indeed a pleasure for me to welcome the guests from afghanistan and the maldives monetary authority, who are attending this conference as observers. we all are familiar with the purpose and background of the asian clearing union. we have also reviewed each year the progress that was made and problems that our members had faced in international trade and payments and tried to modify the coverage, mechanism and procedure of the asian clearing union. what i wish to emphasize today is that major changes have taken place in the international scene during the last one year which necessitates our taking a closer look at the record and relevance of the asian clearing union in relation to fast changing global environment. in the rapidly changing environment, in which regional grouping is becoming a vehicle for trade promotion and economic co - operation, the asian clearing union should revisit its charter, examine its relevance and find ways to expand the intra - regional trade and economic co - operation in a multilateral context. we have to be outward looking and our objective should be to bring about coherence and consistency in our macroeconomic policies that attract direct foreign investment. the annual report of acu for the current year ( 2004 ) indicates that even though intra - regional trade is growing, the operations through the asian clearing union are limited. our efforts to expand its membership have not as yet succeeded. however, i may add here that the acu has not experienced a default. although there have been persistent debtors in the acu system, their negative net balances have not been large. there has not been a " structural creditor problem " in the acu. i would like the governors to give some thought as to how we can make asian clearing union an important vehicle for the expansion of intra - regional trade and further economic coordination, and how our banking and financial markets could be made complementary for the maximization of economic welfare of the member states. asian countries have demonstrated during the last several decades that it is possible | 0 |
is a necessary but insufficient condition to ensure the existence of a single european financial system, efficiently channelling savings to investment opportunities within the european union territory. given that financing in europe is dominated by the banking system, it must be ensured that banks are granted the possibility of securitising their credits and placing those securities with institutional investors. on the one hand, this would allow european banks torelease funds to finance new investment and to have alternative sources of funding in the capital market ; on the other hand, insurers and pension funds, which currently invest in long - term securities issued outside europe, would have the opportunity to invest in european securities. the development of a european securitization market is hindered by the fragmentation of the fiscal and regulatory frameworks ( capital markets, insolvency, etc. ) prevailing in europe. although the harmonisation of national frameworks within a reasonable time frame is not realistic, it would be advantageous, in particular for smaller countries, to develop an opt - in european scheme that would make it possible to overcome the identified barriers. bis central bankers ’ speeches | their short - and medium - term costs, in particular if reforms are appropriately designed in order to mitigate the latter while not jeopardising the former. today we have gathered here all the ingredients for a rich and fruitful debate on the topics i have touched upon. i thank you all for your participation and wish you a very pleasant and constructive workshop. www. bportugal. pt | 0.5 |
arrangement and that the ccp collects initial and variation margin. in particular, the pfmis stipulate that a ccp must be able to withstand, in a stress environment, the failure of the member having the largest exposure to the ccp. in some cases, this requirement is strengthened to require the ability to cover the failure of the two largest members. the pfmis also require the ccps to develop effective methodologies to estimate their funding exposures, so that they can better manage their liquidity risks. another important risk management task for ccps is the on - boarding of new members and the monitoring of the condition of existing members. the strength of the ccp is ultimately derived from the collective strength of its members. the mutualization of the ccp ’ s net credit risk across its members creates an incentive for its members to only want well - capitalized and well - managed members as part of the ccp. the ccp also must ensure that members are meeting their margin requirements and remain in good standing. it is also worth noting that these safeguards for ccps will need to be put into place along with other reforms such as the use of multilateral trading platforms and trade repositories. seamless integration with these new trading processes is essential for ccps to contribute to financial stability. the financial crisis also highlighted the significant gaps that existed between the data collected and the data necessary to adequately monitor developments in the global financial system. in addition, the crisis underscored an important limitation of the current data structure : the inability to combine data effectively across jurisdictions in order to develop a comprehensive view. as a consequence, policymakers often did not have timely access to see basel committee on banking supervision and the board of international organization of securities commissions ( 2013 ) margin requirements for non - centrally cleared derivatives. see committee on payment and settlement systems and the international organization of securities commissions ( 2012 ) principles for financial market infrastructure. bis central bankers ’ speeches key information that would have informed both the diagnosis of emerging problems as well as the likely efficacy of proposed interventions. as we all know, it is difficult to safely steer a fast - moving car if outward vision is impaired by a windshield that is largely obscured. in response, the g20 in april 2009 instructed the financial stability board ( fsb ) and the international monetary fund ( imf ) to detail these information gaps and to develop proposals for resolving them. the data gaps initiative ( dgi ) was the response to carry out this | absorbing capacity, this capital buffer requirement will act to offset any funding advantages for g - sifis, helping to level the playing field with smaller, less complex financial institutions. together, when fully implemented, these changes should reduce the failure risk for g - sifis. to complement the basel framework, i believe that jurisdictions need to create processes and incentives for management of g - sifis to act earlier and more decisively in response to emerging risks facing their firms. proactive interventions by the senior management of banks will have a greater efficacy and a lower cost than reactive steps taken only in response to growing market pressure. these proactive management interventions can take many forms bis central bankers ’ speeches including raising additional capital, cutting capital distributions, restructuring business lines and making difficult personnel changes. avoiding a hazard is easier if one ’ s focal point is kept well down the road. official sector stress tests are an important tool that can facilitate this forward - looking management focus. one example is the comprehensive capital analysis and review ( ccar ) process in the united states. the goal of ccar is to ensure that banks have robust, forward - looking capital planning processes, as well as sufficient capital to withstand severely stressed economic conditions while, maintaining their ability to perform their critical roles of credit intermediation. in ccar, each of the participating banks is required to project the impact of particular forward - looking stress scenarios on their operations over a two - year horizon. both the banks and the supervisors conduct independent assessments of the impact of the stress scenarios on the various business lines of the bank. this approach provides a cross - validation of each bank ’ s analysis, while at the same time generating results that can be compared across the participating banks. another important feature of ccar is that the scenarios and the key aspects of the banks results are made public rather than treated as confidential supervisory information. this transparency is important for supporting market confidence in the banking system. finally, a critical aspect of the stress testing process is the supervisory review of the capital planning process for each participating bank. this planning process is what reinforces and promotes a proactive stance by management to emerging risks. the structure of bank management compensation also could be designed to provide incentives that reinforce a proactive, forward - looking risk management approach. as i will discuss in a moment, sufficient long - term debt that can be converted to equity is an important element of an effective resolution mechanism for g - sifis. while the magnitude of this longterm | 1 |
the measures should also limit to some extent the second risk to financial stability, the build - up of bubbles. the tltros exclude explicitly loans to households for house purchases. furthermore, credit developments are always closely monitored when the assessment from the economic analysis is cross - checked with the signals coming from the monetary analysis, the two pillars of the ecb ’ s monetary policy strategy. thus, concerns that the measure could stoke a housing bubble seem unwarranted. nonetheless, it is important to keep in mind the distinction between what monetary policy can and should do, and what is the domain of macro - prudential policy. monetary policy has the clear primary objective to maintain price stability in the euro area over the medium - term. macro - prudential measures should be used, if needed, to smooth the financial cycle in specific sectors or jurisdictions. bis central bankers ’ speeches | december 2013 eurosystem staff projected hicp inflation at 1. 1 % for 2014. in the most recent projection round of june 2014 – that is, about six months later – inflation was expected to be only 0. 7 % in 2014. while surprises were initially more in headline ( as opposed to core ) inflation and stressed ( as opposed to non - stressed ) countries, very recently the surprises have been more in core inflation figures, and in non - stressed countries. the reasons are well - known : • a mixed bag of supply shocks ( energy & food ; structural reforms in strained countries ) and persistence of underutilised capacity in a wide area of the euro area … • … in a context in which banks ’ credit – a critical ingredient to a self - sustained recovery of investment and durable consumption – was withdrawn in many countries and / or made available to companies and households at interest rates probably only partially justified by increasing lending risk. to address risks and implications associated with a prolonged period of low inflation, we have to ensure that the developments do not become entrenched in inflation expectations. this is why we further cut our interest rate last month in the context of a broader package of mutually reinforcing measures aimed at addressing impairments in lending conditions and the knock - on effects that these impairments are having for the real economy and inflation. loan growth is still contracting ; lending rates have not declined in line with improvements in financial markets. while the lending rates ( for stressed countries ) reflect credit risk, borrowers ’ credit risk is in part endogenous. high lending rates contribute to higher loan delinquencies, which in turn increase the need for banks to make provisions on past legacy loans by increasing lending rates ; so, ex post, higher delinquencies justify high lending rates, and there is a mutually reinforcing spiral of high lending rates, high credit risk and poor macroeconomic conditions. the tltros are designed to contribute to breaking this spiral. they are expected to ease overly tight conditions through several channels. • the first and most important channel is through a reduction in term funding costs for banks. note that the interest rate on the tltros will be fixed over the life of each operation, at the rate on the mros prevailing at the time of take - up, plus a fixed spread of 10 basis points. so if a bank does well in its lending performance, it enjoys very attractive refinancing conditions for up to four years. funding relief | 1 |
market economy that determines the mix of employment. when exports fall or imports rise, domestic demand and relative prices have invariably adjusted in the long run to leave total employment relatively unaffected. as economists like to say, all imports are eventually paid for with exports. i also regret that, despite the remarkable success over a near half century of gatt, the general agreement on trade and tariffs, and its successor, the world trade organization, in reducing trade barriers, our trade laws and negotiating practices are essentially adversarial. they presume that a trade concession extracted from us by our trading partners is to their advantage at our expense, and must be countered. few economists see the world that way. and i am rash enough to suggest that we economists are correct, at least in this regard : trade is not a zero sum game. if trade barriers are lowered by both parties, each clearly benefits. but if one lowers barriers and the other does not, the country that lowered barriers unilaterally would still be better off having done so. raising barriers to achieve protectionist equality with reluctant trading partners would be neither to our benefit, nor to theirs. the best of all possible worlds for competition is for both parties to lower trade barriers. the worst is for both to keep them up. for these reasons, i am concerned about the recent evident weakening of support for free trade in this country. should we endeavor to freeze competitive progress in place, we will almost certainly slow economic growth overall, and impart substantial harm to those workers who would otherwise seek more effective longer - term job opportunities. protecting markets from new technologies has never succeeded. adjustments to newer technologies have been delayed, but only at significant cost. even should our trading partners not retaliate in the face of increased american trade barriers, an unlikely event, we do ourselves great harm by lessening the vigor of american competitiveness. the united states has been in the forefront of the postwar opening up of international markets, much to our, and the rest of the world ’ s, benefit. it would be a great tragedy were that process reversed. i do not believe that will be allowed to happen. there is too much at stake for us and our trading partners. | ##ciation and other cash flows of industries employing older, increasingly obsolescent, technologies are marshalled to finance the newly produced capital assets that almost always embody the cutting edge technologies. this is the process by which wealth is created incremental step by incremental step. it presupposes a continuous churning of an economy in which the new displaces the old. but there is also little doubt that this transition to the new high - tech economy, of which rising trade is a part, is proving difficult for a large segment of our workforce that interfaces with our rapidly changing capital stock day - by - day. moreover, while major advances in standards of living are evident among virtually all nations that have opened their borders to increased competition, the adjustment trauma has also distressed those who once thrived in companies that were then at the cutting edge of technology, but which have since become increasingly less competitive in both domestic and foreign markets. economists will say that workers should move from the steel districts of western pennsylvania to a vibrant silicon valley. and eventually they, or more likely their children, will. but the adjustment process is wrenching to an existing workforce made redundant largely through no fault of their own. it may be argued that all workers should have the foresight to recognize long - term job opportunity shifts and move in advance of obsolescence. this regrettably is a skill not in great abundance – among business managers or the economists who counsel them, as well as among workers. yet the protectionist propensity to thwart the process of the competitive flow of capital, from failing technologies to the more productive, is unwise and surely self - defeating. history tells us that not only is it unwise to try to hold back innovations, it is also not possible over the longer run. generation after generation has experienced episodes in which the technologically obsolescent endeavored to undermine progress, often appealing to the very real short - term costs of adjusting to a changing economic environment. from the luddites to the smoots and the hawleys, competitive forces were under attack. in the end they did not prevail and longterm advances in standards of living resumed. nonetheless, the campaign to expand free trade is never won. legislation to further lower trade barriers, for example, is becoming increasingly more difficult to pass in our congress. it is a continuing battle. further, while tariffs in industrial countries have come down sharply over the past half century, other | 1 |
alan greenspan : federal reserve ’ s report on monetary policy testimony of mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs of the us senate on 20 july 2000. * * * mr chairman and other members of the committee, i appreciate this opportunity to present the federal reserve ’ s report on monetary policy. the federal reserve has been confronting a complex set of challenges in judging the stance of policy that will best contribute to sustaining the strong and long - running expansion of our economy. the challenges will be no less in coming months as we judge whether ongoing adjustments in supply and demand will be sufficient to prevent distortions that would undermine the economy ’ s extraordinary performance. for some time now, the growth of aggregate demand has exceeded the expansion of production potential. technological innovations have boosted the growth rate of potential, but as i noted in my testimony last february, the effects of this process also have spurred aggregate demand. it has been clear to us that, with labor markets already quite tight, a continuing disparity between the growth of demand and potential supply would produce disruptive imbalances. a key element in this disparity has been the very rapid growth of consumption resulting from the effects on spending of the remarkable rise in household wealth. however, the growth in household spending has slowed noticeably this spring from the unusually rapid pace observed late in 1999 and early this year. some argue that this slowing is a pause following the surge in demand through the warmer - than - normal winter months and hence a reacceleration can be expected later this year. certainly, we have seen slowdowns in spending during this near - decade - long expansion that have proven temporary, with aggregate demand growth subsequently rebounding to an unsustainable pace. but other analysts point to a number of factors that may be exerting more persistent restraint on spending. one they cite is the flattening in equity prices, on net, this year. they attribute much of the slowing of consumer spending to this diminution of the wealth effect through the spring and early summer. this view looks to equity markets as a key influence on the trend in consumer spending over the rest of this year and next. another factor said by some to account for the spending slowdown is the rising debt burden of households. interest and amortization as a percent of disposable income have risen materially during the past six years, as consumer | reinforced their capital ratios will think. moreover, unlike spain, most of our peers have activated – or have announced the activation – of countercyclical capital buffers, which may partly explain the increase in their solvency ratios. 6 / 15 dividend policy it is worth remembering that the clearest route to strengthening capital is through the organic generation of reserves. that leads once again to highlighting the importance of profitability and, in relation to profits, of dividend policy. each bank should give structure to this dividend policy, bearing in mind its present and future capital needs. as i have occasionally indicated, in my view dividend payments are excessively rigid. they have functioned more as a fixed remuneration than as a genuine, variable distribution of each year ’ s return. in this respect, one possibility used by banks at various times has been to use scrip dividends. these allow remuneration to the shareholder to take the form of the delivery of new issued shares, instead of cash. this policy enables the necessary remuneration of capital to be combined with the organic generation of capital, although it inevitably entails some dilution of earnings per share, as also occurs whenever there are capital increases. it is the responsibility of each bank to assess these aspects when setting its dividend policy. 7 / 15 implementation of basel iii i have previously referred to the need for banks to plan their future capital requirements, whether as a result of their business projections or of regulatory changes. in this connection, the importance of strengthening, as far as possible, current capital levels should be interpreted against the background of the challenge – a further challenge – entailed by the entry into force of the final stage of basel iii. last week the eba published an update of the estimated impact that the implementation of the outstanding elements of basel iii will have on european union ( eu ) banks. according to this estimate, risk - weighted assets ( rwas ) will increase in the eu as a whole by 24. 4 %, meaning additional capital totalling €135 billion in order to respond to new needs. naturally, we should qualify these figures. let us not forget that they reflect estimates made under conservative assumptions that banks will not adjust their portfolios to lessen the attendant impact. the eba itself indicates that needs would fall to €58. 7 billion if banks decided to retain all their profits during the transitory period. the reforms will not affect all banks equally. large banks, in particular those | 0 |
so we have to be mindful not to exert an undue influence on price formation. another potential complication relates to our public sector purchases. a key safeguard that we have set up for these purchases is to operate so - called “ blackout periods ”, where we do not buy around the date of a new issuance. this facilitates price formation and ensures that article 123 of the treaty – the monetary financing prohibition – is fully respected. conclusion the economic recovery in the euro area has been better than expected and employment has risen strongly. both wages and underlying inflation appear to have turned the corner. all the conditions are in place for a sustained adjustment in inflation towards our aim. so it ’ s just a question of time now. more haste, less speed, however. the improving inflation trajectory means that we can gradually scale back our net purchases and keep monetary policy sufficiently accommodative to continue to support the convergence of inflation towards our aim. we will continue to monitor developments in the economy and set policy in a way that remains consistent with our price stability objective. in doing so, we must also take into account the balance of risks. if we withdraw our monetary policy stimulus too early and too fast, asset prices could collapse and yields rise sharply, with negative spillover effects to the economy. if our asset purchase programme continues for too long, the side effects will increase. and if we nourish a market belief that the exit might be permanently postponed, potential cliff - edge effects could be exacerbated. we are pursuing a credible prospect for the exit to keep these risks contained. see mersch y., “ economic policy and the need for humility ”, speech at the conference “ banking and financial regulation ”, bocconi university, 9 october 2017. 2 bartelsman e., lopez - garcia p. and presidente g., “ cyclical and structural variation in resource reallocation in europe ”, mimeo. 3 see e. g. gopinath g. et al, “ capital allocation and productivity in south europe ”, nber working paper no 21453, 2015 ; borio c. et al, “ labour reallocation and productivity dynamics : financial causes, real consequences ”, bis working paper no 534, 2016 ; andrews d. and petroulakis f., “ breaking the shackles : zombie firms, weak banks and depressed restructuring in europe ”, oecd economics department working paper no 1433, 2017 | the financial sector. banks could be hit hard as funding costs rise faster than interest income on outstanding loans. but it may also be the case that the impact of these factors has already been felt, and inflation could turn out higher than we expect over the course of the year. we would find ourselves behind the curve – and realise it – and we would have to adjust our forward guidance. this forward guidance was put in place to stabilise market expectations and to enhance the effectiveness of our asset purchases. we do so by indicating that interest rates will rise only when we are well past the horizon for asset purchases. prolonging asset purchases pushes out market expectations of a rate rise and pushes down interest rate expectations across the entire curve. of course, the effectiveness of our forward guidance also relies on our credibility. 3 / 5 bis central bankers'speeches in effect, forward guidance is a promise not to react to short - term data outturns in the future so as to persuade markets to expect interest rates to remain low. but if we offer guidance that extends too far into the future, it risks unduly tying our hands. this is a particular risk at present since, as i mentioned earlier, future increases in interest rates need to be gradual. moving late could result in policy remaining too loose for too long. the time will come this year to make further gradual adjustments to our monetary policy stance in line with our confidence in achieving our objective ; market expectations are appropriate in this regard. we should then certainly reflect at length on the degree to which we wish to pre - commit ourselves. the second risk for monetary policy relates to the side effects of low interest rates. our measures have considerably improved financing conditions for households and firms, and have unblocked the flow of credit. yet easier financing conditions may encourage investment in projects that are only profitable at low interest rates, and such loans risk turning sour as interest rates rise. indeed, banks and investors may be tempted to “ search for yield ”, without being adequately recompensed for the risk they are taking on. our mandate is to deliver price stability. ensuring financial stability risks are adequately contained is the role of banking supervision and macroprudential policy. while there is no evidence at present of asset price bubbles in the euro area, there are some notable localised pockets, such as in commercial real estate, and signs of “ search for yield ” behaviour. the financial crisis showed how such risks can interfere with the smooth operation of monetary policy through | 1 |
of the 12 countries of the euro area for the euro has been a massive operation requiring enormous organisational, logistical, technical and economic efforts. its success has far exceeded our own expectations. in almost all its aspects, the euro cash changeover has progressed well and rapidly, without any major hitches. this was a crucial factor for acceptance of the new currency by the european public. the completion of the changeover has been a challenge of unprecedented dimensions that involved the banking sector, security carriers, retailers and the cash - operated machine industry. in order to guarantee a gradual and smooth supply of euro to the economy, euro banknotes and coins started to be distributed to the banking and retail sectors as from 1 september last year. 6. 4 billion banknotes worth some eur 133 billion, and more than 37. 5 billion coins with a total value of around eur 12. 4 billion, had already been frontloaded to the banking sector by the end of 2001. the adaptation of more than 200, 000 automated teller machines ( atms ), which supplied around 70 % of the new banknotes utilised for transactions within less than one week, was another key factor in the euro cash changeover. from the outset, european citizens showed a great deal of enthusiasm and have been very fast in adopting their new money. two weeks after the introduction of the euro banknotes and coins, the value of euro banknotes in circulation was higher than that of national banknotes, and the vast majority of cash transactions in the euro area were being conducted in euro. in the last few months, the eurosystem, i. e. the ecb and the national central banks ( ncbs ) of the 12 eu member states participating in the euro area, and a number of other parties, such as retailers, educational institutions, the tourism industry and the media, were heavily involved in the information campaign which acquainted the general public with the new money. the euro banknotes are endowed with distinctive characteristics and state - of - the - art security features which not only enable the public and professional cash handlers to recognise and check them quickly, but also make them some of the world's safest. the transition to the new banknotes and coins was facilitated by the fact that the financial markets were already fully accustomed to the euro. the introduction of the single currency three years ago was another exceptional success that opened the way to fundamental changes in the conditions in which governments, financial institutions and the private sector operate in financial markets | cleviston haynes : civility, creativity and performance – building and sustaining smart partnerships for improved productivity speech by mr cleviston haynes, deputy governor of the central bank of barbados, at the opening of the 2010 week of excellence, bridgetown, 22 february 2010. * * * dr the hon. david estwick, minister of economic affairs & empowerment, innovation, trade, industry and commerce ; senator sir roy trotman, president of the congress of trade unions and staff associations ; mr. ben arrindel, chairman of the barbados private sector association ; specially invited guests and facilitators ; dr. tayo fashoyin, director, industrial & employment relations department ilo, other distinguished guests ; ladies and gentlemen. the central bank of barbados is again pleased to participate in this week of excellence organised by the social partners. it is appropriate that you should begin your week here in the grande salle of the central bank for the bank ’ s own strategic vision is to be a centre of excellence in all that it does. at the bank, we are acutely aware of the sustained effort, discipline, consistency and commitment required to attain this goal. we only have to look at our cricket icons who have led the way by demonstrating in their sphere of activity that excellence is attainable at the international level for citizens of this small country. one can say that in recent times we have also seen what indiscipline, inconsistency and lack of commitment can produce. we therefore commend the social partners on their on - going efforts to keep this objective at the forefront of national consciousness. this week takes place at a difficult period for the barbadian economy. as you are aware, the past year was challenging as the global financial crisis had a significant negative effect on economic activity, particularly in the tourism and construction sectors and on government ’ s finances. reduced tourism earnings and lower private sector capital inflows have contributed to an attendant loss of foreign exchange earnings. one unfortunate consequence of these developments has been increasing unemployment. however, it is fair to say that the social partners have responded to the challenge with more flexible labour arrangements that helped to contain job losses in some sectors. in its review in early january of the barbados economy for 2009 and prospects for 2010, the bank was cautious in its forecast, noting that the outlook for 2010 is “ clouded by uncertainty about the pace and robustness of the recovery in the north american and european markets on which the tourism and | 0 |
and law enforcement agencies to regulators and vendors – need to work together to counter the dangers that we face. we need to extend the focus beyond the mere reporting of cybersecurity incidents and recovery times. the whole industry needs to become more proactive in its approach and embed a healthier cyber - culture in each firm. this proposed culture will have to be risk - based and inclusive. more prominence will have to be given to greater deterrence, early detection, regular penetration testing, and quicker response times. how we strengthen our computer security incident response teams ( or csirts ) and coordination centres becomes important. to be effective, we need to coordinate our efforts and work together. the sarb believes that cybersecurity is a terrain with enough non - competitive and mutual interests, where public and private stakeholders can collaborate to build the resilience that is required against a common threat. a number of countries have cybersecurity frameworks in place to deal with cyber - threats. while there is a significant amount of variation and overlap across national frameworks, an important shortcoming is often the lack of coordination and cohesion at national and regional levels. we should avoid this. indeed, there are hurdles that we will have to overcome, including privacy concerns, trust deficits, and the lack of expertise. bis central bankers ’ speeches but these are not insurmountable obstacles. i hope you will engage fruitfully on these matters of coordination and cohesion in your deliberations and arrive at workable solutions. cyberattacks know no national borders. we have thus called on knowledgeable experts, both local and international, to address us on a number of relevant topics, ranging from the nature of the threat landscape and regulatory approaches to cybersecurity through future cyberdefensive tools to emerging cyber - resilience trends. to make matters a little more practical, i believe that you may examine one or two case studies and consider how to build cyber resilience into fintech innovation. i am sure that you are also looking forward to learning how cyber - threats are addressed by the other central banks represented here and the latest developments in this regard. conclusion i encourage you to explore and share your ideas on cybersecurity candidly, and i wish you well as you work on the important details of collaborating on, and laying the foundations of, effective and efficient resilience against the cyber - threats of today and of the future. may you remain forever vigil | ties forged within the local community. the importance of vision so far, my remarks have focused on the tangible aspects of planning and investment. but i do not want to leave out a critical element that is perhaps impossible to measure but underlies each of your undertakings. that element is vision. the washington post has reported that when joe horning walked through this theater eight years ago, he was surrounded by broken windows, rotted floor boards, and leaks in the roof. that ’ s what he saw. but what he envisioned was quite different. he envisioned a beautifully restored theater that would not only serve the community but, more important, also serve as a symbol that columbia heights could be revitalized. indeed, in the past eight years, that vision has been realized, with columbia heights today a vibrant and viable neighborhood. as in similar neighborhoods in the district of columbia and throughout the united states, there is much to celebrate in the results of community investments. the increase in street traffic and economic activity makes the neighborhood a livelier and safer place. property values are rising, and that allows homeowners here to experience the wealth - building power of homeownership that their peers in more - affluent areas have experienced for years. it also enables them to invest in the rehabilitation of their homes. this additional investment improves the look and feel of the entire neighborhood. of course, the higher home prices and rents that result from the increased desirability of this neighborhood also limit the availability of affordable housing. these pressures on the market are being felt here in the washington metropolitan area as well as in other expanding real estate markets. the question of gentrification in columbia heights was interestingly portrayed in the washington post earlier this month through the eyes of a pair of twelve - year old girls who have grown up in this neighborhood. the girls entered a citywide essay contest on gentrification, a word that they had not previously known, and observed very keenly the effects of the development going on around them. they noted their increased feeling of safety as they walked to and from school thanks to the rehabilitation of previously vacant rowhouses and the exciting new diversity of individuals living in their neighborhoods. but they also missed the friends whose families were forced to move out of the neighborhood when it became too expensive to stay. they were saddened by the loss of some of the smaller shops that will be replaced by larger retailers. in the end, the girls concluded that gentrification is a complicated issue, and its | 0 |
##s of issuing central bank digital currencies. 4 / 4 bis central bankers'speeches | financial conditions remain very favourable and support the euro area expansion, the ongoing build - up of domestic price pressures and, thus, the sustained convergence of inflation to the governing council ’ s medium - term inflation aim. the governing council continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. the effectiveness of monetary policy can and should be enhanced by other policies. on the fiscal side, the mildly expansionary euro area fiscal stance is currently providing some support to economic activity. in view of the weakening economic outlook and the continued prominence of downside risks, governments with fiscal space that are facing a slowdown should act in an effective and timely manner. at the same time, governments in countries with high public debt should pursue prudent policies and deliver on their structural balance targets. this will create the conditions for automatic stabilisers to operate freely. all countries should reinforce their efforts to achieve a more growth - friendly composition of public finances. the implementation of structural policies in euro area countries needs to be substantially stepped up. the transparent and consistent implementation of the eu ’ s fiscal and economic governance framework, over time and across countries, also remains essential. euro area banking sector developments the resilience of the euro area banking sector remained solid and was supported by both microprudential and macroprudential actions, such as the increase of countercyclical capital buffers by national authorities in a number of countries. the aggregate common equity tier 1 ratio of significant institutions at the end of the second quarter of 2019 stood at 14. 3 %, unchanged from the end of 2018. at the same time, vulnerabilities related to liquidity and funding risks, including those related to us dollar activities, have abated amid lower funding costs and broader access to bank bond markets. non - performing loan ratios improved further to 3. 6 % over the first half of 2019, from 3. 8 % at the end of 2018. however, banks ’ profitability in the euro area remains low due to both structural and cyclical factors, with some weakening since the beginning of the year on account of slower economic growth. the financial stability environment remains challenging, as the global economic outlook has deteriorated. there are mild signs of overstretched valuations in the euro area in some riskier segments of the financial markets, as well as in real estate markets, with marked differences across regions. in addition | 1 |
mario draghi : euro area economic outlook, the ecb ’ s monetary policy and current policy challenges statement by mr mario draghi, president of the european central bank, prepared for the twenty - eighth meeting of the international monetary and financial committee, washington dc, 12 october 2013. * * * i would like to focus on the euro area economic outlook, the ecb ’ s monetary policy and current policy challenges. economic activity in the euro area bottomed out in the first half of the year and is expected to strengthen gradually in the period ahead. recent economic indicators, which have been predominantly positive, support expectations of a modest and gradual recovery. output is expected to recover at a slow pace, driven by a gradual improvement in domestic demand supported by the ecb ’ s accommodative monetary policy stance and a gradual strengthening of external demand. furthermore, the improvements in financial markets seen since august 2012 appear to be gradually working their way through to the real economy, as should the progress made in fiscal consolidation. the risks surrounding the economic outlook for the euro area continue to be on the downside. developments in global money and financial market conditions and related uncertainties may have the potential to negatively affect the economic outlook. other downside risks include higher commodity prices in the context of renewed geopolitical tensions, weaker than expected global demand and slow or insufficient implementation of structural reforms in euro area countries. underlying price pressures in the euro area are expected to remain subdued, reflecting the broad - based weakness in aggregate demand and the modest pace of the recovery, as well as subdued monetary and credit dynamics. medium to long - term inflation expectations continue to be firmly anchored in line with price stability. the risks to the outlook for price developments are expected to be still broadly balanced over the medium term, with upside risks relating in particular to higher commodity prices as well as stronger than expected increases in administered prices and indirect taxes, and downside risks stemming from weaker than expected economic activity. the ecb ’ s monetary policy stance continues to be geared towards maintaining the degree of monetary accommodation warranted by the outlook for price stability. it thereby provides support to a gradual recovery in economic activity. looking ahead, our monetary policy stance will remain accommodative for as long as necessary. in line with the guidance provided in july, the governing council expects the key ecb interest rates to remain at present or lower levels for an extended period of time. this expectation is based on an overall subdued outlook for inflation extending into the | ##minants of productivity shows that lower productivity growth in the euro area has been partly related to higher employment due to greater participation of lower - skilled labour. sustained wage moderation and some progress in labour market reforms aimed at increasing labour market participation appear to have partially shifted production towards a more intensive use of labour. there are also indications that the slower pace of productivity growth observed in the euro area since the mid - 1990s reflects an insufficient use of new productivity - enhancing technologies. while productivity growth has increased in sectors that produce information and communication technologies or provide related services, it has declined in many other areas of the economy. this points to structural rigidities in the euro area that prevent or hinder the fast and effective dissemination of new technologies and improved production processes across the economy. against this background, structural reforms that stimulate innovation, investment and productivity, and promote the use of new productivity - enhancing technologies are crucial. stimulating product market competition, facilitating restructuring and improving human capital through adequate educational systems and “ on - the - job ” training are likely to speed up productivity gains from the use of new technologies. we are now at your disposal for questions. | 0.5 |
remarks by mr. javier guzman calafell, deputy governor at the banco de mexico, on “ emerging markets in an era of dollar appreciation and volatile capital flows ”, at the state street global advisors ( ssga ) - official monetary and financial institutions forum ( omfif ) roundtable “ policy rupture : challenges and opportunities for public investors ”. london, april 4, 2017. 1 i would like to start by thanking the organizers for the invitation to speak at this panel. several years after the outbreak of the global financial crisis, the world economy continues to display a weak performance, despite the recovery that has taken place since then. following the rebound observed in 2010, the growth rate of global gdp has been on a declining trend, averaging 3. 5 percent annually during the period 2011 - 2016, a full percentage point below its precrisis trend. it should be noted that the above owes to a large extent to developments in the advanced economies ( aes ), whose sharp gdp contraction and slow recovery in the aftermath of the crisis limited the increase in real gdp from 2007 to 2016 to a mere 10 percent. even though cyclical factors explain to some extent the aforementioned trends, the markedly low speed with which activity has recovered, as well as the perceived fragility of the process, point in the direction of important structural forces at play. indeed, global demand for both capital and the opinions and views 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. consumption goods appears to remain subdued due in part to an excess of savings over investment, further compounded by the long - lasting deterioration of balance sheets across sectors and economies as a result of the crisis. on the supply side, factors such as low productivity growth and demographic trends, especially in the aes, in combination with so - called hysteresis effects from the crisis, are considered to be exerting downward pressure on growth. all in all, this has given rise to concerns about the possibility of secular stagnation and therefore a much less dynamic outlook for the global economy. 2 the situation is further clouded by parallel and reinforcing trends in international trade flows. not only is the global trade volume of goods and services estimated to have recorded last year its lowest pace of expansion since the height of the crisis, but its average rate of growth has been cut by over one half between 2000 - 2007 | they at their very best slow down the build - up of stability risks within the financial system. this has several important policy implications. for one, despite of the limitations i sketched, we should remain committed to full implementation of the international reform agenda. limitations in scope and impact cannot be an argument to deregulate. but on top of this, we should continue to work on structural challenges within the economy and its financial system. importantly, we should also continue to think about the implications for the overall macroeconomic policy mix. the observation that macroprudential policies cannot be fully relied upon to contain systemic risks would also have to be taken into account in the conduct of monetary and fiscal policy. to be clear : it should not have an impact on the mandate or direction of monetary policy, which would continue to be fully geared towards price stability. however, financial stability would have to be a relevant factor to take into account within the design and the proportionality of policy measures. obviously, these are complex observations that require further analysis. i look forward to discuss these and related matters in our quest for further operationalization of effective macroprudential policies. | 0 |
will increase the importance of capital adequacy, risk management, effective supervision, and transparency in fostering and maintaining financial stability in an increasingly integrated and interconnected global financial system. indeed, supervisors and bankers need to maintain a healthy skepticism about the uncertainties and real - world vicissitudes surrounding any theoretically precise measures of risk - particularly in times of adversity, when capital cushions are so important. qualitative factors such as sound judgment, knowledge, and real - world experience are essential to successful risk management. our hope is that the implementation of basel ii will substantially improve institutions'ability to measure and manage their risks. but we expect that basel ii will complement the evolution of banks'own processes and systems, not supplant them. finally, we also anticipate that basel ii will allow for the open development of new risk - management techniques, as they evolve over time. | 185 – 288. woodford, m. ( 2013a ), ‘ forward guidance by inflation - targeting central banks ’, paper presented at the conference two decades of inflation targeting : main lessons and remaining challenges, sveriges riksbank, 3 june 2013. woodford, m. ( 2013b ), ‘ fedspeak : does it matter how central bankers explain themselves ’, university lecture delivered at columbia university, 22 april 2013. bis central bankers ’ speeches | 0 |
edward m gramlich : budget and trade deficits - linked, both worrisome in the long run, but not twins remarks by mr edward m gramlich, member of the board of governors of the us federal reserve system, at the los angeles chapter of the national association for business economics luncheon, los angeles, 31 march 2004. presented at the euromoney bond investors congress, london, england, 25 february 2004. * * * thank you for inviting me to speak today. while i know that most of you would welcome any insights i might have about current u. s. monetary policy - whether the open market committee will be raising or lowering interest rates at our next meeting - i prefer to focus instead on some issues that could become serious over the longer run. these issues involve the persistent budget and trade deficits facing the american economy, issues that could eventually involve significant economic adjustments around the world. 1 large budget and trade deficits are not a new phenomenon. they also arose in the united states in the mid - 1980s. at that time, the business press and many economists began referring to the situation as one of “ twin deficits. ” with the current re - emergence of both deficits, the phrase has come back into common usage - too common, in my view. to be sure, in theoretical models there is a scenario by which budget deficits can create trade deficits, and one by which trade deficits can create budget deficits. but there are also many scenarios by which either deficit can arise independently, or even by which budget and trade deficits can move in opposite directions, as they did in the 1990s. in general, while budget and trade deficits can be linked, there are important differences between the two, both in how they respond to economic forces and in their long - run consequences. i start by examining the relationship between budget and trade deficits - why they are linked but not twins. i discuss the sustainability conditions for budget and trade deficits ; the conditions that must be fulfilled for the debts on both accounts to be stabilized in relation to the size of the u. s. economy. then i discuss what happens if either debt violates this condition and rises in relation to the size of the economy. this discussion, in turn, raises further interesting distinctions between the two deficits. the link the link between budget and trade deficits can be seen most naturally through the national income accounting framework. any saving the nation does finances either private domestic investment directly | external debt, one can separately ask whether either debt level is becoming a more, or less, important economic factor over time. for government debt, this weaker standard, or stability condition, determines merely whether the ratio of debt to gross domestic product ( gdp ) is stable. if it is, interest payments on the debt will, in equilibrium, also settle down to a stable proportion of gdp. for external debt, a stable debt - to - gdp ratio means that the net interest and dividend payments of the united states to foreign investors will also settle down to a constant ratio to gdp. both debt stocks would also include a valuation adjustment to deal with capital gains and losses. the appendix derives this stability condition generically. it is that d ( g - i ) / ( 1 + g ) = p, where d is the stable ratio of debt to gdp, g is the nominal growth rate of the economy, i is the nominal interest rate in the economy, and p is the ratio of the primary deficit to gdp. for budget accounts, the primary deficit is the national income accounts budget deficit, but excluding interest payments. for trade accounts, the primary trade deficit is the current account deficit, excluding net interest and dividend payments to foreigners. 3 as a general rule, the economy ’ s growth rate and interest rate will be fairly close. the equation says that if they are equal, the primary deficit must be zero to stabilize the debt - to - gdp ratio. if the interest rate is slightly above the growth rate, as it would be in models without risk for economies that save less than the theoretical optimum, a nation with outstanding debt would have to run a slight primary surplus to stabilize its debt - to - gdp ratio. if the effective interest rate on debt is slightly below the growth rate, as it has generally been found to be in the past for both deficits, a nation with outstanding debt could run slight primary deficits and not see the debt ratio grow. 4 on the foreign side, this condition has until now been especially forgiving. even with a large net debt position, our net investment income from foreigners has exceeded that paid out to foreigners. since the net interest rate has been less than the gdp growth rate, the ratio of external debt to gdp could have been stabilized with a moderate primary trade deficit. 5 magnitudes it is well known that the u. s. economy now suffers both budget and trade deficits. but how do these deficits compare with the stability conditions? | 1 |
figures for the united kingdom prior to 1989 are based on the ons estimates. 2. in the right - hand chart, figures for the united states are the medians of the target ranges for the federal funds rate. those for the euro area are the rates on the deposit facility. sources : haver ; ons ; bloomberg. chart 7 i. economic developments labor market conditions and prices in the united states labor force participation rate job openings s. a., cy 2007 = 100 consumer prices in the united states s. a., % energy < 7 % > japan services < 63 % > united states goods < 30 % > cpi < 100 % > japan united states y / y % chg. - 1 cy 07 09 11 13 15 17 19 21 cy 07 09 11 13 15 17 19 21 - 2 cy 18 notes : 1. in the left - hand chart, figures for 2022 / q3 are those for july. 2. in the middle chart, the figure for 2022 / q3 for japan is that for july. that for the united states is the july - august average. 3. in the right - hand chart, figures are for the cpi for all items. figures in angular brackets show the share of each component. figures for 2022 / q3 are july - august averages. sources : ministry of health, labour and welfare ; haver. chart 8 i. economic developments global growth rate for 2022 ( imf forecast ) y / y % chg. forecast as of oct. 2021 + 4. 9 % downward revision forecast as of july 2022 + 3. 2 % oct. 20 apr. 21 oct. 21 apr. 22 forecast date source : imf. chart 9 ii. price developments consumer prices in japan ( less fresh food ) y / y % chg. temporary factors aug. 2022 : + 2. 8 % energy < 7 % > services < 50 % > goods < 40 % > cpi ( less fresh food ) < 100 % > - 1 - 2 cy note : figures for temporary factors are staff estimates and consist of mobile phone charges and the effects of the consumption tax hike, policies concerning the provision of free education, and the " go to travel " campaign, which covers a portion of domestic travel expenses. figures in angular brackets show the share of each component. figures for 2022 / q3 are july - august averages. source : ministry of internal affairs and communications. chart 10 ii. price developments inflation expectations | common to what japan had experienced during the post - 1990s period of deflation. although these disinflationary trends have exerted some effects on short - term inflation expectations so far, medium - to long - term inflation expectations remain intact. such expectations in the united states and the euro area seem to be stable at around 2 percent ( chart 6 ). in light of japan ’ s experiences, however, a persistently low inflation rate entails a risk that people ’ s expectations might change, leading to a decline in medium - to long - term inflation expectations in line with the actual inflation rate. concerns over deflation in the united states are not yet as high as those in the euro area, but i consider it necessary to keep in mind the risk that not only short - term inflation expectations but also medium - to longterm expectations for the united states might decline given that the actual inflation rate has recently been below the level in the federal reserve ’ s outlook, partly due to the declining trend in energy prices brought about by the so - called shale gas revolution. regarding the potential growth rates that i have raised as another concern for the medium term, it has been pointed out from various quarters that there is a possibility of potential growth rates in advanced economies being somewhat lower than those before the 1990s, in reflection of the slowdown in the pace of increase in labor input and in technological innovation. 1 the recent growth rates in emerging economies are lower than those prior to the lehman shock, and there is much argument on whether the low growth rates are caused by cyclical or structural factors. if the decline in the potential growth rates has not been particularly significant, the current disinflationary trends seen in the united states and the euro area are due to the slack persisting in production capacity and in the labor market. and thus it can be said that the disinflationary pressure will start to weaken as this slack dissolves. but another interpretation is that the recent decline in the potential growth rates caused not only a decline in the natural rate of interest, but also a decline in the inflation rate that is consistent with developments in the natural rate of interest. as i have stated, depending on how the potential growth rates are understood, the inflation outlook – and consequently the implications for macroeconomic policy – can change. in this sense, the change in the federal reserve ’ s communication regarding the aforementioned reduction in the pace of its asset purchases is noteworthy. let me explain this in detail. although | 0.5 |
rates remain steady at low levels. yields on long - term government bonds fluctuated and rose temporarily to around 1. 3 percent in lateseptember mainly due to uncertainty over the disposal of non - performing loans by banks, but declined again thereafter and are recently moving around 1. 1 - 1. 2 percent. yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds remain virtually unchanged. meanwhile, stock prices have been falling again in line with a decline in u. s. and european stock prices, reflecting the ongoing selling of japanese stocks by foreign institutional investors. stock prices are moving around 8, 500 yen recently. in the foreign exchange market, the yen is currently being traded in the range of 122 - 125 yen to the u. s. dollar as the market continues to be nervous due mainly to the uncertainty regarding global economic conditions and the unstable situation in the middle east. with regard to corporate finance, private banks are becoming more cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue - chip companies. the lending attitudes of financial institutions as perceived by firms are becoming slightly more severe. in the corporate bonds and cp markets, the issuing environment for firms with low credit ratings is still severe, but the environment for firms with high credit ratings is accommodative. credit demand in the private sector continues to follow a downtrend mainly because firms are decreasing their business fixed investment while continuously reducing their debts. amid these developments, private banks ’ lending continues to decline by about 2 - 3 percent on a yearon - year basis. the amount outstanding of corporate bonds and cp issued is recently moving near the previous year ’ s level. meanwhile, according to business surveys, the financial position of firms, particularly that of small firms, remains severe. the monetary base continued to exhibit a high year - on - year growth rate of around 20 - 30 percent, although the rate has slowed slightly. the year - on - year growth rate of the money stock remained at around 3. 5 percent. funding costs for firms continue to be at extremely low levels on the whole. against the above background, the financial environment as a whole is summarized as follows. money market conditions overall continue to be extremely easy. the money stock and the monetary base maintain high growth rates relative to that of the economic activity as a whole. however, stock prices remain unstable and long - term interest rates are showing relatively large fluctuations. in corporate finance, | bank of japan ’ s october report of recent economic and financial developments1 bank of japan, 15 october 2002 * the bank ’ s view * * japan ’ s economy has stabilized as a whole, but clear signs of recovery have not yet been observed partly due to large uncertainty regarding the global economy. with regard to final demand, while the decline in business fixed investment is coming to a halt, private consumption continues to be weak. moreover, housing investment remains sluggish and public investment is declining. meanwhile, exports continue to increase, albeit at a slower pace. industrial production, despite some deceleration, continues to rise in response to these developments in final demand and adequate reduction of excess inventory stocks. against this background, corporate profits are recovering and business sentiment continues to improve as a whole. however, the pace of improvement in business sentiment has become gradual and the improvement for the immediate future is also expected to be small partly due to large uncertainty regarding the global economy. as for the employment situation, the overtime hours worked continue to increase and new job offers remain firm. nevertheless, as firms are still maintaining their stance on reducing personnel expenses, household income continues to decrease noticeably with a plunge in summer bonuses. thus, the employment and income situation of households overall remains severe. turning to the economic outlook, the uptrend in exports is expected to continue against the background of the moderate recovery in overseas economies, but the deceleration in the pace of increase is projected to continue toward the year - end with the impetus from overseas restocking coming to a halt. thus, while industrial production is also expected to follow a moderate uptrend, the pace is likely to continue decelerating for the time being. with respect to domestic demand, public investment is projected to follow a declining trend and private consumption is likely to remain weak for some time due to the severe employment and income situation. judging from leading indicators and the recovery in corporate profits, it will gradually become certain that the decline in business fixed investment has come to a stop. however, a distinct recovery in business fixed investment in the immediate future is unlikely due to, among other things, large uncertainty regarding overseas economies. once the outlook for the increase in exports and production becomes more certain, domestic private demand will react to it positively. overall, it can be envisaged that japan ’ s economy will gradually form foundations for recovery as overseas economies continue the moderate recovery. however, it will take a while for the economy to show clear signs of recovery | 1 |
lim hng kiang : meeting the challenges of the globalised economy opening remarks by mr lim hng kiang, deputy chairman of the monetary authority of singapore, at the 36th seacen governors'conference, singapore, 31 may 2001. * * * honourable governors distinguished guests and delegates ladies and gentlemen introduction it gives me great pleasure to bid you a warm welcome to the annual conference of the governors of the south - east asian central banks. this is the 36th conference and reflects the close ties and strong co - operation that central banks and monetary authorities in the region have forged over the last 30 years. seacen economy / recent financial developments this year's conference is held amid concerns of a global economic slowdown. after expanding by an average rate of 7. 3 % in the year 2000, prospects for regional economies are set to slow this year. average real gdp growth for the east asian economies is projected to fall to around 4. 5 % for 2001. the slowdown will be due largely to the cyclical downturn in the us economy, as well as the global electronics industry, both of which will hurt regional exports. due to its very open nature, east asian economies are susceptible to the current global downturn in external demand. the us is the largest export market for most of the seacen economies, with export shares averaging 20 %. in terms of goods structure, electronics accounts for over 20 % of total exports in all east asian economies. exacerbating the downturn is the continued economic weakness in japan, the second largest market in the region. reflecting the weak external environment, export growth in many seacen economies has fallen sharply. this has also undermined domestic demand. challenges for asia concerns over the slowing growth in the us and the much weaker japanese economy have hit regional currencies. since end - 2000, regional currencies have seen higher volatility. while the greater flexibility of exchange rates has reduced the risk of large speculative attacks, such fluctuations are not without risk. the challenge facing policymakers is how to ensure the greater exchange rate flexibility does not lead to greater financial system fragility. aside from macro - prudential risk, financial regulators also faced challenges arising from the rapid changes in the global financial landscape. in particular, advancement in technology, investors'demand for shareholder value and customers'demand for integrated financial supervision have accelerated consolidation and globalisation of financial institutions and markets. the boundaries of the banking, insurance and securities industries are less clearly defined. | inflation has been running persistently below 2 percent, the fomc ’ s statement on longer - run goals and monetary policy strategy, revised in august 2020 and reaffirmed in january, is available on the board ’ s website at https : / / www. federalreserve. gov / monetarypolicy / files / fomc _ longerrungoals. pdf. italics added for emphasis. see powell, “ new economic challenges, ” p. 11, in note 10. - 9appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time in the service of keeping inflation expectations well anchored at our 2 percent longer - run goal. our january postmeeting statement on monetary policy implements this new framework. 13 in particular, we expect that it will be appropriate to maintain the current accommodative target range of the federal funds rate until labor market conditions have reached levels consistent with maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. in addition, we will continue to increase our holdings of treasury securities and agency mortgage - backed securities by $ 80 billion and $ 40 billion per month, respectively, until substantial further progress has been made toward our maximum - employment and price - stability goals. the broad responsibility for achieving maximum employment seventy - five years ago, in the wake of wwii, the united states faced the challenge of reemploying millions amid a major restructuring of the economy toward peacetime ends. 14 part of congress ’ s response was the employment act of 1946, which states that “ it is the continuing policy and responsibility of the federal government to use all practicable means... to promote maximum employment. ” 15 as later amended in the humphrey - hawkins act, this provision formed the basis of the employment side of the see board of governors of the federal reserve system ( 2021 ), “ federal reserve issues fomc statement, ” press release, january 27, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20210127a. htm. see joseph t. glatthaar ( 2018 ), the american military : a concise history ( new york : oxford university press ). for a discussion, see aaron steelman ( 2013 ), “ employment act of 1946, ” in federal reserve history, https : / / www. federalreservehistory. | 0 |
one, but in some ways it is related to the previous point, because the international framework for messaging standards provides for transmission of a significant amount of additional data. i think there is widespread acknowledgement within the payments industry that international standards should be adopted wherever possible. timeliness of payments. as communications technology advances, there is little doubt that people are expecting greater immediacy in many areas, and payments are no exception. it is currently not possible for me to make a payment to someone who banks with another bank and for them to be able to use those funds within a short space of time. in some circumstances this lack of capacity can be a significant problem – for instance when someone is waiting on an emergency government payment. this seems like an area we could improve on and it is increasingly becoming a focus overseas. likewise, the fact that payments cannot occur between banks out of normal business hours seems out of line with the ‘ always on ’ world we now live in. addressing payments. cheques are always a good reminder of the things that are missing in our electronic payments. i can pay someone with a cheque when all i know about them is their name. but if i want to make an electronic payment, i bis central bankers ’ speeches typically need to know a 6 - digit bsb number and a 9 - digit account number, things the receiver probably cannot readily provide. people are finding partial workarounds that make use of mobile phone numbers or email addresses, but we are yet to have a truly seamless system. all of these are areas where any progress will have to be made co - operatively, because they are characteristics of the network, not just of the individual players. but that also means that a decision to move ahead in any of these areas needs to take into account the costs and benefits across the system as a whole, both for service providers and end - users. that raises the broader question of whether there needs to be a change in governance arrangements in the industry, so as to make them more conducive to innovation in general. there are a number of reasons why co - operative innovation can be hard to achieve. industry participants have differing commercial interests, and even factors like the timing of their investment cycles can make coordinated actions difficult. a change in messaging standards or timeliness of payments might benefit the public, yet remain hard to achieve because there is no proprietary benefit to the individual service providers. the challenge is to find a way of determining when innovations of that nature are | digital money and infrastructure could increase the efficiency and resilience of wholesale markets where money and assets are tokenised. broader financial stability risks 2 / 3 bis - central bankers'speeches before i turn the floor open to questions, it would be remiss not to briefly mention that our focus on financial stability extends beyond the areas of payments and market infrastructure. as i discussed last year, and as set out by recent editions of the financial stability review, we see risks to financial stability as taking two broad forms. 5 traditional cyclical risks generated from within the financial system these include the effects of higher interest rates or an economic downturn on the resilience of households, firms and banks. these types of risks have long featured in our surveillance work and will continue to do so. non - cyclical risks generated from outside the financial system these have become more prominent in recent times and there is generally little historical precedent to guide us in navigating them. foremost here are geopolitical risks, operational risks ( including but not limited to cyber risks ) and the risks associated with climate change. our assessment is that this second category of risks continue to build in troubling ways. they not only have the potential to be systemic, but could also cut across the financial system, economy and society in complex ways. for these reasons, the rba and other member agencies comprising the council of financial regulators are stepping up the intensity of work in these areas. at the same time, the worsening threat landscape – which is more structural than cyclical in nature – requires industry to actively prepare for a much more challenging operating environment in the years ahead. thank you. 1 rba ( 2024 ),'payments system board 2024 annual report '. 2 rba ( 2024 ),'merchant card payment costs and surcharging ', issues paper, 15 october. 3 rba and australian treasury ( 2024 ),'central bank digital currency and the future of digital money in australia ', september. 4 jones b ( 2024 ),'financial innovation and the future of cbdc in australia ', speech at the intersekt conference, melbourne, 18 september. 5 see, for instance, rba ( 2024 ),'financial stability review ', september ; jones b ( 2023 ),'emerging threats to financial stability – new challenges for the next decade ', sydney, 31 october. 3 / 3 bis - central bankers'speeches | 0.5 |
u. s. regional banks, several factors contributed : unsustainable business models, poor management, too rapid growth, overreliance on uninsured deposits, and concentration in loans and funding. credit suisse's crisis had more complex causes, including large losses from the archegos and greensill cases, governance weaknesses, and repeated strategic changes that eroded market confidence. despite the varying causes, the commonalities reveal potential areas for improving the regulatory framework. in all cases, a rapid loss of client and market confidence occurred. all the banks involved faced substantial liquidity outflows, amplified by social media and facilitated by digital banking. one key area to think about is therefore liquidity regulation. let me start with a very basic observation. why are banks subject to regulation and supervision? the banking business has two key features : leverage and maturity / liquidity transformation. both are necessary for banks to perform their function ; both, however, entail a degree of fragility and the risk of spillovers and contagion, with potentially destructive effects that go far beyond the shareholders of individual institutions. bank regulation is there to limit the system's exposure to such risks, without hampering its fundamental function. 2 / 5 bis - central bankers'speeches this much, i think, is obvious. however, the fact is that, for some reason, international regulatory standards have long concentrated on the first cause of fragility, leverage, by requiring e. g. minimum capital ratios ; such requirements have been at the centre of global standards since the start, with the first basel accord, and have gradually been strengthened over time. the second cause of fragility, maturity transformation ( and, relatedly, liquidity ), were not covered at all in basel i or ii, and only started to appear in basel iii in the form of liquidity standards and pillar - 2 provisions for the interest rate risk in the banking book ( irrbb ). this is strange in a way : it is, after all, common wisdom that bank crises are, more often than not, due to liquidity problems. basel iii thus made progress ; but the compromises i mentioned were, in my view, not fully satisfactory in this area. specifically, there appears to be room for reconsidering the net stable funding ratio ( nsfr ). the current nsfr's one - year horizon means that it cannot fully capture a bank's structural exposure to maturity mis | – by comparison with instant payments – 30 times more slowly, and is about 10, 000 times more expensive. the inefficient processing makes transactions costly not just from a financial perspective, but also in terms of the environmental impact. bitcoin in particular has a large carbon footprint due to the electricity consumption required for its creation and transfer. in addition, because virtual currencies do not have a trusted issuer behind them, they may become worthless at any time. it is not surprising, then, that virtual currencies are not widely accepted as a means of payment. conclusion the future of payments is instant and most countries in the euro area are moving with the times. this is a natural development, following the rise of real - time services in other industries. the industry ( with the support of the eurosystem ) has stepped up to the challenge and developed a scheme and an infrastructure that enable such services to become the new normal for euro payments. now it is time to go one step further and provide efficient and innovative end - user solutions that allow consumers and businesses across europe to make instant payments in any payment situation, especially at the point of sale, where the majority of retail payments are made. i encourage new and existing service providers to take the opportunity to develop pan - european point - of - sale solutions based on instant payments. these solutions should be efficient, userfriendly and secure. as you are all aware, high security standards are essential to retain public trust. i therefore reiterate my call to payment service providers to adhere to the psd2 regulatory technical standards on strong customer authentication and common and secure communication as soon as possible, even before they are legally required to do so. by providing services that are safe, as well as fast and convenient, the payments industry will succeed in meeting the needs of a digitalised society. 3 / 3 bis central bankers'speeches | 0 |
, owing in particular to growing exchanges with new eu member states and the emerging economies. in 2011, euro - area exports and imports accounted for 49 percent of gdp, up from 32 percent in 1999 ; the corresponding figure for both the us and japan is 29 percent. the area ’ s financial assets and liabilities vis - a - vis the rest of the world amounted to 184 and 196 percent of gdp, respectively, up from 92 and 99 percent in 1999. in the us the corresponding figures in 2010 were 140 and 157 percent. italy is very open to foreign trade. trade with countries outside the euro area is worth about 34 percent of italian gdp and 6 percent of euro - area gdp. including exchanges with the rest of the euro area, italy ’ s openness is even more pronounced, the total value of foreign trade equalling 59 percent of gdp. the share of manufacturing exports in gdp is high compared to other advanced countries. in 2009 about 90, 000 manufacturing firms – a fifth of all italian manufacturers – sold part of their output abroad. many are able to reach distant, difficult markets like china : this is the case for 8, 600 italian industrial firms, against 6, 300 german firms and 4, 200 french firms. in 2011, italy ’ s foreign financial assets and liabilities amounted to 119 and 140 percent of gdp, respectively, up from 92 and 97 percent in 1999. 4. the crisis risks leading to re - nationalization of financial portfolios. the perceived risks are amplified by the uncertainty over the resolution of events that are in many respects bis central bankers ’ speeches unprecedented. the key is careful and timely analysis of each national economy and of the actors within them. the opportunities offered by financial diversification in a global environment are potentially intact. ongoing reform efforts in the euro - area countries aim at preserving their attractiveness for financial diversification. °°° 5. the crisis has highlighted the weaknesses of eu and especially euro - area governance. first, the stability and growth pact failed to provide sufficient incentives to correct fiscal imbalances. second, budgetary discipline alone could not avert the financial tensions generated by macroeconomic imbalances. third, the eu lacked a mechanism for managing systemic crises. emu governance hinged on fiscal rules and a no - bail - out clause. the rules were deemed necessary because “ the constraints imposed by market forces might either be too slow and weak or too sudden and disruptive ” ( delors committee, 1989 ). economic convergence was expected | " sovereign debt " crisis, right after, have rocked the italian economy, just while it was struggling to adjust to the new technological and global market environment. to give you a sense of the blow inflicted to the real economy by these two shocks combined, the cumulate drop in gdp during the crisis reached 9 percent ; industrial production fell by a quarter. the fall in global demand severely hit exporting firms, precisely those that were fighting hard to “ go global ”. it was the great recession. there is a big difference between the two shocks, and that regards the effects on the banking system. in the couple of years following the default of lehman brothers, italian banks weathered the storm. much like japanese banks, they were not substantially involved in the " toxic " asset kind of problem affecting banks of other countries. hence, they were able to absorb the turbulence coming from the recession with no support from taxpayers'money. but the sovereign debt crisis kicked in. it paralyzed the cross border interbank market in europe. credit started to decrease, especially to smes. the recession deepened. italian banks, facing a strong rise in non - performing loans and a sharp increase in the cost of funding, saw their profits and capital squeezed, further impairing their ability to support the real economy in a vicious spiral. when the sovereign debt crisis subsided the conditions of our banks improved, but the issue of bad loans still figures prominently on the policy agenda in italy these days. risks and opportunities for the future the macroeconomic scenario is now getting better in italy. a recovery started one year ago. yet the rates of growth projected for this year and the next one look still insufficient to reabsorb unemployment. we still see a lack of aggregate domestic demand, determining an output gap that we estimate at around 5 per cent. the common monetary policy put in place by the european central bank is doing its best to contrast deflationary risks still visible in the euro area. on the fiscal side, italy has inherited from a long season of excessive current expenditure started in the seventies a high level of public debt. hence, fiscal policy has now a limited room for manoeuver, also given the constraints posed by the european rules. the government is bis central bankers ’ speeches fully using the available flexibility. in terms of composition of the budget, it is aiming at changing it in a more growth - friendly manner. consumers'and investors'confidence has to be restored, with the help of macroeconomic policies, in order | 0.5 |
vitor constancio : monetary policy challenges in the euro area speech by mr vitor constancio, vice - president of the european central bank, at the annual conference of the marshall society on “ the power of policy : solving problems and shaping the future ”, cambridge, 31 january 2015. this is the full text of a speech delivered in abridged form in cambridge on 31 january. * * * summary the monetary policy experience of the past seven years is reviewed. in pursuit of its objectives, the ecb has been very flexible in adjusting and expanding its toolkit. in a first phase, from 2008 to 2013, monetary policy measures aimed at easing financial constraints arising from malfunctioning money and funding markets. non - standard monetary policy was conducted in a context of well - anchored inflation expectations. it was not aimed at, but unavoidably resulted in, the expansion of the ecb ’ s balance sheet. the second phase, since 2013, is characterised by a more active use of the ecb ’ s balance sheet, as inflation started to fall significantly below 2 %, accompanied by declines in various measures of long - term inflation expectations. non - standard measures, introduced as from july 2013, included a policy of forward guidance, asset purchase programmes of private debt, a programme to provide targeted long - term funding to banks and an enlargement of the asset purchase programme to include sovereign bonds. a number of concerns have been voiced regarding the adoption of a large scale asset purchase programme ( app ) in the euro area. it is argued that these concerns are unfounded since : the transmission channels of the app go well beyond the direct effect on the price and yield of the purchased assets ; government fiscal discipline should not be achieved at the expense of central bank independence ; central banks have instruments to absorb the effects of an expanded monetary base should inflation become a risk in the future ; and finally, exuberance in specific asset markets should be addressed with macro - prudential policy tools, at national level, since price stability relevant for monetary policy refers to the market of goods and services, not to asset markets at large. at the moment, the euro area is suffering mostly from weak aggregate demand. supply - side policies are necessary to increase the medium - term growth potential. monetary policy, aiming at price stability by stimulating demand and supporting investment, should reduce employment and output gaps, thereby positively affecting medium - term growth. * * * ladies and gentlemen, let me start by thanking | make banks ’ shareholders and investors more prudent and will better protect european taxpayers from any misbehaviour by banks. that said, the best way to prevent crises in the future is to make sure that our economies are prudently managed and that we don ’ t let financial imbalances develop, as was unfortunately the case before the crisis. 4. the biggest challenge that cypriot banks have to face today is how to manage and resolve the extremely difficult and sensitive issue of loan servicing … the cypriot economy needs a functioning banking sector which contributes to the economic recovery. that can only be achieved if the non - performing loan issue is addressed forcefully. for that, the structure of incentives would have to be changed, so that both borrowers and lenders have a common interest in finding a pragmatic solution to the debt problem. the data tell us that this is not happening. conversely, non - performing loan levels are continuing to increase. the reform of the foreclosure process is part of the change that has to come about. in this respect, i welcome the supreme court decision on the unconstitutionality of the four parliamentary bills concerning the foreclosure law. this will help to contribute to the reduction of non - performing loans in the banking system and recreate margins of manoeuvre for banks to extend loans to profitable projects supporting the recovery. bis central bankers ’ speeches 5. the cypriot economic adjustment programme was well on track until recently. however, when political decisions touch upon legal reforms, such as foreclosures and privatisation, delays arise amid reactions … the work of the cypriot authorities and their commitment to the programme has been commendable. those measures were painful and they have imposed a large short - term cost on the economy and cypriot society. but they have started to pay off. they have helped to stabilise the economy and to improve the confidence of international investors. institutional and legal reforms are fundamental to enhancing the business environment and boosting economic growth and job creation. this raises difficult political discussions in cyprus, as in any country, but such discussions are nonetheless indispensable, as this is about changing the business model of the cypriot economy, and we are in a democratic society. 6. policy in the euro area is characterised by the lack of a common approach, given that the ecb is willing to proceed, if necessary, with further monetary policy easing and has called on those governments that have room for manoeuvre to loosen | 0.5 |
dovish. that would represent a return to the first extreme incentivising borrowing. both these extremes have perverse effects. the impacts of the extreme policies and the parallel trends in the economy are assessed by duffie ( 2023 ) for the us financial market and, for example, by grimm, laeven and popov ( 2023 ) for the euro area. the impacts on global trade are summarised by alfaro and chor ( 2023 ). it would be inappropriate for me to evaluate the polices of other central banks, but it would be a mistake not to critique the past policy of the cnb. the main problem in the czech republic was the rapid switch from one extreme to the other – from ultra - low rates and efforts to trigger inflation to ultra - high rates and efforts to rein inflation back in again. everything comes at a cost. a rapid increase in rates doesn't always mean lower inflation in the future. you can't put right the mistakes made in past years in one fell swoop. this is discussed in the classical literature – see, for example, friedman and lucas ( 1976 ). the big lesson for me is that we will try not to repeat 2017 at the cnb. the interventions made at that time to weaken the koruna and raise inflation led within four months to an increase in the cnb's balance sheet, or rather in the banking sector's liquidity. it increased from czk 1, 300 billion in december 2016 to czk 2, 300 billion in 2 / 4 bis - central bankers'speeches april 2017. this contributed to us later having the highest core inflation in the eu. each central bank should start with itself, with self - reflection. my discussions with colleagues from the fed, the ecb, the bank of england and the reserve bank of new zealand confirmed me in the view that our models, should, like theirs, be audited and critically assessed. professor at the university of chicago and former governor of the reserve bank of india raghuram rajan ( rajan, 2023 ) said : " central banks have constrained their own policy space with asymmetric and unconventional policies, ostensibly intended to deal with the policy rate touching the lower bound. they have triggered a variety of imbalances that are making fighting inflation harder today. " more purposeful and less interventionist central banks would probably do better than a high - inflation, high - debt, low - growth world | return to quantitative easing sometime in the future, should circumstances require that. given the outlook for the economy and inflation, further normalisation of interest rates will be required. in making its decisions, the board will continue to be guided by the evidence on both inflation and the labour market. we will also continue to be flexible and responsive to changing circumstances. we will do what is necessary to ensure that inflation outcomes are consistent 2 / 3 bis central bankers'speeches with the medium - term inflation target. this does not require an immediate return of the inflation rate to target because our monetary policy framework intentionally allows for flexibility and some variability in inflation from year to year. but we do need to ensure that the inflation rate tracks back to the target range of 2 to 3 per cent over time. this would be harder to achieve if the inflation psychology in australia were to shift in a durable way due to the recent higher inflation outcomes. the decision to move today, rather than wait, should help on this front. in making our decisions over coming months, we need to navigate through some considerable uncertainties. globally, it remains uncertain how the supply - side problems will be resolved and developments in ukraine are unpredictable. another source of uncertainty is how household spending in advanced economies responds to the decline in real wages, as wages growth has not kept pace with the higher inflation. also, we have no contemporary experience to guide us with how labour costs and prices in australia will behave at an unemployment rate below 4 per cent. it is also relevant that households have much more debt than previously, and many households have never experienced rising interest rates. so this is another aspect that we will be watching carefully. notwithstanding these uncertainties, i expect that further increases in interest rates will be necessary over the months ahead. the board is not on a pre - set path and will be guided by the evidence and data as it takes the necessary steps to achieve the medium - term inflation target and support full employment in australia. thank you for listening. i am happy to answer your questions. 3 / 3 bis central bankers'speeches | 0 |
agus d w martowardojo : building resilience, diversifying growth keynote address by mr agus d w martowardojo, governor of bank indonesia, at the euromoney indonesia investment forum, jakarta, 22 march 2016. * * * honorable speakers, distinguished guests ; ladies and gentlemen, …. good morning. 1. it has always been a great pleasure to be part of the euromoney indonesia investment forum. let me first thank the organizers for inviting me to this prestigious event. 2. this morning, i would like to share my views, on how we should build resilience and diversify growth engines, and how bank indonesia ’ s role in supporting the indonesian economy as we venture ahead in the volatile world. ladies and gentlemen 3. the past few years have brought us many economic surprises and challenges. even today the global economy is still surrounded by substantial risks and uncertainties. 4. concerns and uncertainty about the global outlook have weighed heavily on world financial markets. last year, emerging market have been particularly hard hit and their currencies have weakened and sovereign credit spreads have continued to widen. 5. entering 2016 market developments have taken a further turn for the worse. concerns about growth and financial stability in china came back to the fore in early january 2016 that struck global investor risk appetite. 6. coupled with worries about the broader emerging market economic outlook and ample supplies, these concerns affected heavily on commodity prices, with oil and metal prices falling to their lowest level in years. 7. indeed, growth in emerging markets – while still accounting for over 70 percent of global growth – declined for the fifth consecutive year. 8. what may be most disconcerting is that the rise in global risk aversion is leading to a sharp retrenchment in global capital and trade flows. last year, for example, emerging markets saw about – $ 735 billion in net capital outflows, compared with – $ 111 billion in net capital outflows in 2014. 9. heavy capital outflows from emerging markets have fed into falling official reserves, as some em central banks have consistently intervened to support their currencies. 10. global trade flows, meanwhile are being pulled down by weak export and import growth in large emerging markets such as china, russia, and brazil, which have been under considerable pressure. 11. everywhere, inflation has fallen to historical lows. at the recent g20 meetings in china there was broad recognition of the risk of a | respective authorities which included capital controls on the one hand and taking measures to attract relatively longer term flows on the other. capital inflows & outflows : hierarchy of choices 10. let me now make some comments on capital controls. our framework of capital account management, has been more inclined towards capital inflows than capital outflows. in a, capital scarce growing economy with large investment needs, it has been our longstanding policy to encourage capital inflows to augment domestic savings with a bias towards flows that are stable, long term and those that are least prone to sudden stoppages and reversals. here i would like to highlight our approach to some of the critical elements of capital flows. foreign direct investments 11. foreign direct investment ( fdi ), characterized by lasting interest and some degree of management control by the investor, is positioned high in the hierarchy of capital inflows not only because of it is resource augmenting but also because it usually brings in better technology and more efficient management and business practices. the framework for fdi, which gets legal sanctity under the regulations notified by the reserve bank under fema, is set by the government of india in consultation with the reserve bank of india, and the only restriction on fdi pertains to sectoral investment limits – the degree of control that can be ceded to a non - resident - motivated by strategic or socio - economic considerations. the rest of the regulatory framework is a matter of procedural detail, and we have been continuously trying to rationalize and streamline the regime to make it as investor friendly as possible. to illustrate the point, one can cite some of our recent measures, such as, doing away with the regulatory prescription of pricing methodology, introduction of optionality in inward fdi, etc. foreign portfolio investors 12. there is a tendency to see inflows on account of foreign portfolio investment as “ hot money ” which can cause sudden stoppages or reversals. over two decades of experience as well as recent studies show that this fear is perhaps exaggerated. portfolio investment flows do exhibit some volatility and surge either way, but at an aggregate level there is a fair degree of stability. since its introduction in 1992, the regulatory regime for portfolio investment has evolved over time. you are all aware of the recent simplifications and liberalizations brought about in the scheme in sync with regulations notified by the securities and exchange board of india ( sebi ) wherein the fiis and | 0 |
anselmo teng : development and supervision of bvi business companies opening remarks by mr anselmo teng, chairman of the monetary authority of macao, at a seminar on “ development and supervision of bvi business companies ”, macao, 23 november 2009. * * * dear mr. baker, honourable guests, ladies and gentlemen, good morning! on behalf of the financial sector of macao, i would like to express our warm welcome and heartfelt gratitude to mr. baker, deputy managing director of the financial services commission of british virgin islands, who has kindly consented to be the speaker of this seminar entitled “ development and supervision of bvi business companies ”. i would also welcome participants from relevant government agencies and financial institutions to attend this informative seminar. one year ago, the financial tsunami, triggered by the subprime fallout, started to take its toll on global financial markets in a scale which is unprecedented since 1930. a vast number of reputable financial institutions encountered severe difficulties in liquidity and solvency arising from toxic assets they acquired in the hey day. fortunately, governments and central banks around the world took concerted actions, which included fiscal stimulus and monetary easing, to stabilize the global financial system. equity and commodity prices have mostly returned to pre - crash levels. the emerging markets, particularly china, are faring well after the crisis. being a micro open economy, macao was inevitably affected by the turmoil. the overall economy of macao started to feel the pinch in the second half of 2008. the shrinkage has started to moderate but growth in 2009 will inevitably show certain degree of adjustment. the financial sector of macao also underwent a mild consolidation since the eruption. as our experience of toxic assets was rather limited, the direct impact of the crisis on macao financial sector was minimal. in addition, the spillover effect of the huge stimulus package of china has effectively uplifted the macao economy. as a result, financial institutions in macao have been able to maintain fine asset quality, ample liquidity and adequate capital. i should say the economy of macao and hence its financial sector have survived and emerged unscathed after the outbreak. our prudential supervision has never been impaired by any crisis. as a responsible member of the global village, the macao sar government has never been lax in its efforts to enhance sound financial supervision through persistent offsite surveillance and onsite inspection applied to authorized institutions. in addition, the monetary authority of | supervise all authorized institutions by conducting on - site inspections, off - site surveillances and prudential meetings. in 2007, amcm issued “ guideline on management of country risks ” and “ determination of market risk adjusted capital adequacy ratio ” to be adopted by financial institutions which will no doubt enhance the stability of our financial system. in the domain of insurance supervision, we emphasized on the revision and perfection of related legislations. at the same time we strengthened our inspection efforts, bashed illegal insurance activities. in perfecting related legislations, we revised “ mandatory automobile civil liability insurance ” and “ mandatory labour civil liability insurance ”. simultaneously, we enhanced inspection of aml measures implemented by insurance institutions. in 2007, amcm carried out on - site inspections on insurance institutions operating in macao, accentuating our efforts in regulating the operation of our insurance market. we strive to maintain a stable exchange rate. in 2007, china achieved record high trade surplus. there was a hefty increase in exchange reserves. the yuan continued to appreciate against us dollar which gave rise to depreciation of the pataca against the yuan. it fueled the pressure on inflation in macao. against such a backdrop, amcm adhered to rules of currency board and link rate, maintained the relative stability of the pataca, which facilitated stable operation of the macao economy. amcm promotes actively cross border financial cooperation. in 2007, as usual, amcm participated in activities relating to financial cooperation with the mainland, our neighbouring regions, countries and international organizations and encouraged the financial industry of macao to communicate and cooperate with overseas entities. for instance, we promoted closer cooperation between our financial sector and portuguese speaking countries and actively participated in meetings with relevant international and regional organizations. we hosted related international activities and successfully hosted the ogbs 2007 annual general meeting. we advocated and deepened financial cooperation between macao and guangdong as well as between macao and shenzhen. we reinforced cooperation with various financial regulatory bodies with a view to effectively bashing illegal financial activities through execution of cross border supervision. we actively encouraged the enlargement of rmb business in macao, promoted further development of rmb business, propagate the circulation of pataca on the mainland, reinforced cross border settlement and cooperation in financial infrastructure and opened up the clearing system for hong kong dollar cheques. in retrospect, we are proud to say that 2007 was again a fruitful year for the macao financial sector. i would like | 0.5 |
in the near future if world economic growth rebounds and the financial market situation in the developed countries normalizes. on its part, the bank will continue to minimize the adverse impacts of second round price effects that may arise from the external shocks by pursuing appropriate monetary policy. 3. conclusion the central bank remains committed to the low inflation objectives in the medium term outlook and shall implement an appropriate monetary policy stance aimed at setting money supply to such a level that would keep inflation on track to deliver price stability. accordingly, while the economy will be allowed to adjust to exogenous shocks, the central bank policy actions will aim at minimizing the second round effects feeding into domestic inflation. it should be pointed out that continued fiscal discipline ; financial markets development, sustained financial stability and deepening have provided a conducive environment for doing business in uganda. the gains achieved so far will be consolidated by continuing the coordination of monetary and fiscal policies to ensure macroeconomic stability. there is need for urgent action to tackle supply side constraints to increase production. going forward, reforms to improve efficiency of institutions will continue to be implemented and significant investment effected in infrastructure to reduce the costs of doing business in the country. government has already committed itself to address the infrastructure requirement in roads, energy and communication sectors. the private sector is therefore called upon to take advantage of the available opportunities in the global community and neighboring countries to increase the supply of food and other products to maximize the gains from these opportunities. | is able to conduct monetary policy in an effective and flexible manner by taking account of the economic, price, and financial conditions - - including the impact on the functioning of financial intermediation - - as it directly targets long - term interest rates. another component of the new framework is an " inflation - overshooting commitment. " with this commitment, the bank aims to raise inflation expectations by demonstrating its strong determination. the bank has attempted to make expectation formation more forward - looking through qqe. in reality, however, before the forward - looking expectation formation fully took hold, the observed inflation rate declined, due mainly to the fall in crude oil prices. as a result, people's inflation expectations also declined in an adaptive manner. therefore, i consider that, in order to achieve the price stability target of 2 percent, it is absolutely necessary to raise inflation expectations and promote a shift in expectation formation toward a more forward - looking direction. the inflation - overshooting commitment is a means to this end. inflation expectations are, so to speak, the sense of price trends among individuals and firms, and to change such expectations is not an easy task. this is even more the case with a country like japan that has experienced protracted deflation. when qqe was introduced, the bank set a time frame of about two years to achieve the price stability target in order to emphasize its strong and clear commitment to ensuring the economy's exit from deflation. therefore, it may seem like it has taken a long time for the bank to achieve this target. on the other side of the coin, only four years have passed since the target was set. needless to say, this does not mean that taking a long time to meet the objective is acceptable. first, it remains important to have the bank's strong commitment to achieving the price stability target and express it in various different ways. then, under the highly accommodative financial conditions maintained by the bank in addition to the large - scale economic stimulus package implemented by the government, i consider it essential to enhance private demand by further accelerating efforts in both the public and private sectors to strengthen the growth potential. in fact, such efforts already have been undertaken by both the public and private sectors. in this context, the government decided the japan revitalization strategy 2016 in june 2016 and launched the 10 strategic public - private joint projects, in which the public and private sectors share knowledge and strategy, and cultivate new promising markets | 0 |
the direct and indirect effects of prices will impede returning the inflation indicator to the goal declared by the eurosystem, i. e. under 2 %, but close to that figure. the extraordinary monetary policy measures implemented by eurosystem continue to be an important factor stabilizing the euro area. the conditions for borrowing have become more favourable both for enterprises and households. the dynamic of loans granted in the euro area continues to improve, yet the speed of recovery is low. therefore, at the 3 december meeting of the ecb council we decided on several measures : • to further reduce the overnight deposit facility interest rate to minus 0. 30 % ; • to extend the expanded asset purchase programme to the end of march 2017 ; • to reinvest the principal amounts of the securities purchased within the expanded asset purchase programme once their term of maturity has set in ; • to include amongst the purchasable assets also secure, investment grade debt securities emitted by local governments ; bis central bankers ’ speeches • to continue to conduct refinancing operations with a set interest rate and full allotment at least to the end of the last reserve requirement period of 2017. the decision taken by the ecb council will mean even cheaper resources at the disposal of latvian commercial banks, households and enterprises. i hope that this loan money will reach households and businesses without an additional surcharge. the costs of servicing the latvian government debt will also continue to drop, which will mean additional savings – and it would be essential not to consume those but to direct them toward implementing structural reforms, thus increasing the country ’ s competitiveness. instead of additional borrowing to make use of the low interest rates, it is important to reduce the public debt, which would have a positive impact on the budget as well. but i will turn to that in a little while. ( chart ) latvijas banka has continued with the expanded asset purchase programme by purchasing securities emitted by the government of latvian and international organizations in the amount of 1. 44 billion euro over eight months of this year. the purchases of latvian government securities by latvijas banka and ecb had reached 630 million euro by the end of october. 2. and now let ’ s turn to latvian economic growth analyses by sector and other criteria indicate that the latvian economy is growing in accordance with earlier predictions and the rate of this growth could be characterized as moderate. given the complicated situation in the external environment, such a result can be considered as satisfactory | reserve will be very important. – under the current circumstances, structural reforms in education and healthcare systems gain even more importance. it is my great hope that in 2016, serious reforms will take place in both of these areas, in order to improve latvia ’ s competitiveness, and that measures will concurrently bet taken to explain to the population why such reforms are necessary and what positive effect they will have on our economy in the future. why am i discussing budget matters at this time? we are worried about the obvious fact that all possibilities for organizing the budget have been exhausted. it is said that latvia can no longer sustain tax revenues at the level of 28 % of gdp and that the budget is overall too small. thus groundwork has been laid for the raising of taxes next year. under such circumstances, the latvian business environment would be seriously endangered and, with it, any successful economic development in the future. we have at least six months till the drafting of the next budget begins and i hope that the ministry of finance and the government will launch a serious discussion for us to see what the government is spending overall and whether the only way to improve the budget situation is to continue brutally raising the taxes. bis central bankers ’ speeches | 1 |
benefit of those affected. while this has meant that the examination has taken longer than expected, the results are now becoming evident in terms of the numbers of people identified as affected and the scale of redress and compensation being paid. in tandem with our supervisory work, enforcement work is ongoing. enforcement four enforcement investigations are currently under way, and we expect that all of the main lenders will face enforcement investigations. enforcement investigations are detailed and forensic, and routinely involve the scrutiny of thousands of documents and the conduct of interviews as part of the investigative process, to establish the exact circumstances of matters under investigation. in our enforcement investigations, the central bank will consider all possible angles, including potential individual culpability. while we are investigating, it is also important to remember that the board members and senior personnel of lenders have significant legal obligations to report potential regulatory breaches to the central bank and to report certain potential criminal offences to an garda siochana under the criminal justice act 2011. in that context, we are writing to the board members and senior personnel requiring signed confirmation from them that they are aware of their legal obligations. culture within lenders the central bank ’ s consumer protection code requires that lenders act in the best interests of their customers. while many lenders publicly state that they put customers first, evidence from the examination firmly suggests otherwise. the examination has exposed the manner in which certain lenders have treated their customers and the degree of regulatory force required to make them rectify such behaviour. it is clear that significant behavioural and cultural issues and challenges in some of the lenders still exist and that customer interests have not been sufficiently protected or prioritised. the minister for finance has mandated the central bank to report on the issue of behaviour and culture within lenders later this year. we are currently completing our scoping work and the next step is to commence on - site assessments, which will include engagement within each of the lenders at senior management, middle management and staff levels to probe behaviour and cultural issues within lenders. it is important to note that culture is about more than behaviour. a partial list includes prioritising 3 / 5 bis central bankers'speeches the best interests of customers, offering responsible products, reviewing board effectiveness, committing to diversity and inclusion and having robust internal audit and risk management procedures. a defining cultural test is how a firm deals with adverse situations : does it make sure that the best interests of customers are protected, even if this damages short - term profitability? | . last month, we published a progress report provided to the minister for finance. today, we can provide a further update to the committee based on end - december information. the end - 2017 figures show that lenders have been forced to pay €316 million in redress and compensation. more will follow, as the remainder of the 33, 700 customers that were denied tracker products or charged the wrong rates receive redress and compensation and as claims submitted to the independent appeals processes are adjudicated2. when we last appeared before you, we outlined the phased structure of the examination and that lenders had submitted their phase 2 reports. we made clear we regarded certain reports to be 1 / 5 bis central bankers'speeches deficient. in particular, we said that certain lenders had left out groups of customers whom, in our view, had been affected by their failures and were therefore entitled to redress and compensation. we emphasised that we would robustly challenge any such deficiency as we moved through our assurance work. in that work, we scrutinised lenders ’ reports, undertook on - site inspections, hauled in lenders ’ senior management and impressed on them the need to take a consumer - focused approach in complying with the examination. the result of this intensive engagement is that the issues around the inclusion of disputed groups of customers identified to that point have now been resolved to the satisfaction of the central bank. as a result of our challenge, there has been a large increase in the numbers of customers between october last and today who will be included in redress and compensation schemes – a further 13, 600 customers. in short, the examination is delivering for consumers. i wish to acknowledge the work of this committee and the minister of finance & public expenditure and reform in shining the public spotlight on those lenders involved in the examination, adding to the sustained pressure we have exerted on the lenders since the outset. like any regulator, the central bank is limited by law in the amount of information we can publicly disclose about any regulated financial institution. much of the pressure we exert on lenders in order to protect consumers must necessarily be done in private until outcomes are final and announced. of the initial group of 13, 000 customers accepted by lenders up to end - september last, 74 % have now received their redress and compensation. the majority of the outstanding customers will receive theirs between now and end - march, with the remainder receiving payment by endjune. €181 | 1 |
jorg asmussen : changing reality intervention by mr jorg asmussen, member of the executive board of the european central bank, at the panel discussion “ reverse reality – what if : lehman sisters ’ or the sisterhood ran g20 and big business? ”, women in parliament, global forum, brussels, 28 november 2013. * 1 ) * * reversing reality the title of our debate “ what if lehman sisters … ” invites us to a thought experiment : what would a reversed reality look like? would the world be a better place per se? i doubt it. there is plenty of empirical evidence on gender differences in finance and risk aversion. experiments and field studies on gambling and betting show that women on average are more risk averse than men. my anecdotal evidence as a father of two young ladies age 6 and 5 proofs quite to the contrary that female do behave hazardously on playgrounds. however, as an economist, i have no reason to doubt the empirical results. but i doubt, indeed, that reversing reality in the sense of replacing “ male dominance ” in finance by “ female dominance ” would make the world a better, or the financial industry a safer place. it would merely create another type of “ unbalanced reality ” with the same tendency to herding behaviour. 2 ) changing reality i am, however, deeply convinced that it is time to change reality and to strive for more gender diversity. a ) why is gender diversity important? i see three reasons for this : first, gender diversity brings new insights, skills and experiences to an organisation and is thus an asset and a competitive advantage. mixed teams achieve on average better results. if you allow, i would like to use a successful soccer team as an example : yes, you need brave strikers, ready to take any risk and not shying away, even if it hurts. but to be successful, you also need the midfield, setting the scene for others and willing to run the extra mile. and you need the very cautious defence you can rely on. second, gender diversity allows accessing the widest talent pool. 50 % of newly graduates are women and the majority of graduates with top grades are female. we simply cannot afford to not make use of these human resources and this argument weighs even heavier in ageing societies facing demographic challenges. third, gender diversity is simply a question of fairness and chances of participation in modern society and key to work - life balance for modern families | comfortable relative to regulatory requirements. however, pre - existing sources of risk and vulnerability remain and some have grown : • the recent market jitters have confirmed concerns regarding previously identified risks and vulnerabilities and have revealed the relevance of some new risk exposures ; • vulnerabilities could be quickly unearthed if market liquidity were to abruptly and sharply decline, possibly triggered by a wane in risk appetite caused by a change in risk perceptions ; • re - leveraging in the corporate sector and the process of credit risk transfer from the banking system to other financial institutions and market participants which is associated with a greater emphasis on the “ originate and distribute ” business model by banks, could constitute vulnerabilities in a less benign market environment. • in addition, global imbalances remain a medium - term, low - probability but potentially high impact risk for financial stability. therefore, despite the strong performance of the financial sector and the benign macroeconomic outlook, there is no room for complacency, given the potential risks and the identified vulnerabilities. this conclusion also reflects the fact that the materialisation of risks and the triggers that could expose vulnerabilities can not be predicted with any degree of certainty. the main message for the financial institutions is to prepare to mitigate potential disturbances through appropriate risk management arrangements including through stress - testing and vigilant monitoring of the financial soundness of their counterparties. | 0.5 |
based analysis of the short - term effects of structural reforms in labour and product markets ”, oecd economics department working papers no. 948, oecd publishing. this study provides useful insights into the shortterm effects on structural reforms. see vansteenkiste, i. ( 2016 ), “ did the crisis permanently scar the portuguese labour market? : evidence from a markov - switching beveridge curve analysis ”, forthcoming. see oecd ( 2016 ) “ going for growth ”. chapter 2 of the report gives a good overview of the literature on reform priorities in a difficult macro context. see imf ( 2016a ), op. cit. a good example of the depth and detail of the greek reform programme is given in “ the second economic adjustment programme for greece fourth review – april 2014 ”, european commission occasional papers, 192, april 2014. see monteagudo et al. : “ the economic impact of the services directive : a first assessment following implementation, european commission economic papers 456 ”, june 2012. according to european commission ameco database. the latest observation is 2013. bis central bankers ’ speeches see imf ( 2016b ), " euro area : staff concluding statement of the 2016 article iv mission ", 16 june, and banerji, a. et al. ( 2015 ), " building a better union : incentivizing structural reform in the euro area ", imf working paper, wp / 15 / 201, september. bis central bankers ’ speeches | we must have a common growth strategy based on identifying our structural weaknesses. the key words must in my view be “ productivity ” and “ employment ”, which are positive - sum games – not “ competitiveness ”, which could end up as a zero - sum game. the member states will not lend much support to euro area growth by merely competing for their neighbours ’ market shares. we have to act together to raise productivity and employment. improving the functioning of the service market in the euro area is therefore important not only because of its large share of overall gross value added, 65 % on average in the euro area, but also because 75 % of the total labour force is employed in this sector. even though there has been a steady shift towards more service production, we are still lagging behind other advanced economies such as the us and, to a lesser extent, japan, which have higher production of services per capita. in particular, it is striking that service sector output per capita ( in ppp terms ) is 33 % higher in the us than in the euro area, which is the main reason for a smaller difference in overall gdp per capita levels ( 26 % ) [ 27 ]. to a large extent this is due to old - fashioned restrictions that prevent competition in many countries in the euro area. the european commission has estimated that an ambitious implementation of the 2006 services directive would have the potential to increase euro area gdp by around 2. 5 %. the latest estimates show that only around 0. 8 percentage point of this has been realised – and this is ten years after the directive entered into force. also, bear in mind that these figures significantly underestimate the gains from a wider service market reform, given that some of the most important sectors – for instance health care – are completely excluded from the directive. another factor in services that is sometimes overlooked is that of scale. in today ’ s fragmented service market in europe, there is insufficient pooling of resources to drive large - scale r & d initiatives, new distribution platforms and to increase competition between market participants. we therefore need to take a step back and consider what can be done to complete the european single market for services. to give an example, the original idea of applying the socalled country of origin principle should be reconsidered. this would mean that the regulation of the exporting country is applied. the benefits from such a change are straightforward : first, it becomes easier for a service provider that no longer has to deal with | 1 |
vigilance of the factors mentioned are warranted by rbi. we are monitoring ( a ) the process of restoration of full normalcy in global financial markets ; ( b ) the evolving financial contagion ; and ( c ) the possible spill over to the real sector after accounting for the possible extent of “ decoupling ”. the major reason for extraordinary vigilance by rbi is what i would describe as simultaneous volatilities in several globally significant markets, namely, money, credit and currency markets ; asset prices ; and commodity prices, especially oil and food items. the current phenomenon of simultaneous volatilities should be viewed in the context of possible repositioning of the world ’ s dominant reserve currency, involving significant wealth, income and terms of trade effects. similar stresses unlikely in india our banks with overseas presence have confirmed that they have insignificant exposure to the us sub prime mortgage market. some analysts have flagged the prospect of a sort of sub prime lending problem within india also. though there are reports of accelerated emergence of non - performing assets in regard to consumer credit, housing and real estate in a few banks, our preliminary assessment, on the basis of information provided, is that these do not have systemic implications either in terms of solvency or liquidity. there are several reasons why indian banking system may not invite disturbances akin to sub prime. first, pre - emptive monetary policy actions have been taken to address evolving monetary, credit and inflation environment. second, several prudential measures have been taken which include higher risk weights and higher provisioning in respect of sensitive sectors, namely capital market, housing, real estate etc. third, the initial exposure of most banks to the sensitive sectors mentioned above has been very modest. fourth, intensive supervisory review of select banks was undertaken when it was observed that their off balance sheet exposures appeared large or were rapidly accelerating. finally, as part of our regulatory regime in regard to banks and financial markets, there has been what may be termed as “ focus on liquidity ”. recent turbulence in global financial markets was characterized by liquidity issues and there is currently a global debate on the need to focus on liquidity. hence, a more detailed account of our regulatory focus on liquidity is appropriate. regulatory focus on liquidity as you are aware, the overall liquidity in the system is actively managed by the rbi mainly through the operation of laf on a daily basis. however, there are challenges in this regard due to volatility | in capital flows and governments ’ balances. in terms of the evolving global prudential framework, the emphasis has generally been more on capital, as a means of reducing vulnerability to risks, than on prudential requirements for liquidity risk. the issue of liquidity has not been generally addressed in as structured a manner as the issue of capital requirement. aspects relating to liquidity have been largely left to each regulator to assess and prescribe a suitable framework under pillar ii of basel ii. in the indian context, rbi had issued broad guidelines for asset liability management and banks have flexibility in devising their own risk management strategies as per board approved policy. however, in regard to liquidity risks at the very short - end, rbi has taken steps to mitigate risks at the systemic level and at the institution level as well. first, rbi had, early on, recognized the risks of allowing access to the unsecured overnight market funds to all entities and therefore restricted the overnight unsecured market for funds only to banks and primary dealers ( pd ). to enable this phase - out of all non - bank / non - pd participants from the uncollateralized money market, the repo markets – both bilateral repos and collateralized borrowing and lending obligations ( a form of tripartite repos ), were developed. since 2005, the overnight call market is a pure inter - bank market. the impact of this has been that the volumes have shifted from the overnight unsecured market to the collateralized market. second, greater inter - linkages and excessive reliance on call money borrowings by banks could cause systemic problems in two ways. one, if a bank is not able to repay the loan on the due date or the market perceives that the bank is having funding problems it may not be able to continue borrowing in the inter - bank market. if this results in non - payment, the bank which has lent the funds could itself face liquidity problems if it has also borrowed on an overnight basis to lend to this bank. the risk of financial contagion could also arise if other banks in the system that are similarly placed become affected by such concerns. the external costs of failure – the costs that are not borne by the bank and are, therefore, unlikely to be taken into account in its own planning – are therefore greater. the rbi has therefore introduced prudential measures to address the extent to which banks can borrow and lend in the call money market in relation to the | 1 |
step, you, the people of ra would be better informed about these financial services. not only that, but we would like to see your new micro business initiatives given timely support, resulting in sustainable businesses. but let me say that financial inclusion is not only about all the stakeholders providing financial training and financial services to you. it must be a two - way thing, where those of you who are bis central bankers ’ speeches receiving these services and training will use it to work hard and make better lives for your families. in this way we will work ourselves out of the poverty which many of our fellow fijians often speak about, and we will enjoy better living standards. theme and implication for financial inclusion ladies and gentlemen, the theme this year for the ra financial inclusion exposition is “ green growth, sustainable livelihood ” the province of ra has a lot of natural resources and is basically an agro - forestry based province. there is a lot of dependency on marine and land resources. green growth is all about making the best use of what you have around you in your natural surroundings that will help you better your living standards. developing micro, small and medium businesses from the use of your natural resources in order to grow your family ’ s economic wellbeing, will also contribute to the wider growth of our economy. at the same time the prudent management of these resources can be better done in a manner that will ensure sustainable livelihood. farmers or villages can use supportive energy efficient technologies ( such as energy saving light bulbs and solar dryers ). you can limit or recycle waste material, and use soil and water conservation and sustainable agriculture methods to ensure sustainable livelihood. for the people of ra, financial inclusion can complement your efforts to grow your livelihood. it will help you learn to be better money managers and have the appropriate financial services, products and advice that will help you grow and at the same time ensure sustainable practices. this is where we believe financial literacy, or knowing how to manage money, plays a key role. this is an important life skill that is needed by all if we are to maintain sustainable conservation practices. conclusion ladies and gentlemen, this two - day financial inclusion exposition in rakiraki will provide the community with an opportunity to learn more about the services offered by the different stakeholders. the occasion is designed to be educational and at the same time to have some fun. there are also lots of games and giveaways for the children and the entire family. i urge you all to try and | take away something new in terms of your understanding of finance today. please make an effort to visit all the booths where our stakeholders and colleagues are waiting to serve and assist you. with these few words, i thank you for your presence and declare the 2014 ra financial inclusion exposition open thank you, vinaka vakalevu, bohut dhaniyavad. bis central bankers ’ speeches | 1 |
economy was the lifting of exchange controls. south africa had to face this daunting challenge in 1994 with the knowledge that the country had no foreign reserves at its disposal at that stage to finance any net outflow of capital. it had to rely, therefore, on inflows of capital to generate the foreign exchange reserves that would be needed for the financing of any outflows, following upon the removal of the controls. in the beginning, the south african monetary authorities were often criticised for not being more bold, and for following a policy of gradualism instead of a “ big bang ” approach for the removal of exchange controls. in retrospect, and taking account of the magnitude of the gross flows into and out of south africa over the past five years, the path followed by the authorities was undoubtedly the correct one. on balance, and on a gross basis, non - residents increased their claims on south african residents by more than r200 billion over the past five years. this enabled south africa to finance an accumulated current account deficit of about r40 billion, to increase the net foreign reserves by about r35 billion, and to allow private south african residents to accumulate about r130 billion in foreign assets. this included about r60 billion of foreign direct investment by south african corporates, about r65 billion held by institutional investors in foreign assets, and about r4 billion invested by private individuals outside of the country. the process of the gradual removal of exchange controls resulted in the effective withdrawal of about 70 per cent, [ or even more ], of the exchange controls that existed at the beginning of 1994. at this stage, south africa has no effective exchange controls any more on : • • current account transactions of the balance of payments ; or the inward or outward transfer of funds owned by non - residents. in the case of residents, limits were introduced for amounts that can now be invested outside of the country by corporates, institutional investors and private individuals. the further phasing - out of exchange controls requires the gradual raising of these ceilings until they are no longer restrictive. the only area in which no concessions of any significance were made so far refers to the blocked funds of emigrants or former residents of south africa. the government must still take a decision on the implementation of a programme for what will most probably be a gradual release of the blocked funds of former residents. the globalisation process the liberalisation of the south african financial sector and concurrent developments in the structure of and volumes in the | zeti akhtar aziz : islamic finance – new frontiers in financing the economy keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the eu - malaysia chambers of commerce and industry ’ s ( eumcci ) quarterly financial panel discussion 2012 “ islamic finance – new frontiers in financing the economy ”, kuala lumpur, 8 march 2012. * * * in this new phase of globalisation in which economies and financial systems are increasingly becoming more interconnected, we are seeing the emergence of several new trends in trade and investment flows. while there has been a slower expansion in world trade and investment flows in the aftermath of the global financial crisis, cross - border trade and investment activities among emerging economies have been increasing significantly. asia is very much part of this changing pattern in world trade and investment activity. in asia, strong domestic demand, supported by resilient financial systems and well developed financial markets have well intermediated these international flows. the most pressing challenge confronting the current global economy is to generate growth and employment. it is particularly important for the crisis - affected economies that growth resumes and is sustained, while addressing fiscal imbalances, public and private sector overindebtedness and the financial sector impairment, the solutions to which will most likely result in slower growth. while supportive domestic policies will thus be necessary to support the growth, also important is the potential growth that can be gained from trade and investment with other parts of the world. for the countries in the asean region, the partnership with the eu region has expanded steadily over time, and has continued to evolve and strengthen. there is significant potential to expand such trade and investment links between both the eu and asean regions. global corporations, including the eu and asean multinational corporations ( mncs ), have contributed to maximising the mutual benefits from such relationships. in malaysia there are currently more than a thousand multinational corporations from more than 30 countries. many are from the eu region. initiatives that continue to lower the barriers between our respective regions are also set to strengthen the growth of such strategic partnerships. it is my pleasure to be here at this quarterly financial panel discussion, organised by the eu - malaysia chamber of commerce and industry, to speak on the role that islamic finance might have on facilitating greater trade and investment between our regions. islamic finance, which was previously domestic - centric, is now increasingly providing financial solutions for cross - border trade and investment. progressive liberalisation has facilitated the internationalisation of islamic finance. | 0 |
christopher kent : non - mining business investment – where to from here? address by mr christopher kent, assistant governor ( economic ) of the reserve bank of australia, to the bloomberg economic summit, sydney, 16 september 2014. * * * i thank lara bui, natasha cassidy, bernadette donovan, stephen elias, craig evans, gianni la cava, kevin lane and tom rosewall for help in preparing these remarks. accompanying graphs can be found at the end of the speech. introduction i ’ d like to thank bloomberg for the opportunity to talk to you today. i discussed this topic at this same venue 18 months ago. the outlook for non - mining business investment is an important element of our forecasts. it depends on a range of forces acting on the economy, including the stimulus currently being provided by the very low level of interest rates. but, forecasting economic activity is hard. understanding and forecasting business investment is arguably harder still. when i was here in april of last year, i ’ d suggested that : • mining investment would be likely to peak in 2013 ; • non - mining investment would be likely to pick up, but only gradually ; and • growth for the economy as a whole would be a little below trend in 2013 and then pick up gradually through 2014. it now looks like mining investment peaked in late 2012 ( graph 1 ). despite a substantial decline in mining investment since then, growth of the economy overall picked up to a pace that was around trend over the course of the past year. much of that improvement has owed to a sharp rise in resource exports. at the same time, there has also been an improvement in the growth rate of economic activity in the non - mining sectors, even though non - mining business investment has remained subdued. this better growth of non - mining activity often gets missed given all the focus on the resources boom. while this improvement is welcome, a key question is how durable the improvement will be? it might even gather a bit more steam, thereby helping to drive overall growth to an above - trend pace at some point. such developments are possible but by no means certain. they depend in part on non - mining business investment, which is the motivation for my talk today. recent past over recent years, non - mining business investment has been subdued. after recovering from the decline that followed the global financial crisis, non - mining business investment in real terms has been little changed over the past three years or so ( graph 2 ). in | of the federal reserve system ( 2007 ). “ minutes of the federal open market committee, march 20 – 21, ” press release, april 11. bonis, brian, jane ihrig, and min wei ( 2017 ). “ the effect of the federal reserve ’ s securities holdings on longer - term interest rates, ” feds notes. washington : board of governors of the federal reserve system, april 20. brainard, lael ( 2015a ). “ economic outlook and monetary policy, ” speech delivered at “ north america ’ s place in a changing world economy, ” 57th national association for business economics annual meeting, washington, october 12. — — — — ( 2015b ). “ normalizing monetary policy when the neutral interest rate is low, ” speech delivered at the stanford institute for economic policy research, stanford, calif., december 1. — — — — ( 2017 ). “ transitions in the outlook and monetary policy, ” speech delivered at the john f. kennedy school of government, harvard university, cambridge, mass., march 1. ihrig, jane, elizabeth klee, canlin li, brett schulte, and min wei ( 2012 ). “ expectations about the federal reserve ’ s balance sheet and the term structure of interest rates ( pdf ), ” finance and economics discussion series 2012 – 57. washington : board of governors of the federal reserve system, july. kiley, michael t. ( 2015 ). “ low inflation in the united states : a summary of recent research, ” 6 / 7 bis central bankers'speeches feds notes. washington : board of governors of the federal reserve system, november 23. nalewaik, jeremy ( 2016 ). “ non - linear phillips curves with inflation regime - switching ( pdf ), ” finance and economics discussion series 2016 078. washington : board of governors of the federal reserve system. 1 these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 in the period from 1950 to 2000, inflation often rose late in the business cycle. in response, the federal reserve raised interest rates, which in turn led to a weaker economy. 3 for example, the fomc minutes for march 2007 expressed “ concern ” about the rate of inflation but noted that increases in energy and non - energy imports could explain some of the upward pressure on core prices ( see board of governors, 2007, paragraph 23 ). | 0 |
housing simply becomes unaffordable. the bank ’ s property price index – which is based on advertised prices – fell moderately on a year earlier during the september quarter. while domestic banks have been more prudent than banks abroad, however, the continuing high dependence on property as a driver of credit growth, and as collateral for other lending, remains a source of risk. at the same time, it is important to reiterate the strengths of the domestic banking system. in june 2008, the capital adequacy ratio stood at 14 % on average, as against a statutory minimum of 8 %, while the average liquidity ratio was 48 %, well above the 30 % benchmark. the loan to deposit ratio averaged a prudent 77 %, while non - performing loans extended their downward trend. the central bank of malta has been playing an active role in responding to the events i have described. first, with the support of my bank colleagues, i have participated in the deliberations and decisions of the governing council of the ecb on the provision of liquidity and on monetary policy. allow me at this point to digress briefly. as we said in our statement after the november meeting, we expect the banking sector to make its contribution to restoring confidence. reinforcing this message, the president pointed out that central banks and governments had taken bold decisions, and now commercial banks, too, had to live up to their responsibilities, especially at a time of deteriorating growth prospects. with bank lending rates in malta being generally set with reference to official policy rates, i would, therefore, expect bank customers, particularly those whose borrowings promise most to support domestic economic activity, to benefit fully from the recent ecb rate cuts, which have totalled 175 basis points. apart from its monetary policy role, the central bank of malta is also charged with preserving financial stability, which it defines as a condition where the financial system is able to allocate savings towards investment opportunities and facilitates the efficient settlement of payments. a stable financial system is also one that is able to manage risks that may harm its performance, and consequently that of the economy, and that should be able to absorb shocks without impairing its operations. the bank carries out this task through the regular monitoring of the financial system, as well as of the domestic payment and securities settlement systems. the bank ’ s findings are shared with the malta financial services authority ( mfsa ) and with the ministry of finance. the authority | the captive insurance business is growing fast. these developments in malta mirrored, to a certain extent, those abroad. financial liberalisation, deregulation and the expansion of cross - border capital flows have driven the rapid growth of the financial sector globally. indeed, until the start of the turmoil last year, the global financial system had benefited from a long period of economic expansion, relatively easy monetary conditions and innovation. as a result, the size of the financial industry relative to the economy increased considerably. in the united states it grew to a point where it represented nearly 25 per cent of the stock market capitalization, while financial assets in britain in 2007 were equivalent to almost nine times the gdp. such a favourable combination of circumstances could not last. and when the whole edifice started to crumble, the shock waves travelled fast, a testimony to the efficiency of the transmission channels in a globalized economy. thus, in no time at all, a crisis that had its roots in a narrow segment of the housing market in the united states moved across the atlantic to britain and then to the euro area. and as demand in the advanced economies and commodity prices began to tumble, emerging economies started to decelerate rapidly. so much for the decoupling theory! unlike other recent crises, the current turmoil had its origin within the financial system itself. it followed a boom in asset prices, particularly house prices. although some observers, including central banks, had warned about mispricing of risk, many investors purchased what are now known as “ toxic ” assets in a search for yield, increasing leverage to generate higher profits. the growing use of securitisation allowed banks to originate loans and distribute them, packaging risk and selling it to other investors. it was believed that this would spread risks more evenly, enhancing the stability of the system as a whole. but the financial engineering involved in this process was so complex that neither the regulators nor the credit rating agencies could calculate the risks. what the regulators also overlooked were the dangers that were developing as banks moved further away from their customers. on the financing side, banks were becoming increasingly dependent on wholesale investors for funding. on the lending side, the dispersion of credit risks through securitisation lowered the incentive to monitor borrowers ’ behaviour and led to increased moral hazard. as information became ever more fragmented and financial instruments more opaque, confidence began to dissipate. now as we know, the market economy – and its ultimate objective, the creation of wealth – | 1 |
close to zero and the major central banks have undertaken around usd7 trillion of quantitative easing. although the federal reserve has discontinued its bond purchase programme, global quantitative easing in 2015 is expected to be greater than at any time since 2011. bank bail - outs during the gfc have imposed enormous costs on taxpayers ( close to 30 % of gdp in the case of ireland ) and at home we saw the large fiscal costs associated with the support for south canterbury finance. sound prudential policies relating to capital adequacy, liquidity management, core funding, disclosure requirements, and stress testing of balance sheets cannot always prevent financial crises and the need for unconventional monetary policy, but they can lower the risk of systemic failure. dincer n, and b eichengreen 2014 “ central bank transparency and independence : updates and new measures ” international journal of central banking. bis central bankers ’ speeches vii ) the emergence of macro - prudential policy one of the insights from the gfc was how rapidly instability could develop even though an economy might be growing close to its potential, and be experiencing sound fiscal policy and price stability. an environment of low interest rates, rising leverage, aggressive competition among lending institutions, and a widespread search for yield by investors usually translates quickly into rising asset prices – especially when the global economy is growing at a rapid rate, as was the case during 2003 – 07. when financial crises occur, asset valuations decline and the lower asset prices may be unable to support the debt that financed their acquisition. we are currently seeing considerable appreciation in asset prices ( including fixed income securities, equities, and real estate ) in many countries as a result of extensive monetary accommodation and investors aggressively searching for yield. many central banks and regulatory agencies have turned to macro - prudential policies in an attempt to reduce risks to financial stability, including those associated with an overheated housing market. in view of these concerns, the reserve bank introduced macro - prudential policy in the form of speed limits on high loan - to - value ratio ( lvr ) lending for existing residential property on 1 october 2013. house prices were already significantly overvalued based on historical and international indicators and were accelerating rapidly in auckland and christchurch ( which account for around half of the national market ) and gaining considerable momentum in several other regions. in addition, the ratio of household debt to household disposable income at 156 percent was high, and banks were competing aggressively to provide mortgages to borrowers with | , the bank of korea will enforce a 52 - hour workweek policy starting next month. to carry out the central bank ’ s duties under the changed working conditions, we will need to continuously improve our work methods so that we can utilize our resources efficiently within the limited time frame. our staff members will also have to concentrate more on their work. dear fellow members of the bok family! as uncertainties concerning economic conditions have further heightened, amid a number of accumulated problems facing our economy that require resolution, the general public is likely to pin high hopes on the central bank. we should do our best in executing our duties with firm resolution. today, as we greet the 69th year since our bank ’ s establishment, i would like to thank everyone once again for your hard work, and i wish each one of you, together with your families, health and happiness always. thank you. 3 / 3 bis central bankers'speeches | 0 |
develop their own countercyclical policy so as to overcome periods of limited financial market access, preventing domestic variables from being significantly affected. thanks to these policies, the monetary and financial system in latin america as well as in argentina, despite facing a series of turbulences, has managed to operate within the guidelines set. there have been no bank closures, the institutions have kept their robust liquidity and solvency levels, savers have been able to make the portfolio decisions they have deemed fit, credit has kept growing – though at a slower pace. for the first time in several decades, after patiently working for five years, the central bank of argentina has become a true stability anchor, providing three public goods unprecedented in the country : monetary stability, financial stability and foreign exchange predictability. as regards the institutional impact on growth, the literature does seem to have risen to the occasion. the neo - institutionalist school has come to prominence in the past few decades with the spread of its explanatory power. from the very beginning, its founders have sought to answer a fundamental question – why do some nations achieve self - sustained growth, while others remain economically stagnant? neo - institutionalism highlights the role of the historical background. unlike the neoclassical school, it focuses on a dynamic vision. in my opinion, when we talk about economic institutions, the concept of pyramid comes in very handy, and what better place than the mayan and aztec land to make a reference to it. societies build their institutional arrangements in stages, one after the other, one over the other, each on top of the previous one. to keep progressing with this pyramidal arrangement at the regional level, it is essential to develop financial markets in domestic currency. in this sense, there are several important factors, both at the macroeconomic and microeconomic levels. the microeconomic factors include an increasing dedollarization of the economy and reduced vulnerabilities related to potential sudden stops in capital flows. this is particularly important since currency mismatches have been the basis of the major financial crises among emerging economies. a marked reliance on borrowing in strong currencies makes countries more vulnerable to domestic currency depreciation ( which is strongly tightening ). furthermore, the development of finance markets in local currency is usually associated with improved liability management facilitating risk management. among the microeconomic factors, it is key to develop a yield curve in local currency that reflects the opportunity cost of funds for different terms, leading to more efficient resource allocation | through reinsurance, and to have the tools to establish an adequate level of premiums ”. 6. in macao, banks and insurance companies, as a result of innovation in products and services, improved technology and other developments in the industry, have a larger pool of risk management tools and practices available. of course, they are faced with continuous challenges as they manage risk, especially when they need to remain profitable and competitive. however, if financial innovation can be used properly, on one hand, to add value to the customers in terms of products and pricing, and to improve profitability on the other, while identifying and understanding during the process how risk profiles can change as a result, then good risk management can be deemed to have been in place. this complex process falls within the technical expertise of professional actuaries. in fact, professional actuaries are the key players in the process. 7. viewing from a more macro perspective, the volatility of financial markets around the world underlines the imperative nature of risk management in maintaining stability of our global financial system. last year, there were worries over certain financial products, particularly subprime loans related, which might throw international financial markets into turmoil. unfortunately, it has turned out to be a “ cassandra ” one. excess liquidity and recklessness of participants were causing misallocation of resources which would certainly give rise to inflated financial assets and their subsequent bust. last tuesday, the fed announced to cut fed fund rate by 75 basis points to alleviate the battered markets. this action will certainly give short term relief. however, how long the effect will last is still a question. this time, the pain comes not from the cost of borrowing but from the ability to lend. as we all know, gargantuan international banks are writing down the value of their siv ’ s and bringing them back to their balance sheets. such a move has already taken away tens of billions of dollars from their capital which will tremendously weaken their capacity to lend. coupled with their suspicion they have conceived in respect of the viability of their counterparts, we shall witness some stagnation in the lending market for quite some time in the future. such structural retrenchment in liquidity has little to do with cost of borrowing. as a result, there may be continued upheavals in financial markets. 8. as financial institutions offer more sophisticated products and services, there will be more associated risks in their on - going risk management framework. this is | 0 |
implies the public announcement of a quantified definition of the final objective of price stability ; for instance, the banque de france aims at an inflation rate not exceeding 2 % ; • thirdly, the strategy should be based on a forward - looking approach. this is because the transmission of monetary policy decisions to the economy takes place with relatively long lags. estimates of these lags between interest rate changes and their effects on inflation vary between one and two years. as a consequence, central banks have to look ahead before they take monetary policy decisions. a case in point was the recent decision by several continental central banks, including the banque de france, to raise their main refinancing rates on 9th october. this move was justified by the need to pre - empt inflationary pressures early enough, although current inflation remained low. in my view it is very important to make the public aware of the concept of the “ pre - emptive strike ”, which is at the heart of central banking. 1. 2. intermediate target : more arguments in favour of monetary targeting, with a caveat in order to provide an anchor to inflation expectations and to look ahead, central banks make public an intermediate target which they commit themselves to respecting. announcing an intermediate target also enhances the accountability of the central bank. this is why article 12 of the statute of the ecb explicitly refers to decisions relating to intermediate monetary objectives as one of the main responsibilities of the governing council of the ecb. two possible strategies have been selected by the emi council as potential candidates to be recommended to the ecb, namely monetary targeting and direct inflation targeting. 2 in the case of direct inflation targeting, the inflation forecast made by the central bank can be viewed as fulfilling the role of the intermediate target. 3 let me dwell a moment on the choice the ecb will have to make between direct inflation targeting and monetary targeting, unless it chooses to combine elements of both strategies. inflation targeting stresses the responsibility of the escb for achieving and maintaining price stability. however, there are some difficulties in the process of forecasting inflation over the medium and longer term. as mervyn king recently stated, “ such a forecast cannot be a single number. it must be presented for what it is, namely a probability distribution ”. 4 furthermore, inflation targeting could imply more formal cooperation with the government since the latter is in a position to influence price developments. finally, inflation targeting has admittedly proven useful in progressing towards price stability, as | expected and is reasonable. we cannot ask banks to generate a double - digit return on equity when interest rates and the risk - free rate are so low and banks are indeed more resilient than they were. moreover, this improvement does not only concern the banks : it can also be seen in the non - banking sector and the financial markets, with particular progress made with regard to over - the - counter derivatives and the shadow banking system. regarding the economic consequences of the reforms, it is important first to remember the cost of the financial crisis : according to imf data, the total loss of global output from 2007 to 2014 amounts to 25 %. compared to this considerable loss, the potential cost of financial regulation is very small. and above all, no one can seriously claim that in france or more generally in the majority of advanced economies the supply of credit has been excessively constrained by banking regulations. on the contrary, lending to the economy remains robust, with housing loans in france up 5. 6 % year - on - year in april 2017 and loans to non - financial corporations up 5. 4 %. in the coming months, this strong overall growth may actually warrant general vigilance and closer scrutiny by the high council for financial stability, in which i participate. 1 / 3 bis central bankers'speeches * * * ii. nevertheless, we are still faced with a challenge for the future, which brings me to my second point : even if the achievement is now on solid foundations, there is clearly no room today for complacency or respite. although the risks of a future crisis have diminished, no one should believe that they have disappeared entirely. so what measures are required? for banks, the priority is to stabilise the regulatory framework and therefore we must finalise basel iii. here, it is useful to remember that, essentially – let ’ s say approximately 80 % – basel iii was already completed in 2011. in addition, there is now a broad consensus on risk measurement approaches. the main point that is still undecided and which continues to occupy the committee members is the setting of the so - called “ output floor ” for banks that apply internal models. let ’ s be clear : i read and hear the banking industry, and french banks in particular, giving its advice for negotiations on this point. a little restraint would not go amiss, and it is not our intention to defend corporate interests. if an output floor of 75 % is not acceptable, it | 0.5 |
outlook survey, september, www. cfosurvey. org. data collection for the 2007 survey of consumer finances was completed early in 2008 and processing of the data is under way. an article reviewing the highlights of the data is expected to be published in the federal reserve bulletin in the first quarter of 2009. release of the public version of the micro data is expected to follow that publication ( see 2007 survey of consumer finances ). see board of governors of the federal reserve system ( 2003 ), survey of small business finances. lenders that make sba loans have not been able to securitize and sell sba - backed loans to other institutions in the secondary market. turning to credit demand, the nfib survey's results are even more pessimistic than they were in april. for example, the survey's index of small business optimism dropped in october to its lowest level since the monthly surveys began in 1986. this subdued level reflects deterioration in several components of the index, including that the fraction of respondents considering expansion in the next three months and the fraction considering capital expenditures in the next three to six months have fallen to the bottom of their ranges over the past two decades. weak plans for business expansion will likely reduce demand for loans, which could result in future declines in small business loans even without any tightening of credit supply conditions. as noted earlier, although only 5 percent of small businesses in the nfib survey ranked financing conditions as their top concern, some 23 percent of firms indicated that sales were their main concern. these results, when combined with the duke / cfo magazine survey data, suggest that consumer demand concerns generally provide the most serious challenges facing small businesses. policy responses to financial and economic developments and their implications for small business credit access i would now like to turn to a discussion of the policy actions that the federal reserve, the congress, the treasury, and other government agencies have taken in recent weeks to address the overall functioning of financial markets and the weakening of economic activity as well as how these policies should assist small businesses going forward. in response to the escalation in financial market stress that began in late september, policymakers both in the united states and other countries have taken a series of extraordinary actions aimed at restoring market functioning and improving investor confidence. the federal reserve has continued to address ongoing problems in interbank funding markets by expanding its existing lending facilities, increasing the quantity of term funds that it auctions to banks, and accommodating greater demand | in the public sector rose by 2 % to over 17, 000 employees. there was also a pickup in both the locally based work force and seasonal workers in australia and new zealand. consumer price pressures rose in 2018. headline inflation reached 4. 2 percent in december against 1. 8 percent at the end of 2017. this rate was within the bank ’ s forecasted range and was driven by stronger supply - side domestic inflation, along with the rise in imported prices. categories responsible for the spike in consumer prices during the year were education, transportation, food, and alcohol and tobacco. external conditions remained firm during the year. despite a reduction in the trade surplus, improved investment income and tourism receipts narrowed the current account deficit. as a result, the country ’ s gross foreign reserves increased by 10 percent to $ 5 billion. this level of reserves was sufficient to cover nearly 13 months of imports and is well above the cbsi ’ s precautionary import cover threshold of 6 months. developments in the monetary sector also point to sustained growth. broad money rose by 7 percent to $ 5. 2 billion due to increases in both net foreign assets and private sector credit. lending by banks to the private sector grew by 4 percent to $ 2. 4 billion during the year. major borrowing industries were construction, distribution, transportation and manufacturing. nonetheless, interest rate margins remained high at around 10. 5 percent. meanwhile liquidity levels in the banking system continued to accumulate, rising by 14 percent to $ 2. 2 billion and was largely driven by the growth in net exports. excess liquidity remained high, although we believe it is not inflationary, particularly in view of the much lower credit growth and the supply - side nature of inflation in the country. with respect to government ’ s finances, 2018 was a positive year. the fiscal position returned to an estimated surplus of $ 191 million after two successive years of deficits, reflecting considerable fiscal consolidation. revenue in particular rose on strong collection from tax and trade - related duties, while total expenditure only grew marginally, amidst a reduction in development spending. meanwhile, government debt increased moderately and remained at around 11 percent of gdp. turning to the outlook for the economy, cbsi projects the solomon islands economy to grow by 3. 7 percent in 2019. this moderation in growth reflects the key assumption that forestry will finally decelerate as part of the government ’ s new policy to achieve sustainability in the forestry sector. nevertheless, growth is expected to be driven by | 0 |
deepak mohanty : statistics in the reserve bank of india welcome remarks by mr deepak mohanty, executive director of the reserve bank of india, on the occasion of 6th statistics day conference, reserve bank of india, mumbai, 17 july 2012. * * * governor dr. subbarao, prof. r. radhakrishna, chairman, national statistical commission, dr. aurel schubert, director general, statistics department, european central bank ( ecb ), deputy governor dr. subir gokarn ; other distinguished speakers prof. j. r. varma, iim ahmedabad, prof. probal chaudhuri, isi kolkata and prof. amit bubna, isb, hyderabad ; deputy governors, colleague executive directors, distinguished guests from the financial sector and academia, members of the press, shri a. b. chakraborty, officer - in - charge, dsim and friends. i extend a warm welcome to you to this statistics day conference. 29th june is celebrated as statistics day to commemorate the sterling contribution of prof. prasanta chandra mahalanobis to statistics and the indian statistical system. in addition, the reserve bank also holds an annual statistics conference, which provides a forum for interface of our statisticians with academia, external experts and with operational departments. these two annual events provide us an opportunity to review the progress of statistical work in the reserve bank and guide us in setting the agenda for further work. i am sure, today ’ s conference theme, data gaps and central banking, will reinforce that process. in evidence - based public policy and decision - making mechanism, statistics is a critical tool. at the same time, statistics is a public good. over the years, there have been initiatives by the government, the reserve bank and professional bodies like the indian association for research in national income and wealth and the indian econometric society for identifying data gaps in the indian economy. the report of the national statistical commission has helped in identifying major gaps in economic database on india. in 2010, the national statistical commission had set up a number of professional committees to look into various issues relating to improvement in official statistics. the report of the reserve bank ’ s working group on surveys ( 2009 ) has also highlighted important data gaps. improving database is an ongoing process. while several initiatives have been taken at the national level to bridge data gaps, i will focus on the recent initiatives of the reserve bank. the reserve bank ’ s policy canvas is large | addition to transport and communication. in addition, the warehousing and supply - chain infrastructure will be critical to bolster value addition and productivity in the agriculture and horticulture sector. this will create employment opportunities in semi - urban and rural areas and promote inclusive growth. the demand for warehousing infrastructure has also gone up in tier - 2 and tier - 3 cities in the wake of steep jump in online trading. moreover, investment in intangible capital such as research and development and skill upgradation of human resource has strong and positive impact on productivity. some empirical evidence suggests that the impact of investment in intangible capital on labour productivity is more than investment in tangible capital. 4 16. seventh, a dynamic and resilient financial system is at the root of a stronger economy. india ’ s financial system has transformed rapidly to support the growing needs of the economy. while banks have been the primary channels of credit in the economy, recent trends suggest increasing role of non - bank funding channels. assets of non - bank financial intermediaries like nbfcs and mutual funds have been growing ; funding through market instruments like corporate bonds has also been increasing. this is a sign of a steadily maturing financial system – moving from a bank - dominated financial system to a hybrid one. substantial progress has been made to fortify internal defence mechanism of financial institutions to identify, measure and mitigate risks. this is a continuing process and efforts by all stakeholders have to be sustained. towards a more inclusive and sustainable economy 17. history shows that the impact of pandemics, unlike financial and banking crises, could be a lot more asymmetric by affecting the vulnerable segments more. the covid - 19 pandemic is no exception. within countries, contact - intensive service sectors employing large number of informal, low - skilled and low - wage workers have been hit harder. in several emerging and developing economies, lack of health care access has disproportionately affected the family budget of the poor. even education which was provided online during the pandemic excluded the 3 / 5 bis central bankers'speeches low income households due to the lack of requisite skills and resources. overall, there are evidences across countries that the pandemic may have severely dented inclusivity. 18. the global recovery has also been uneven across countries and sectors. advanced economies have normalized faster on the back of higher pace of vaccination and larger policy support. emerging and developing economies are | 0.5 |
, basel ii will, for the first time, impose an explicit capital charge on banks for operational risks, on top of the traditional credit and market risks. implementation of basel ii in thailand will begin at the end of this year, and the preparation for its implementation is progressing on schedule. i am confident that with the implementation of basel ii, the quality of risk management by banks in thailand, especially with respect to operational risks, will improve further. i have taken a lot of your time in this opening remark. but the topic of today ’ s seminar is important. so, without further ado, may i declare the seminar open and wish you all a successful deliberation over the next two days. thank you again for the invitation, and thank you for your attention. | bandid nijathaworn : meeting security and risk challenges in the finance and infrastructure sectors opening address by dr bandid nijathaworn, deputy governor of the bank of thailand, at the seminar on “ meeting security and risk challenges in the finance and infrastructure sectors ”, bangkok, 11 february 2008. * * * distinguished guests ladies and gentlemen, it is a great pleasure to be here this morning, to give this opening remark for the seminar on “ meeting security and risk challenges in the finance and infrastructure sectors ”. and those of you who come from abroad to join the seminar, let me also welcome you to bangkok. today, risk management and security concern are important management issues for all businesses, as companies increasingly operate in an evolving global environment of rapid technological change and innovation. great advance in information technology has brought about radical changes in the way modern businesses are conducted and managed, and in the way new products and delivery channels are created. yet while these changes have imparted important benefits to businesses in terms of profitability and efficiency, they also pose greater challenge in terms of the risk exposure and the management of risks. in this regard, i think financial services and banking is of no exception. it is one industry that continues to face this important challenge. banking business, basically, is about risk - taking, managing risk and profiting from risk. the growing sophistication and complexity of financial activities, brought on by financial innovation and globalisation, have made risk management a key and important task for all banks. in particular, the integrity of real - time information on changing prices, valuation of financial position, and warning on breaches of internal control is most critical now for bank ’ s top management in taking timely and prudent decision. the recent episode in the global financial market has demonstrated again the costly implication of weaknesses in this area. for these reasons, information technology and its management has become a key part in business strategy as it can provide lever to create competitive edge and innovate business model, especially for providing customer reach in a cost - effective manner. but on top of this, pressure from competition and the need to cut costs also have forced banks to rethink their business models and strategies, leading to fundamental changes in the business process that include the proliferation of outsourcing, electronic banking, and the use of the internet. again, while these developments are positive, they also expose banks to a different aspect of risk management, for example how to manage and | 1 |
digital transformation of the retail payments ecosystem welcome address by ignazio visco governor of the bank of italy at the ecb and banca d ’ italia joint conference, rome 30 november 2017 i am pleased to welcome all the speakers and participants to this conference on the ongoing digital transformations in the retail payments ecosystem. the programme is remarkable : many key issues for central banks and the private sector will be discussed in these two days. let me take this opportunity to thank the organizers at both the bank of italy and the european central bank for putting together such a broad and relevant array of topics. the fast evolution of digital technologies promises to deliver benefits but it also creates new challenges for the payment system and its stakeholders. today ’ s conference is an opportunity to take stock of recent advances, to evaluate possible future landscapes in retail payments and to discuss the challenges and opportunities they pose to central banks and the population at large. i am sure that maintaining a continuous dialogue among central bankers, private sector representatives and academics on the subjects that will be discussed in this conference will contribute to the efficiency and safety of our payment systems. the diffusion of digital technologies is having pervasive effects on our society. today, around eighty per cent of the european population has a smartphone, personal computer or tablet to navigate the internet. we use the internet to perform many fundamental activities that influence our behaviour and productivity, such as communicating and searching for information. the rise of e - commerce is also having substantial, and at times disruptive, effects in many industries. digital innovations, such as big data and artificial intelligence, are used for medical diagnoses, in the transportation sector and to select the news that is reported on social media. the explosive growth of electronic devices controlled through the internet suggests that the “ internet - of - things ” will play an important role in our daily lives. as the youngest, tech - savvy generations approach adulthood, the effects of these phenomena are bound to become even more significant than they are today. the digital transformation of our society has also changed the type of payment instruments we use. indeed, the more we use digital distribution channels in our consumer expenditures, the more we need digital forms of money to pay for these transactions. but there is also a cultural change behind this process. credit and debit cards are increasingly used in brick - and - mortar stores, and in some countries banknotes are no longer the most common means of payment. the highly dynamic landscape of payment systems is ever evolving. while new | guy quaden : price and wage rigidities in an open economy opening address by mr guy quaden, governor of the national bank of belgium, at the fourth biennial colloquium of the national bank of belgium, brussels, 12 october 2006. * * * it is a great pleasure for me to open the fourth biennial colloquium of the national bank of belgium and to welcome you all at this conference. the topic of this year's conference is " price and wage rigidities in an open economy ". understanding how prices and wages are determined and how they fluctuate over the business cycle is of course a crucial issue for central banks. nominal and real rigidities in price and wage setting have a strong impact on how the economy, and inflation in particular, reacts to all kinds of shocks. as far as these rigidities result in deviations of prices from their efficient levels, they will lead to an inefficient allocation of resources and unnecessary volatility in output and employment. especially in a global context, with a rapidly changing external environment, flexible prices and wages can protect the economy against costly real adjustments and improve its resilience. that is the very reason why we are interested in measuring these rigidities, in understanding their nature and in assessing their welfare implications. this knowledge may eventually result in formulating deliberate policy recommendations for structural reforms in view of reducing rigidities in price and wage setting, to the extent that this is desirable from a welfare perspective. however, as far as these rigidities are deeply rooted, monetary policymakers are faced with them as part of the environment in which they operate. price and wage rigidities have indeed a strong impact on the monetary transmission mechanism. they also affect the way central banks will combine their pursuit of price stability with a more general concern about real economic developments and the policy trade - offs involved. the importance of these issues induced the national bank of belgium to devote its 4th biennial colloquium to " price and wage rigidities in an open economy ". the aim of this conference is to promote theoretical and empirical research, both at the micro and the macro level, on the measurement, the rationale and the consequences of price and wage rigidities in an open economy. by way of an introduction to the conference, i would like to underline the policy relevance of many of the topics that will be discussed in the presentations today and tomorrow. in order to evaluate the relevance of the different types of rigidities, it | 0 |
oireachtas committee in december, i said that “ we understand some of what happened, but some of it is still hard to understand ”. we are already putting in place new procedures and arrangements that take account of what we have learnt to date. i hope that my report can help develop that understanding further and help us all emerge from our current difficulties with a degree of restored confidence. | ben s bernanke : commencement address speech by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the 2009 commencement of the boston college school of law, newton, massachusetts, 22 may 2009. * * * i am very pleased to have the opportunity to address the graduates of the boston college law school today. i realized with some chagrin that this is the third year in a row that i have given a commencement address here in the first federal reserve district, which is headquartered at the federal reserve bank of boston. this part of the country certainly has a remarkable number of fine universities. i will have to make it up to the other 11 districts somehow. along those lines, last spring i was nearby in cambridge, speaking at harvard university's class day. the speaker at the main event, the harvard graduation the next day, was j. k. rowling, author of the harry potter books. before my remarks, the student who introduced me took note of the fact that the senior class had chosen as their speakers ben bernanke and j. k. rowling, or, as he put it, " two of the great masters of children's fantasy fiction. " i will say that i am perfectly happy to be associated, even in such a tenuous way, with ms. rowling, who has done more for children's literacy than any government program i know of. i get a number of invitations to speak at commencements, which i find a bit puzzling. a practitioner, like me, of the dismal science of economics – and it is even more dismal than usual these days – is not usually the first choice for providing inspiration and uplift. i will do my best, though, and in that spirit i will take a more personal perspective than usual in my remarks today. the business reporters should go get coffee or something, because i am not going to say anything about the markets or monetary policy. instead, i'd like to offer a few thoughts today about the inherent unpredictability of our individual lives and how one might go about dealing with that reality. as an economist and policymaker, i have plenty of experience in trying to foretell the future, because policy decisions inevitably involve projections of how alternative policy choices will influence the future course of the economy. the federal reserve, therefore, devotes substantial resources to economic forecasting. likewise, individual investors and businesses have strong | 0 |
hong kong dollar interest rates at the longer end of the yield curve. pain of adjustment 26. there is no doubt, however, that the discipline of the currency board system requiring rather harsh adjustments through interest rate changes means that there are innocent parties who may rather unfortunately be affected. i am conscious of the plight of, for example, the businessmen who happened to have interbank rate related loans due for interest rate fixing on 23 october 1997, or the home mortgage payers who have now to live with a mortgage rate, after two increases, which is 150 basis points higher than before, or those who have been investing their life long savings in the stock market, the property market and other asset markets, seeing these markets fall under the influence of higher interest rates. although some consolidation has been overdue in these asset markets which had overshot as a result of irrational exuberance, when they do fall sharply our exchange rate link with the us dollar inevitably would be blamed as the culprit, at least when everybody was in the heat of it all. 27. thankfully, it is perhaps in the nature of human beings that even the innocent parties who were unfairly hurt are capable of appreciating the big picture and rationally assessing what the alternative might be. interest rate volatility is the price to pay for a stable exchange rate. clearly it would not be in their interest for hong kong to get involved in the process of competitive devaluation of others in the region and suffer even higher interest rates. and why should we, given that our competitive position, as very much a service oriented economy, is not really very sensitive to exchange rate changes? the currencies of the asian economies, other than the mainland of china, have recently been on a free fall. i am sure even the international monetary fund ( imf ) is surprised by the extent of the devaluation seen in the asian currencies after they were floated. 28. all concerned might have underestimated the effect of a general realization of the need for hedging when a currency moves from a fixed exchange rate system into a floating exchange rate system. it has now become quite clear that there has been overshooting in the depreciation of some of the asian currencies. it must be doubtful if these very large depreciations are necessary for correcting the imbalances in these economies. there are economic and financial problems that needed to be put right, but the plunge in their cu | mr. yam gives a keynote address on the hong kong dollar link keynote address by the chief executive of the hong kong monetary authority, mr. joseph yam, at the hong kong trade development council, financial roadshow in tokyo on 3 / 3 / 98. introduction 1. i am honoured to be delivering the keynote address of this financial roadshow of hong kong. i shall, as you are aware, be talking about the hong kong dollar link. the hong kong dollar has been linked to the us dollar at a fixed exchange rate since october 1983. notwithstanding what must be the worst financial turmoil in the history of asia in recent months, and an abundance of events which might have undermined confidence on the hong kong dollar in the past fourteen and a half years of the existence of the fixed link, the exchange rate has remained very stable. indeed, the hong kong dollar is one of the two major currencies in the asian region that have not been affected by the recent tidal wave of devaluations, the other being the renminbi ( rmb ) of the mainland of china. furthermore, it is the only freely convertible currency in the region that has survived the turmoil unscathed. 2. there has been much scepticism expressed on the hong kong dollar ’ s link with the us dollar over the years and in particular in the past few months when one after another the asian currencies tumbled. indeed, to some, the hong kong dollar increasingly sticks out like a sore thumb, but to others it is being seen increasingly as a pillar of stability in financial markets in the asian region and an example of financial prudence. i hope you belong to the latter group of people rather than the former, but i fear that i may be expecting too much, for indeed it is quite natural when you do not have the chance to examine in detail an apparently controversial matter to be sceptical about it rather than to hang your faith in it. but my task today is, so to speak, to try and win you over. exchange rate policy 3. let me start with hong kong ’ s exchange rate policy. here one is often attracted by the simplistic argument that hong kong, which prides itself as the freest economy in the world, should best operate with a freely floating exchange rate. i obviously do not subscribe to that view. hong kong, as you all know, is a highly externally oriented economy. almost all our daily needs are imported, including | 1 |
last decade. rulemaking entails publishing rationales for agency action and seeking public input. these procedural requirements serve an important purpose and ultimately promote better agency decisionmaking. one of the most effective tools we have for doing so is the use of public board meetings to address matters of significant public interest. my hope is that material items on the reform agenda will continue to be handled through public meetings that give greater visibility and insight into the thinking and rationales of different policymakers. closing thoughts i will conclude today's remarks by thanking all of our participants for joining us in dallas and contributing to these important discussions. the elements that facilitate accountability parallel those elements necessary for effective reform - a deep understanding of facts, a careful identification of how elements of the banking system perform over time and during stress, and a commitment to take ownership of identified problems with targeted reforms that are commensurate with the underlying risks. as we engage in a review of our regulatory framework for liquidity and more broadly, these elements should serve as a guide to understanding the past and help us chart a path forward. 1 the views expressed here are my own and are not necessarily those of my colleagues on the federal reserve board or the federal open market committee. 2 federal reserve system, request for comment, " expansion of fedwire® funds service and national settlement service operating hours, " 89 fed. reg. 39, 613 ( may 9, 2024 ). 3 the comment period on this proposal has been extended until september 6, 2024. federal reserve system, request for comment ; extension of comment period, " expanded hours for fedwire® funds service and national settlement service ( pdf ) " ( june 21, 2024 ). 4 michelle w. bowman, " bank liquidity, regulation, and the fed's role as lender of last resort " ( speech at the roundtable on the lender of last resort : the 2023 banking crisis and covid, sponsored by the committee on capital markets regulation, washington, d. c., april 3, 2024 ). 5 the federal housing finance administration ( fhfa ) published a request for input on the core mission activities and mission achievement of the fhlbs. as noted in the request, the fhfa had previously found in the fhlbank system at 100 : focusing on the future report that fhlbs should increase their support for housing and community 8 / 9 bis - central bankers'speeches development. see fhfa, " request | originating abroad, such as a foreign recession. first, this shock affects the united states through direct trade links, lowering demand for u. s. exports and, thus, lowering u. s. gdp. second, the foreign recession leads to lower interest rates abroad and, other things being equal, raises the value of the dollar, which in turn lowers u. s. exports and boosts u. s. imports. the dollar appreciation also puts downward pressure on u. s. import prices and, thereby, inflation. the extent to which foreign worries lead to safe - haven flows may add to the dollar ’ s strength. finally, there is contagion to u. s financial markets. let me first elaborate on the exchange rate channel i just mentioned. the traditional determinants of exchange rates — that is, differentials in expected rates of return — apply to the united states as to other countries. but the u. s. economy is different because of the special role of u. s. government bonds as global safe assets. as a consequence, an adverse foreign shock that damped the demand for risky assets would be expected to trigger safe - haven flows that boost the dollar, weighing on the u. s. economy. 4 the spillover of risk aversion to u. s. markets might well also push down equity prices and widen 1 / 4 bis central bankers'speeches corporate credit spreads, adding to the contractionary pressures. however, the same safe - haven flows into treasury securities would cause u. s. long - term yields to fall, mitigating these adverse effects on domestic demand and activity. 5 historical experience let us consider some historical examples of the effect of adverse foreign shocks on the u. s. economy. the mexican peso crisis of 1994 and ‘ 95 and the asian financial crisis of 1997 through ‘ 98 resulted in substantial hits to aggregate emerging market economy ( eme ) growth, but they had fairly muted effects on u. s. growth. 6 in part, this limited response in previous decades reflected the smaller share of the emes in the global economy and, as a related matter, in u. s. trade. furthermore, the weight of emes in the global financial system was lighter in previous decades, so their crises were less disruptive to global markets. 7 finally, even back then, the safe - haven flows into dollar assets that i highlighted earlier were an important mitigating factor, pushing down u. s. long - term yields | 0.5 |
to households stood at 3. 1 %, unchanged from the previous month. the euro area bank lending survey for the third quarter of 2018 indicates that loan growth continues to be supported by increasing demand across all loan categories and favorable bank lending conditions for loans to enterprises and loans for house purchase. the pass - through of the monetary policy measures put in place since june 2014 continues to significantly support borrowing conditions for firms and households, access to financing – in particular for small and medium - sized enterprises – and credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer - term growth potential and reducing vulnerabilities. the implementation of structural reforms in euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. regarding fiscal policies, the broad - based expansion calls for rebuilding fiscal buffers. this is particularly important in countries where government debt is high and for which full adherence to the stability and growth pact is critical for safeguarding sound fiscal positions. likewise, the transparent and consistent implementation of the eu ’ s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council urges specific and decisive steps to complete the banking union and the capital markets union. we are now at your disposal for questions. 2 / 2 bis central bankers'speeches | of the linear chuo shinkansen line will act as a tailwind for yamanashi prefecture. the second advantage is the advanced technologies that firms in yamanashi prefecture have developed so far. i hope that technological innovation will advance as a result of further brushing up these technologies, applying them to new areas, and working to integrate them with other firms ’ technologies. this, together with cooperative efforts among industry, government, academia, and financial institutions, is expected to lead to future achievements. i would like to conclude this speech by expressing my strong hope that the region will enjoy further growth in the future through the initiatives i have mentioned, while making use of its potential. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches | 0 |
remedies the deficiencies brought out by the crisis, and to make the financial system fully operational again so as to ensure, in italy as elsewhere, the flow of resources needed to accompany and sustain the economic recovery. the process of stabilizing and strengthening the financial system and rewriting the rules is proceeding according to the calendar set by the leaders of the g20 and the financial stability board ( fsb ). the set of reforms, once enacted, should increase the financial system ’ s resilience to shocks, encourage the development of models for intermediation oriented to long - term results, and eliminate the incentives for excessive risk - taking by stimulating more far - sighted behaviour based on the sound and prudent management of intermediaries. concerns that the banking system will be unable to provide sufficient support to the economy are particularly strong in italy, not least because of the financial structure of our small and medium - sized enterprises, heavily dependent on bank credit and historically skewed towards short - term debt. the crisis can – and must – be an opportunity for resolute action to rebalance the structure of firms ’ liabilities. in their selection activity, banks must be able to assess firms ’ long - term growth potential, to assist them in their development. in this context, the contribution of foreign banks can be significant, especially in some segments of the economy. in italy today, the branches and subsidiaries of foreign intermediaries account for one fifth of all bank intermediation, a share comparable to that of many other advanced economies. an analysis of the past is useful not only to identify the contribution that foreign banks have made to their host markets – in terms of competitiveness, innovation and the quality and quantity of services provided – but also to outline their possible future contribution. this has several determinants : the types of foreign intermediaries, their business model, their objectives, their results and the impact on prices. the bank of italy is following these matters closely ; indeed, it could not do otherwise. i will therefore retrace some of the stages of the success story of foreign banks ’ expanding role in italy and highlight the difficulties that must be overcome so that this progress may continue to the benefit of the italian economy, and the implications for the bank of italy. 2. internationalization there are several reasons why a bank may decide to enter foreign markets : i ) to take advantage of the host country ’ s growth potential and thereby tap new profit opportunities ; ii | ##bilities 6. 9 4. 9 4. 4 6. 2 5. 2 5. 5 5. 1 28. 6 1. 3 23. 0 1. 5 40. 9 4. 5 15. 3 7. 2 4. 6 8. 5 20. 0 14. 5 7. 8 10. 8 securities held for custody source : supervisory reports. ( 1 ) average of the first 6 months of the year. some items may have different definitions from the past owing to changes in the reporting procedures. figure 1 number of foreign banks present in italy ( with reference to bank branches and subsidiaries ) changes over the year total foreign banks of which : branches - 10 source : supervisory reports. figure 2 loans by eu banks to non - residents ( amount by residence of counterparty as a percentage of total outstanding loans ) other euro - area countries remainder of the european union se pt. - 9 m ar ch - 9 se pt. - 9 m ar ch - 9 se pt. - 9 m ar ch - 0 se pt. - 0 m ar ch - 0 se pt. - 0 m ar ch - 0 se pt. - 0 m ar ch - 0 se pt. - 0 m ar ch - 0 se pt. - 0 m ar ch - 0 se pt. - 0 m ar ch - 0 se pt. - 0 m ar ch - 0 se pt. - 0 m ar ch - 0 se pt. - 0 source : european central bank. ( 1 ) outstanding loans granted by banks having their registered office in the european union to non - institutional customers resident in other eu countries. the counterparties do not include monetary financial institutions. | 1 |
, a regulatory framework for this specialized area of insurance. we will be seeking feedback from local industry on this. the government recently announced the launch of eldershield, a national long - term care insurance scheme to be underwritten by private insurance companies. eldershield provides a basic level of benefits, which many singaporeans will wish to supplement. this will create opportunities for insurers to structure and market appropriate long - term care policies. credit insurance and political risk insurance are two other promising areas. globalisation and lower barriers to cross - border trade will spur continued internationalization of trade and support strong demand for credit and political risk insurance. being located in asia, a region that has traditionally witnessed strong trade flows, singapore is wellplaced to develop further as a hub for such activity. several new specialist insurers and brokers have in recent months set up a presence in singapore, including financial guarantee insurers and trade credit insurers and brokers. another growing area of business is bancassurance activity. life insurance products sold through the bancassurance channel now account for 25 % of new life insurance business. two new specialist bancassurance players have established operations in singapore, and contributed significantly to this trend. increasing resilience amidst these new opportunities, more than ever, we now need to strengthen the resilience of the insurance industry. the mas has for some time, been working with the insurance and reinsurance industry to raise standards of corporate governance, internal controls and professionalism. many of our companies are already at international best practice standards. however, as in all countries, practices vary, and we aim to have all our insurers to attain best practice standards by 2005 if not earlier. risk - based supervision in 1998, mas embarked on a strategic change in our regulatory philosophy. we moved from a bottomup, audit - based inspection approach to a top - down, risk - based supervisory approach. this approach, being prospective in nature, is well suited to today's world of new and increased risks. risk - based supervision evaluates the major risks faced by an institution and assesses how well these risks are being mitigated. this will help both regulators and companies to identify and, importantly, to pre - empt problems. well - managed institutions will be given greater flexibility, while less well - managed ones will be subject to closer scrutiny. singapore's risk - based supervisory framework for insurers the basic framework for risk - based supervision | a platform for industry players to gain greater understanding of fintech applications and developments as well as support innovative solutions to find commercialisation opportunities. • sgx is also working with licensed private market platforms to facilitate the listing process for portfolio companies. such platforms provide pe / vc managers with opportunities to invest or exit, and provide a pipeline of companies that could list on sgx. such private - public markets partnerships can serve as an engine of growth for our public markets and provide support for enterprises throughout their corporate lifecycle. 28 đ đ in keeping up with changes in our public markets, such as the rise of neweconomy start - ups and technology firms, exchanges have continued to innovate to provide product owerings that support the varying needs of these companies. • for example, sgx has joined global exchanges in canada, europe, and the us, in introducing the dual class share ( dcs ) structure to support firms which have shares with diwerent voting rights to raise funds. dcs listings will broaden the range of investment options for investors and add vibrancy to singapore ’ s capital markets and capital markets globally. 29 đ đ with the recognition that public markets play an important and key role in our entrepreneurial ecosystem by providing public financing for growing companies, mas will continue to support growth in public equity markets. • mas has committed s $ 75 million over three years to help companies list and raise equity capital on sgx and support initiatives that broaden and deepen our research ecosystem. this will help to mitigate the growing and global phenomena of shrinking research coverage and build up our capabilities in covering public markets. conclusion 30 đ đ in conclusion, as we move into a changing world with a less certain global order, rapidly advancing technology, and increasing threats and opportunities, it will be even more important for exchanges and clearing houses to keep pace with global trends and be ready to adapt. this will ensure that you are wellplaced to navigate challenges and remain relevant to the evolving needs of our financial markets. 31 đ đ the wfe, in continuing to advance a collective voice for the improvement of our public markets, will be an important contributor to global discussions with regulators on how our public markets are shaped for the future. the wfe ’ s ongoing eworts in advancing the sustainability agenda for exchanges and clearing houses, is testament to the leadership and contributions it has presented since its founding in 1961. 32 đ đ i wish you a fruitful general assembly and annual meeting in singapore. | 0.5 |
financial sector regulation. so far, efforts to stabilise the banking system have not resulted in a resumption of bank lending ; for this reason, it is feared that economic recovery may take longer, possibly way into 2010. there is also concern that countries will increasingly resort to protectionist trade policies, a trend that would be self - defeating since no economy can resolve its problems in isolation. fortunately, commercial banks in botswana are not yet impaired by the impact of the “ credit crunch ” that is afflicting other countries. bank deposits far exceed loans ; and banks have generally avoided accumulating unmanageable risk. in this connection, it is worth mentioning that batswana should learn from the mistakes of over - borrowing, the dire consequences of which have hit households elsewhere in the world very hard. nevertheless, the bank of botswana is monitoring possible situations of exposure to offshore parent financial institutions on an ongoing basis. while the domestic financial sector is, to some extent untroubled, international diamond markets have deteriorated rapidly and unexpectedly. as highlighted by the honourable minister of finance and development planning in this year ’ s budget speech, this development has adversely affected government revenue. as at the end of january 2009, which is three months after diamond exports were seriously curtailed, the foreign exchange reserves amounted to 69. 7 billion pula ( provisionally ), which is a 19 percent growth from the december 2007 level of 58. 5 billion pula. when the effect of the pula depreciation is excluded, the reserves fell by 6. 4 percent in terms of special drawing right ( sdr ) and by approximately 12 percent in us dollar terms. the decrease in reserves was due to the fall in equity market prices, a slowdown in diamond export receipts and payments for government and other transactions. the pressure on the reserves is expected to continue during 2009, although at the level equivalent to 27 months of import cover, they should remain relatively adequate. i believe it should take little persuasion to acknowledge that managing the country ’ s reserves prudently has served the country well, given the current severe financial and capital markets difficulties. i now turn to the core business of this evening ’ s event : the bank ’ s monetary policy framework and strategy for 2009. as i said earlier, last year ’ s modifications to the framework focused on the medium - term, a period considered appropriate for monetary policy to take effect and anchor the inflation objective, based on rigorous inflation forecasting that is now taking root | to 15 percent in december. correspondingly and as appropriate, commercial bank prime lending interest rates mirrored the bank rate adjustments ; in addition, the management of excess bank liquidity reinforced the policy stance. nevertheless, high inflation resulted in lower real interest rates, some of which, unfortunately, became negative in real terms. with respect to the bank ’ s outlook for inflation for this year and a reasonable period ahead, both domestic and global inflation is expected to abate, as a result of lower economic activity and subdued demand. commodity prices, including the cost of oil, are likely to be low, and world inflation is forecast to decrease from 6. 4 percent in 2008 to 3. 1 percent in 2009. in south africa, inflation is expected to decline to 5. 5 percent in 2009, and fall within the 3 - 6 percent target range. therefore, foreign prices will dampen domestic inflation. since the bank ’ s inflation objective is 3 - 6 percent and trading partner countries ’ inflation is forecast at 3 - 5 percent, the downward crawl of the pula should be marginal in 2009, and the real effective exchange rate should be stable. overall, economic performance is expected to slacken significantly, due to the depressed mining activity. it is also anticipated that despite the decline in government revenue, due to a fall in mining production, public spending will increase in support of economic growth. nevertheless, it is estimated that output will be below trend, particularly in the short term. this should put downward pressure on inflation. in this environment, it is unlikely that increased government spending will be inflationary, particularly in the absence of a public sector wage increase. however, it is worth mentioning that any large increase in administered prices, such as electricity tariffs and botswana housing corporation rentals, would be inflationary. be that as it may, the probability is that price increases will be subdued in 2009 compared to 2008. it is, therefore, anticipated that, by the end of the year, inflation will be closer to, if not within, the medium - term objective range of 3 - 6 percent. honoured guests : you may very well ask : what about the monetary policy stance in 2009 in the circumstances! well, we at the bank consider that monetary policy action this year will take into consideration the following scenarios : first, the increase in government spending is unlikely to be inflationary ; second, the exchange rate is expected to be stable ; and third, it is hoped the inflation trend will continue to be downward. these developments | 1 |
financial and economic history. therefore, one might be tempted to classify 2012 as an “ annus horribilis ”. i wish to challenge this view. will 2012, with hindsight, possibly go down in history as an “ annus mirabilis ”? absurd, you may think. but on second thought this notion seems less absurd than it first appears. let us not forget that the famous poem of john dryden entitled “ annus mirabilis ” was inspired from major events in the year 1666. a very difficult year, to put it mildly, a year in which the great fire destroyed 80 % of the city of london. the fire spread so rapidly due to the city ’ s narrow streets and the “ interconnectedness ” of houses. the battle to stop the fire was considered to have been won by two factors : the strong east winds died down, and the tower of london garrison used gunpowder to create effective firebreaks to stop the fire from spreading further eastwards. dryden ’ s view was that god had performed miracles for england. the king promised to improve the streets. bis central bankers ’ speeches well, some may say, so it is in 2012. the fire in the financial markets was stopped by the ecb, by the two firewalls efsf and esm as well as by the governments announcing that they would improve the financial system. thus 2012 is an “ annus mirabilis ”. but as you know, miracles need to be acknowledged either by the pope or by the scientific community. so let us check whether a miracle was at work in 1666. and what i am going to say now about 1666 can be understood as a metaphorical warning about what could happen if we do not draw the right policy conclusion from the events of 2012. despite numerous radical proposals, london was rebuilt using essentially the same street plan which was in use before the fire. so the miracle is that nothing similar to the great fire has happened in the following years. the lesson of this story is quite clear. the financial system needs better rules than in the years preceding the crisis. we need a resilient financial system. we need a strong supervision. we need effective macroprudential instruments. we need to know how these instruments will work, which is a challenge for the scientific community as well as for macroprudential policy makers. otherwise, we would be putting our trust in a miracle. and we need to understand the complicated interactions between the financial and the real economy | . at the initiative of politicians ( financial services committee, fsc ), work is now under way on establishing mediation within cebs as well. transferring a procedure that was designed for securities trading raises a number of questions. unlike in the securities sector, in the banking field mediation does not have a legal foundation. although mediation is voluntary, and its results legally non - binding, considerable “ moral ” pressure to abide by the results is likely to be created. moreover, it is not just specific “ cases ” or “ products ” which are at issue in cebs to become subject to mediation but large sections of supervision. it must also be noted on 27 march, econ will probably adopt a report on the commission white paper on financial services policy 2005 - 2010, which advocates, in surprisingly clear language, a centralised supervisor. in paragraph 34, econ “ [ n ] otes that for a real oversight of the systemic and prudential risks of the top players in the market, the present system of cooperation is too weak, and promotes a well - equipped executive european prudential supervisory authority inside that system endowed with the appropriate competences for supervision of large cross - border and cross - sector financial conglomerates ”. that the competencies of the potential mediation parties differ in the field of banking, depending on whether they are home or host supervisors. at the same time, the question of need for a mediation also arises in some areas. thus, for instance, it is an option for approving group - wide risk - measurement procedures pursuant to article 129 ( 2 ) of the crd. however, cebs has already developed “ guidelines on validation ” with the aim of reaching a common decision within the six - month period. seen in that light, the use of meditation might be criticised as an example of excessive bureaucracy. mediation cannot – and must not be allowed to – undermine the european or national legal framework. although areas such as “ legal proceedings ” and “ national legislation ” are not being envisaged as objects of mediation, the possibility of subjecting national discretion – and, thus, national legislation – to mediation has not been clearly ruled out, either. conclusion : careful thought should be given to the areas to which such a procedure is to be applied. although mediation may help, it could also cause harm if the legal framework were abandoned entirely or interpreted too broadly. mediation is not a new “ lamfalussy procedure ” for adopting legislation but merely a tool for resolving disputes within | 0.5 |
world where he has the resources he requires. i believe by doing this, we can develop better economic theories and finance solutions where fundamental shariah principles can be fully crystalised to achieve the objectives ( maqasid ) of shariah. in the recent budget announcement, the government has allocated rm20 million for research and innovation relating to islamic economics and advancing our thought leadership. while this has been entrusted to inceif and the mifc leadership council, it is our hope to bring the stakeholders together and collaborate in producing impactful and practical research that could unlock the application of economics and values in the modern financial system. on this note, we must continue to seek purposeful use of finance for the common good. albert einstein once said, " the world as we have created it is a process of our thinking. it cannot be changed without changing our thinking ". i hope this conference will spur deeper discussions about fundamental aspects of islamic finance so that we can jointly empower change and elevate the impact of islamic finance to much greater heights. lastly, what is true is from allah s. w. t. what is false, i humbly beg your forgiveness, is from me. with that, i wish all of you a productive discourse ahead. wallahu a'lam. thank you. 5 / 6 bis - central bankers'speeches 1 source : islamic finance development indicator report 2022 2 as time has passed, the form of money has naturally evolved to adapt to the changing economic landscape – from hard money ( e. g. metal coins ), to claims on hard money ( e. g. promissory notes ), to fiat money as per in present days. 3 this is based on a hadith by prophet ( pbuh ), " it is not permissible to sell something that is not with you nor to profit from what you do not bear the risks ( associated with an asset ) " ( narrated by ibnu majah ). 6 / 6 bis - central bankers'speeches | zeti akhtar aziz : reflections on financial reform – malaysia ’ s experience speech by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the 2013 china business news ( cbn ) annual meeting and finance summit “ reflections on financial reform – malaysia ’ s experience ”, beijing, 8 december 2013. * * * it is my honour and pleasure to be invited to speak at this 2013 china business news finance summit. as the globalisation of finance intensifies, the world is becoming increasingly more inter - connected and integrated. this has largely been due to the trend towards increased financial liberalisation by most parts of the world. it has been maintained that such deregulation and liberalisation would facilitate the development of more efficient and robust financial systems and that it would result in a more efficient allocation of financial resources across borders. while such financial liberalisation may indeed bring such wide ranging benefits, it also brings with it increased risks that needs to be effectively managed. it was for these reasons that malaysia adopted a conscious effort to put in place the financial and economic pre - conditions so as to enable us to benefit from such financial reforms involving the deregulation and liberalisation of our financial system. allow me to share our experience in pursuing this agenda. following the asian financial crisis, malaysia embarked on strategies for an orderly development of the financial sector. focus was first placed on strengthening the institutional capacity of the domestic financial intermediaries so as to narrow the performance gap between the domestic and international financial intermediaries. in parallel with this was the intense effort to develop the domestic bond market. during this phase of the development of the financial system, significant advancement in the banking sector was made in terms of capitalisation, risk management and governance practices, delivery channels and in human capital development in the industry. this paved the way for the interest rate reform to move to greater market orientation, thereby supporting a more efficient pricing of financial products and services. the more competitive environment that it generated also became an important driver of productivity gains, customer centricity and innovation in the financial system. equally important, was the attention that was given to the development of a deep and vibrant domestic bond market as an alternative channel for the efficient raising of funds, particularly by the corporate sector. the development of the bond market has enabled better matching of long - term projects with long - term funds, and by reducing the over - reliance on the banking system, it has contributed significantly to financial | 0.5 |
costs. but there are very large benefits – we need to stay competitive for the long - term welfare of the people of the euro area. what does the word competitiveness mean to economists? in a narrow sense, it is often used to refer to international price competitiveness as measured by various indicators of effective exchange rates. at the european central bank we analyse developments according to a whole host of such indicators. this concept of competitiveness is linked to the “ external performance ” of a country, typically measured in terms of export growth, shares of export markets or current account balances. developments in price competitiveness have always been important drivers of an economy ’ s ability to compete in international markets. but in recent years, other factors have become increasingly important in the face of the structural changes engendered by globalisation. these relate to export specialisation, which includes the range and the quality of the products a country exports, and the particular markets it exports to. in this regard, it is important that our countries take advantage of their high technological advancement and well - educated labour forces, to produce higher quality and more sophisticated goods and to redirect their exports towards strongly growing markets. looking even more closely into the domestic structure of an economy we come to the notion of productivity. productivity and competitiveness are two different concepts, but there are close links between them. “ competitiveness ”, when more broadly defined, includes a notion of relative productivity. under this definition, the most competitive economy is the one with the best prospects for “ generating ” highly productive firms, contributing to longer - term economic growth and, ultimately, to the welfare of its citizens. recent advances in trade theory have stressed the connections between the external and internal dimensions of competitiveness, which have become increasingly relevant in a globalising economy. some of the latest economic models of trade1 see global competition as a selection mechanism, in which only the most productive firms do business outside their national borders. 2 less productive firms, by contrast, which are unable to bear the transport and other costs related to foreign trade, are either forced out of business or remain confined to their domestic market. countries in which highly productive firms can thrive are therefore also likely to do better in terms of their overall export performance, as this will allow more firms to compete successfully in international markets. in general, these are countries with more intense domestic market competition, better technology and greater openness to foreign competitors. 3 these new models also stress the importance of countries ’ institutional | abbado, and i am also very much looking forward to this year ’ s opening concert by one of france ’ s most renowned baroque ensembles, les talens lyriques. this is the tenth year of the european cultural days. what do you think makes this cultural initiative a success? without the support of our longstanding partners and sponsors, not to mention our loyal audiences, such an initiative would be difficult to bring to fruition. our well - established partnerships with the city of frankfurt, reliable sponsors, local cultural institutions and our media partner hr2 - kultur have enabled us for many years to present a unique insight, each autumn, into the contemporary culture of a different eu member state. two years ago, together with our longstanding partner, the city of frankfurt, we began a new project : the charity concert of the european cultural days. under the heading “ a bis central bankers ’ speeches concert for you ”, artists perform for a good cause ; this year ’ s concert will be given by musicians from “ le cercle de l ’ harmonie ”. entry to the concert is free, but audience members are asked to give donations for a selected frankfurt - based charity. this year, we will be supporting the work of “ die frankfurter lesepaten ”, whose volunteers help primary school children from various cultural backgrounds aged 6 to 10 years to learn german. in choosing this charity, we would like to promote language acquisition – one of the most important factors for integration – and tolerance towards other cultures. this is in line with the underlying principle of the european cultural days : “ unity in diversity ”. bis central bankers ’ speeches | 0.5 |
. furthermore, the euro has established itself as the second international reserve currency behind the us dollar, and investors trust the euro when investing in eurodenominated financial products. i would like to take this opportunity to : provide you with an insight into our current of the current economic situation ; explain how the single currency has contributed towards the management of the financial market crisis ; offer you an overview of the financial market reforms in the european union ; outline what is still to be done to guarantee the stability of the euro over the longterm horizon. assessment of the economic situation of the euro area allow me to first explain the ecb ’ s current assessment of the economic outlook from a monetary policy perspective. as regards the economic situation of the euro area, there are a bis central bankers ’ speeches number of positive signals. the economy is following an upward trajectory ( show chart ). since its trough in the second quarter of 2009, the economy has made up close to half of its recession - induced production losses. the relatively low rate of growth observed until now is in line with experiences of other economies recovering from severe financial crises. a peculiarity of the current recovery in comparison with previous upturns is the relatively low contribution to growth stemming from consumer spending. however, in this area to, there are some positive signals. as regards private households, the labour market situation is stabilising, which should boost consumers ’ purchasing power and, by extension, domestic demand. the impact of the crisis weighed more strongly on the number of hours worked than on the number of employed. that is why the rebound in economic activity is also making itself felt more in the number of hours worked than in the rate of unemployment, although the latter has been hovering around 10 %. in the near future, all available forecasts indicate that the gradual recovery of economic activity in the euro area is likely to continue. according to the most recent projections of ecb staff ( table ), the real economic growth rate is expected to stand at between 1. 3 % and 2. 1 % this year and between 0. 8 % and 2. 8 % next year. at the same time, the outlook for growth in the area of exports and domestic demand is now predicted to improve. overall, the most recent economic data confirms that the underlying momentum of economic growth in the euro area is favourable. however, as regards economic activity and the medium - term risks to price stability, the surge in oil prices is increasing cause for concern ( show chart ) | ambitions would be tempered and targeted to meet the specific needs of the market. furthermore, requiring matching funds not only ensures the private sector is willing to risk its own money but also tests the potential of the technology or investment firm. several venture capital programs such as israel ’ s yozma, the new zealand venture investment fund, and brazil ’ s inovar seed fund have all developed successful matching mechanisms for private investors. in this regard, i throw out a challenge to the caribbean private sector. tamana intech park is an opportunity to get off the sidelines and into the game. bring your money, bring your technology and, like all risky ventures, you may or may not have the opportunity to reap substantial rewards. my third and final lesson is that small, open caribbean economies need to favor scale - up rather than start - up ventures. here is a thought - provoking question : would you allocate more of society ’ s resources to giving birth to more babies or to raising children well? many parents in the audience might agree that the long, complicated and often thankless job of growing a healthy, educated and moral child seems more challenging than giving birth. in the context of enterprise creation, there has been a dramatic proliferation of start - up programs around the world : start - up america, start - up chile, start - up russia and dozens of others. i believe this sends two flawed messages. the first is that the most difficult task of the entrepreneur is to launch the venture. the second is that the more start - ups, the more successful the program. since small size is the major constraint to economic growth in the caribbean, there is a compelling argument for policymakers to stop treating the quantity of start - ups as an indicator of success and to start looking at the quality of those start - ups that grow and eventually scale - up. one high - potential venture which grows to 100 people in five years does create the same number of jobs as 50 bottom - of - the - pyramid ventures which stagnate at 2 people. but many experts argue that the high - potential venture has a much greater economic impact than the small - scale venture. contrary to popular opinion, high - potential is not always synonymous with high - tech. and it is not the surest path to competitiveness and prosperity. in fact, caribbean economies may get more development “ bang for the buck ” by supporting “ low tech ” sectors such as food processing and forestry than by trying to develop a | 0 |
##mism of emes becomes even more persuasive. the share of advanced economies in the global gdp dropped from 80 per cent in 2000 to 67 per cent in 2010 with a mirror increase in the share of emdcs ( chart 2 ). quite expectedly the share of brics increased more impressively from 8 per cent to 17 per cent2. disaggregated numbers are in annex table - 1. disaggregated numbers are at annex table - 2. bis central bankers ’ speeches chart 2 : share of global gdp ( at current us $ prices ) ( percentage ) by all accounts, the world has recovered from the financial meltdown and the follow on recession much sooner than we had feared at the depth of the crisis. the recovery is all the more remarkable because global income, trade and industrial production fell more sharply in the first twelve months of this crisis than they did in the first twelve months of the great depression. in its latest world economic outlook ( weo – january 2011 ), the imf estimated global growth for 2010 of 5. 0 per cent ; this marks a surprising upward revision from its earlier projection of 4. 8 per cent made in october 2010. emes, contributing nearly half of this growth, have clearly been the engine of this recovery. emes have also been the motive force behind the estimated expansion of world trade at 12 per cent in 2010, an impressive reversal from shrinkage of 11 per cent in 2009. two faqs this post - crisis scenario, marked by the faster recovery of emes, throws up two frequently asked questions relating to emes in the global context. the first is whether emes will be able to sustain global growth at near pre - crisis levels even if advanced economies continue to languish. people who put this question, i believe, are doing so as a rhetoric – to encourage analytical thinking rather than to solicit an affirmative answer. sure, multiple growth poles are a safety - net for the whole world, but to expect emes, by themselves, to lift global growth to former levels will be unrealistic. note that emdcs account for less than half of world gdp even when measured at ppp valuations, and only about a third of the world trade in goods and services. the second question about emes in the global context relates to decoupling. the decoupling hypothesis held that even if advanced economies went into a downturn, emes would not be affected because | of their improved macroeconomic management, robust external reserves and resilient financial sectors. the crisis failed to validate the decoupling hypothesis as all emes were affected, admittedly to different extents. what the crisis, in fact, reinforced is that the economic prospects of advanced economies and emes are interlinked through trade, finance and confidence channels. even as the decoupling hypothesis gained intellectual credence in the pre - crisis years, it was never very persuasive in the face of globalization. in fact, recent research within imf shows that the detrended aggregate output growth of emes has strong association with the aggregate output growth of advanced economies, and that this “ association ” has in fact bis central bankers ’ speeches increased over time, evidencing not only that the coupling is strong but that it is getting stronger. sure, in recent years emes have been less affected by recessions in advanced economies owing to improved policy framework, more effective macroeconomic management and growing intra - eme trade. but over an entire cycle, the economic prospects of emes remain firmly coupled with those of advanced economies. in an increasingly globalizing world, advanced economies and emes are dependent on each other, and going forward, both have big challenges in terms of sustaining growth, containing inflation and reducing unemployment. by far the biggest challenge for emes will be to convert high growth into poverty reduction. against that backdrop, let me proceed to look at some of the issues on the global agenda from the eme perspective. global rebalancing the first issue i want to address from the eme perspective is global imbalances. no crisis as complex as the one we have gone through has a simple or a single cause. we now have a fairly good idea of the multiple causes of the crisis and almost everyone is agreed that one of the root causes of the crisis is the build up of global imbalances. in as much as global imbalances – no matter whether they were caused by a “ consumption binge ” in advanced economies or a “ savings glut ” in emes – were the root cause of the crisis, reducing imbalances is a necessary condition for restoring global financial stability. the post - crisis debate on global imbalances has three interrelated facets. the first is the role of exchange rates in global rebalancing. the second relates to capital flows into emes raising the familiar challenge of managing the impossible | 1 |
war's impact, including extensive damage to the energy system economic growth continued in h1 2024, but has decelerated in recent months, impeded by russia's attacks on energy infrastructure. however, businesses have partially 1 / 3 bis - central bankers'speeches adapted to rolling blackouts. the stable operation of the sea corridor has also provided significant support for economic activity. despite power shortages and smaller harvests compared to a year ago, the nbu has even slightly upgraded its economic growth forecast for this year, to 3. 7 %. this was made possible by better q1 results and an anticipated expansion of fiscal stimulus, as well as by the development of distributed generation with support from large - scale lending programs. the step - by - step normalization of economic activity and the steady pursuit of loose fiscal policy, combined with the development of export routes and the revival of external demand, will help speed up real gdp growth to 4 % – 5 % in 2025 – 2026. significant international financial aid will enable the government to finance the budget deficit, and the nbu to maintain a comfortable level of reserves under the forecast's baseline scenario, ukraine will keep receiving substantial external financing inflows. however, they will slowly decline with the growth in the internal capacity to use domestic resources to finance budget expenditures. international partners are expected to provide about usd 38 billion in soft loans and grants to ukraine this year, and no less than usd 31 billion next year. such volumes of external inflows, coupled with growing domestic borrowing, will make it possible to cover a significant budget deficit of about 23 % of gdp in 2024 and 18 % in 2025. for its part, the nbu will be able to maintain a sufficient volume of international reserves to ensure the sustainability of the fx market and moderate inflation. the course of the war continues to be the key risk to inflation dynamics and economic development the duration and nature of russia's aggression will continue to have a notable impact on ukraine's inflation and economic development. a prolonged high - intensity war will curb the economy's return to normal conditions and make it difficult to bring inflation to the nbu's target. there are other risks, most of which are also directly or indirectly related to the war, including : the emergence of additional budget needs, mainly those to maintain defense capabilities the pass - through to prices of certain new business taxes, the introduction of which is currently being discussed at the state level further damage to infrastructure | 20th march last year. at first, the outflows were met by running down their holdings of cash, but as the outflows increased, they sought to liquidate some 2 / 6 bis central bankers'speeches of their bank assets – cds and cp. but they found that the market for those assets – which typically comes primarily from dealers buying back their own paper – was closed. the dash for cash meant that the tide was flowing fast against them. as the regulatory system currently works, if mmfs ’ liquid asset ratios fall towards prescribed thresholds, and they are unable to top up their liquid assets ( cash ) through sales, they are able to ‘ gate ’ or impose fees on investors, in other words decline to provide immediate liquidity. as with banks, the broader danger of this situation – which is a threat to financial stability – is that such a problem in one fund could trigger contagion to other funds, through fear that they might have the same problem, and thus lead to a highly destabilising run on money market funds. these thresholds can, therefore, also affect the behaviour of fund managers, making liquidity buffers not usable in times of stress, for fear this would fuel investors ’ desire to run. it is also important to note that another consequence of the rising demand for cash, and the failure to meet that demand by selling assets, was a sharp rise in money market rates. the rise was sharpest at longer money market - tenors, but there was also a pickup in overnight repo rates. this was a particularly serious sign of market dysfunction in what are core markets, and a serious challenge to our ability to implement monetary policy by keeping these rates broadly aligned to the official bank rate. it resulted in an increase in the cost and reduction in the availability of credit – to the financial system, other companies and households – precisely at the time they needed it most. there was therefore a serious threat to both monetary policy and financial stability, in other words both of the core purposes of a central bank. it was an existential moment. we took two actions which eased the pressure, and did so quickly. first, on 19th march the mpc decided to buy gilts in large size and at high speed. at its peak the pace of gilt purchases reached £13. 5bn per week, more than twice as fast as in early 2009. the use of this broad monetary policy tool was warranted given the widespread nature of the dash | 0 |
later on. 8 moreover, bbms may affect specific groups, such as banks, borrowers or countries, even cerutti et al., 2017 ; eller et al., 2020. couaillier et al., 2021. the regulatory capital relief measures considered in the analysis include the reduction of the combined buffer requirement ( cbr ), as well as the frontloading of new rules on the composition of the pillar 2 requirement ( p2r ), allowing banks to partly use additional tier 1 and tier 2 ( instead of cet1 ) instruments to meet these requirements. in particular, credit volumes increased by 3. 1 per cent after the regulatory capital relief measures, while interest rates on loans to firms eased by 7 basis points. ampudia et al., 2021. see, for romania, neagu et al., 2015. this seems to have been the case with the uk financial policy committee ’ s decision in 2014 to recommend a loan - to - income ( lti ) flow limit calibrated to a level that would have no impact on mortgage lending in a central scenario, but would prevent a significant increase in lending at very high lti multiples ( bank of england, 2014 ; see also, for poland, łaszek et al. 2015 ). when there is no clear overall effect. these heterogeneous effects are mainly attributable to the introduction of differentiated ltv limits by category of borrowers. 9 while several papers investigating the effects of ltv or dsti caps use a multi - country framework, and policy dummies or macroprudential indices to operationalise the definition of macroprudential policy, 10 single - country studies provide a more focused analysis on the impact of these measures. for instance, both one paper on israel11 and one on sweden12 found that the introduction of an ltv limit did not reduce the number of borrowers accessing credit ; but it did encourage borrowers to borrow less and to buy cheaper and lower - quality houses. there is also some evidence of unintended consequences, such as spillovers ( banks shifting risk to other business areas ), and circumvention. for example, when ireland introduced ltv and lti limits in february 2015, banks appear to have increased their risk - taking in lending to companies and holdings of securities, two asset classes not targeted by the measure. 13 in spain, following a similar measure, appraisers appeared | is consistent with known cognitive bias, so as to empower the consumer to make such choices in full awareness. whatever your approach, the landscape is evolving rapidly. a growing body of experimental research is developing on the effectiveness of regulatory initiatives based on behavioural insights. at the frontier, a series of studies is flourishing on the physiological reaction of financial consumers to external stimulus ( neurofinance ). what will come out of that, and what one is to do with whatever the results might be, must be the subject of future reflection. for the framework of consumer protection to be effective, it needs more than regulation alone. it must be complemented with supervision, enforcement, and financial education. let me elaborate briefly on the approach of the bank of italy. based on the understanding that too much information is as potentially harmful as too little information, and that such “ information overload ” can lead consumers to take financial decisions that they will consider inappropriate in retrospect, the traditional regulatory approach based on a full disclosure regime has evolved. reflecting changes in the eu legal framework too, regulation of the most common products now provides for standardised pre - contractual information that makes key information adequately salient. the regulator plays a delicate role in selecting the most relevant information, based for instance on the size of the revenues from certain fees and tariffs, and finding ways to increase its visibility. one application of this concept is to require banks to disclose standardised cost indicators for the simplest forms of bank accounts and the most common types of consumer loans. thaler, r. h. and sunstein, c. r., “ libertarian paternalism. ” the american economic review, vol. 93, 2003, pp. 175 - 179. thaler, r. h. and sunstein, c. r., “ nudge : improving decisions about health, wealth and happiness. ” new haven and london : yale university press, 2008. again on the regulatory side, recognising that biases are always in action, and that financial services providers – including banks – may actively seek to exploit them, has led us to introduce – in compliance with the applicable eu legislation – certain business conduct requirements, aimed at increasing the overall fairness of contractual relationships. we abstain, however, from interfering directly with individual decisions of consumers or firms. a few examples of such requirements are : i ) provisions concerning the assessment of creditworthiness, to address overindebtedness ; ii ) product governance requirements, concerning the | 0.5 |
##jon ” [ norwegian history 1814 – 1905 : building a state and creating a nation ]. the level of trust in a society is influenced by many conditions. it may be that the recent years ’ large migration flows are eroding the trust that has prevailed in norway earlier. however, immigrants have in fact adopted surprisingly rapidly the level of confidence in their new home country. see also dag wollebæk ( 2013 ) : truer innvandringen tilliten? [ does immigration undermine trust? ], article in aftenposten. alexander cappelen and bertil tungodden at the norwegian school of economics are also working on these issues ( see e. g. http : / / paraplyen. nhh. no / paraplyen / arkiv / 2012 / juni / tillitstesten / ). see also algan and cahuc ( 2010 ) : “ inherited trust and growth ”, american economic review 100 ( 5 ), pp. 2060 – 92, who document a strong causal relationship between trust and economic prosperity. johannes steen ( 1827 – 1906 ) was born in christiania ( now oslo ). after completing a higher degree in philology at the university of christiania in 1848, steen held a number of positions in the school system and was for many years the headmaster of the stavanger latin school. steen was also a member of the storting and prime minister. both as an educationist and as a politician, steen made key contributions to the creation of the norwegian comprehensive school. source : store norske leksikon, http : / / nbl. snl. no / johannes _ steen / utdypning. internationally, the society of jesus is known as the founder of the modern school system, with a curriculum tailored to the child ’ s age and previous knowledge and schooling characterised by systematic progression. these pedagogical principles evolved gradually through the second half of the 1500s, culminating in 1598 with ratio studiorum, the official plan for jesuit education ( see o ’ malley, j. w. ( 1993 ) : the first jesuits, harvard university press, cambridge, massachusetts ). bis central bankers ’ speeches 1889. the result was a comprehensive school system that strengthened our collective identity. 12 for norwegians, it is easy to take inclusive institutions for granted. throughout human history, however, it is extractive institutions that have been the norm. there were attempts to | radovan jelasic : future of the capital market in the balkans speech by mr radovan jelasic, governor of the national bank of serbia, to participants of the economist media group conference “ future of the capital market in the balkans ”, belgrade, 24 june 2008. * * * ladies and gentlemen eight years into the transition of the serbian economy, we may safely say that our financial sector has become and, judging from how things stand now, shall remain bankcentric. such observation is based on the following two facts : 1. the share of the banking sector in total assets of the financial sector ( banks, insurance companies, leasing providers and voluntary pension funds ) remained more or less constant at around 90 % throughout the period from 2003 to 2007! 2. legislative activities on faster development of the capital market have been stuck in the doldrums for almost two years now! to illustrate, securities act, law on compulsory motor vehicle insurance, law on the market of securities and other financial instruments, law on personal income tax and law on corporate profit tax are all either in the final phases of completion or were completed and sent off to the assembly of the republic of serbia for adoption only to be placed on the long waiting list of issues to be discussed! there is no denying that voluntary pension funds and insurance companies are still hoping for a chance to invest in high - quality listed securities. they, however, remain in very short supply. let us remember that there are only four listed securities in serbia at the moment : besides bonds issued against frozen foreign currency savings deposits, we only have tigar, energoprojekt and soya protein securities. what is happening with the remaining 1800 shares quoted on the stock market? why aren ’ t they listed? could it be that somebody has turned them down – which i doubt, does not want to list them – which is also highly unlikely as they represent a good investment, or is unable to list them – which is most likely! one thing is for sure, it does not only take a law to create a capital market. and serbia is a very good illustration of the fact. enactment of adequate legislation is a necessary, but not a sufficient prerequisite for setting up the capital market. one of the key links in the chain of development of the capital market should be the pension system reform. last week we were visited by mr. klaus schmidt hebbel from the central bank of chile. he will be working as chief economist | 0 |
i believe that over the next two days we will get to see many more exciting products and projects that can inspire innovation ; broaden our understanding of the current technology landscape ; and help set the policy agenda for strengthening thailand ’ s and our region ’ s fintech ecosystems, especially to serve smes and consumers. seeing the extensive works put on by our staff and partners and many prominent leaders and individuals in attendance this morning make me certain that we are on the path towards fulfilling our goals. ladies and gentlemen, to attain the overall improvement in productivity, immunity, and inclusivity, the bank of thailand is committed to supporting adoption of financial technology by financial institutions and promoting fintech innovation while ensuring that key risks can be contained. throughout the next two days i look forward to personally interacting with all participants, to learn and find ways we can collaborate for the benefits of the thai and regional financial industries and our fintech ecosystems. thank you very much for participating in our very first bangkok fintech fair. i wish you all a successful and fruitful event. 7 - 7 | disorderly unwinding of these balances, we are cautiously optimistic that responsible actions by all parties will prevent such an event. in our region, we have significant adjustments in domestic demand, underpinned by improved economic fundamentals. as a result, the surplus countries in our region continue to experience a gradual but significant decline in their current account balances, partly due to the acceleration in the rate of exchange rate appreciation in the region. importantly, some members of our constituency have been able to utilize the fiscal space arising from past reforms, which is a contributing factor behind the stronger demand in these countries. nonetheless, the concurrent challenge is to keep inflationary pressures under control while ensuring that strong domestic demand does not lead to a build - up of imbalances. 4. notwithstanding the baseline scenario, it is clear to us that the fund is correct in identifying the financial turmoil as the single greatest risk to growth. in the us, given the loss of confidence, the immediate priority for the authorities was to limit the financial contagion and counter the downside risks to growth. following that, the first line of defense was monetary policy and monetary operations to inject liquidity. the second line was fiscal stimulus. we view these actions as steps in the right direction, although one should also recognize the limitations of such policies at a time of impaired balance sheets and ebbing sentiments. the third line of defense was using public money to safeguard the stability of the financial system. in view of the systemic nature of the crisis and the potential for spillovers we appreciate the need for decisive policy actions and the drastic unorthodox measures. indeed, our own experience during the asian crisis was that adherence to a market - centric philosophy in an environment where markets have seized up is simply not tenable. at that time, we advocated a more pragmatic approach that prioritizes the resumption of credit activities in the financial markets. while welcoming the newly - apparent pragmatism shown by national authorities in advanced countries and international bodies like the imf, we caution that actions must be carefully designed to return the system to stability without unduly giving rise to moral hazard concerns. 5. admittedly, any attempt to draw lessons now will be tentative as the crisis has yet to run its full course, notwithstanding the recent collapse of one of the biggest investment banks, which many have taken as a nadir in this crisis. our own view is that until a full extent of exposure to these markets | 0.5 |
benjamin e diokno : sustainable solutions for southeast asia ’ s recovery opening remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for adb ’ s southeast asia development symposium ( seads ) 2022 “ sustainable solutions for southeast asia ’ s recovery ”, manila, 15 march 2022. * * * good day to all. i am honored to join you today for the southeast asia development symposium 2022. before the pandemic, the philippine economy grew at an average of 6. 4 percent annually. poverty incidence dropped from 23. 5 percent in 2015 to 16. 7 percent in 2018. while the pandemic may have set us back on some of our goals, i am confident that we are on our way to regaining our pre - pandemic growth trajectory. there are two things fueling my optimism : first is the continued confidence in the philippine economy. the country continues to have a favorable medium - term growth prospects based on the stable outlook affirmed by majority of major credit rating agencies. second, we didn ’ t sit idly by during the pandemic but pursued game - changing structural reforms, from amendments to the retail trade liberalization act, public service act, and foreign investments act. we are also pushing for amendments to the implementing rules and regulations ( irr ) of republic act no. 10000 or the agri - agra credit act of 2009, which allows banks to lend to more types of farming communities and classify more loans as compliant with the law ’ s quotas. we are positive that the senate and house will reach a consensus and ratify the bill once session resumes on may 2022. i am confident that, with these game - changing reforms, we can achieve real change in the lives of ordinary filipinos through more and better jobs and more competitive economy. also, our financial digitalization initiatives, under the digital payments transformation roadmap, are enabling better payments processes and financial inclusion. moreover, the philippine central bank ’ s policies on sustainable finance are harnessing the ability of banks to drive a more sustainable future. aided in part by the bsp ’ s measures, the economy is showing signs of solid recovery, as shown by the 5. 6 - percent gdp growth last year. this year, we expect the economy to grow by 7. 0 - 9. 0 percent. looking ahead, the philippine central bank is laying the foundation for | ’ s economy this year ”. these arguments simply remind us that china is already a large economy whose economic engine happens to be traditionally stronger than most. simulations therefore of a “ hard landing ” are important to track. euromonitor international reports that ten jurisdictions most at risk from a hard landing in china include hk, taiwan, large economies like south korea, india and japan, as well as the 4 biggest asean economies ( indonesia, malaysia, singapore and thailand ) plus vietnam. what does this mean for the philippines? china is an important trading partner and has been, in fact, the third major export market of the philippines since 2011, with an average share of about 12 percent from 2010 to 2014. based on nso data, in 2014, our exports to china reached us $ 8. 5 billion or 13. 6 percent of our total merchandise exports. imf. ( august 2015 ). people ’ s republic of china staff report for the 2015 article iv consultation. imf country report no. 15 / 234, washington, u. s. : international monetary fund. the following follows the points raised in “ china economy : weakened but still growing ” by joe mcdonald, associated press. september 23, 2015. bis central bankers ’ speeches while the philippines is not among those listed in the euromonitor international study, it is significant to note that almost all those countries listed are important trading partners of the philippines. the simulated impact is a decrease in gdp growth. and the results are not trivial, ranging from just under two percentage points ( japan and indonesia ) to above 3. 5 percentage points ( vietnam, taiwan and hk which is nearly at 4. 5 percentage points ). so, while the impact on our gdp may not be strong and direct, the “ second - round ” effect through the “ other ” trading partners bears watching. what about the effect on domestic inflation? slow chinese growth could lead to lower global demand for commodities, including oil, which could in turn be a positive for reducing overall domestic inflation pressures. that said, where the chips will fall, so to speak, on the balance of global inflation will really be determined by country - specific dynamics. there are other areas wherein our economy may be adversely impacted. and let me just highlight two for now – tourism and remittances. for the moment, our assessment is that the negative impact on tourism is expected to be moderate, while on remittances, it should only be negligible. 3 fortunately, | 0.5 |
, but the failure of hiring to rise with vacancies could also indicate that firms perceive the prospects for economic growth as still insufficient to justify adding to payrolls. alternatively, subdued hiring could indicate that firms are encountering difficulties in finding qualified job applicants. as is true of the other indicators i institute at the university of california, los angeles ). on the cyclicality of college enrollment, see andrew barr and sarah turner ( 2013 ), “ down and enrolled : an examination of the enrollment response to cyclical trends and job loss ( pdf ) ”, paper presented at the perc applied microeconomics workshop, held at texas a & m university, college station, texas, march 20. for research showing that the high numbers of workers seeking disability status is correlated with sectoral employment declines and demographics and not correlated with the rate of workplace injuries, see norma b. coe and matthew s. rutledge ( 2013 ), “ why did disability allowance rates rise in the great recession? ( pdf ) ” center for retirement research paper 13 – 11 ( chestnut hill, mass. : center for retirement research at boston college, august ) ; and john merline ( 2012 ), “ the sharp rise in disability claims ( pdf ) ”, federal reserve bank of richmond, region focus ( second / third quarter ), pp. 24 – 26. the effects of the great recession on retirements are difficult to identify. during the recession and immediately after, the losses in wealth may have put upward pressure on labor force participation ; the persistently weak labor market may have subsequently contributed to more retirements and thus put downward pressure on participation. perhaps as a result of these confounding forces, early research on the effects of the great recession on retirement finds unclear results. for example, see alan l. gustman, thomas l. steinmeier, and nahid tabatabai ( 2011 ), “ how did the recession of 2007 – 2009 affect the wealth and retirement of the near retirement age population in the health and retirement study? ” nber working paper series 17547 ( cambridge, mass. : national bureau of economic research, october ). for a discussion of these developments, see richard w. johnson ( 2012 ), “ older workers, retirement, and the great recession ( pdf ) ” ( stanford, calif. : russell sage foundation and the stanford center on poverty and inequality, october ). see tomaz cajner, dennis mawhirter, christopher nekarda, | financial security. 1 / 4 bis - central bankers'speeches in addition to broad - based outreach, i would also like to emphasize the opportunity that financial education provides to advance our shared goal of financial inclusion. today, i will discuss three important aspects of the fed's inclusion efforts that helps to inform policies and practices designed to advance financial access and capability : access to a banking account ; the availability of responsible small - dollar lending products for short term financial needs ; and expanded reach of financial initiatives to indigenous and native communities to more effectively assist in providing access to the broader financial economy. we have made significant progress in providing greater access to bring the unbanked into the insured depository space. our research gives us insight into the success of recent efforts to expand access among unbanked populations. for example, the federal reserve's survey of household economics and decisionmaking ( shed ) showed in 2021 that 94 percent of adult survey respondents have a bank or credit union account, and the federal deposit insurance corporation's 2021 national survey of unbanked and underbanked households found that 95. 5 percent of all u. s. households were banked, which is the highest level since the survey began in 2009. 2 the fed's shed survey shows similar results. from 1989 to 2019, the percentage of u. s. adults with bank accounts rose from 85. 6 to 94. 5 percent. this is also true in the increased number of bank accounts owned by members of minority groups over the same time period, especially for black and hispanic consumers. black adults increased bank account ownership from 56. 7 to 86. 8 percent and hispanics increased from 63. 5 to 89. 5 percent. though these surveys show significant improvement over the past decades, there is still further progress to make. in fact, our shed survey data helps to identify characteristics of those who may choose not to use a deposit account or do not have access to one. the most recent survey results show that income and education may also play a factor - among the respondents, 24 percent of adults who have not earned a high school diploma and 17 percent of adults making less than $ 25, 000 a year did not own a deposit account. we also know that there are many factors that may lead consumers to choose not to engage in the banking system, whether from a distrust of the banking system or prior mishandling of a banking relationship being an impediment to account ownership. these broader gains in the number of consumers | 0.5 |
activity. residential property sales have declined sharply over the past year, and housing starts have also fallen to be lower than they have been for over a decade. property developers are in stress and many are finding it difficult to finance the construction of apartments they have committed to. the government is encouraging banks to lend and is providing some direct support but, at the same time, it has been encouraging developers to reduce their indebtedness. this weakness in the property sector has implications for steel demand and hence demand for our iron ore. the second area of substantial uncertainty is what the current high inflation and cost - of - living pressures might do to price and wage expectations in australia. every day in the news we hear about how price rises are hurting households. first it was rises in the prices of goods during the pandemic as supply chains couldn ’ t cope with the surge in demand. but increasingly price rises in non - discretionary goods are impacting household budgets. petrol, then groceries, now rent and electricity. the floods have resulted in volatility in fresh food prices. furthermore, high fuel and shipping costs are finding their way into prices as businesses pass on increases in their input costs. how households and businesses respond to these pressures is going to be critical for the australian economy and the path of monetary policy. households recognise that their real wages are declining. and with the labour market as tight as it is, it is quite possible that workers will demand and may get wage rises. businesses might well be willing to pay higher wages if they think they can easily pass on the cost increase in higher prices. how this inflation psychology plays out is critical for the inflation outlook and for monetary policy. if this mindset were to take hold inflation will remain high. a third uncertainty is the behaviour of households as interest rates and inflation rise. although household debt hasn ’ t risen much over the past decade relative to income, it is still high so rising interest rates could make servicing debt much harder. on the other hand, one of the legacies of the pandemic was a large build - up in household savings buffers. with fiscal support for incomes during the pandemic, low interest rates increased the cash flow of households with mortgages and at times limited opportunities to spend and savings increased markedly over the past couple of years. we estimate that households overall accumulated more than $ 250 billion in additional savings during the pandemic. most of this saving has been among households at the upper end of the income distribution | rather than a term rate, and doesn't incorporate a significant bank credit risk premium. conclusion there are three main points i would like you to take away with you concerning interest rate benchmarks. first, the longevity of libor cannot be assumed, and you should start considering might mean for any contracts you have that reference libor. today what that second, in contrast, we are well advanced in changes to enhance the longevity of bbsw. while these changes entail some costs, the cost of not doing so would be considerably larger. third, you should think hard whether risk - free benchmarks are more appropriate rates for your financial contracts than credit - based benchmarks such as libor and bbsw. endnotes [ * ] thanks to ellis connolly for his work on interest rate benchmarks and in preparing this speech. i have talked about this issue previously : < https : / / www. rba. gov. au / speeches / 2016 / sp - ag - 2016 - 02 - 22. html > and < https : / / www. rba. gov. au / speeches / 2015 / sp - ag - 2015 - 11 - 18. html >. for andrew bailey's speech, see : < https : / / www. fca. org. uk / news / speeches / the - future - of - libor >. these are typically negotiable certificates of deposit ( ncds ). see : < https : / / treasury. gov. au / consultation / c2017 - t188618 / > and < http : / / www. aph. gov. au / parliamentary _ business / bills _ legislation / bills _ search _ results / result? bid = r5962 >. see : < http : / / www. asic. gov. au / about - asic / media - centre / find - a - media - release / 2017 - releases / 17 - 237mr - asic - consultson - proposed - financial - benchmark - regulatory - regime / >. for more details about the methodology for the cash rate, see : < https : / / www. rba. gov. au / mktoperations / resources / cash - rate - methodology / >. the rba has also conducted a self - assessment against the iosco benchmark principles : < https : / / www. rba. gov. au / mkt - operations / resources / cash - ratemethodo | 0.5 |
, such as property prices, equity prices and the krone exchange rate on the prospects for output, employment and inflation are also taken into account. assuming the criteria above have been satisfied, the following additional criteria are useful : 3. robustness interest rate developments should result in acceptable developments in inflation and output also under alternative, albeit not unrealistic, assumptions concerning the economic situation and the functioning of the economy. 4. gradualism and consistency interest rate adjustments should normally be gradual and consistent with the bank ’ s previous response pattern. 5. cross - checking it is important to cross - check the board ’ s judgments concerning the interest rate path against other information. one natural cross - check is market expectations about the future interest rate, as represented by implied forward interest rates ( adjusted for risk and term premia ). in addition, simple interest rate rules like the taylor rule and other variants suggested in the literature provide potentially useful cross - checks. experiences what are our experiences of our communication approach? the ultimate objective of our communication is to achieve better outcomes in terms of improved stability in inflation and the real economy. however, with less than three years of being fully transparent about our future policy intentions, it is too early to draw a conclusion regarding macroeconomic stability. an intermediate objective of communication is to provide a better understanding of the bank ’ s reaction pattern. one test of this to consider the volatility of market interest rates on the day norges bank decides the interest rate. if the new communication approach has been successful, one should expect that the interest rate decisions are more predictable. chart 5 shows the magnitude of market rate changes on the day the interest rate is decided. we see that volatility in market interest rates has on average been smaller after we started publishing our interest rate forecasts. although one cannot exclude the possibility that the reduction in volatility is caused by other factors than policy communication, it seems that our reaction pattern has become somewhat better understood. petra geraats argues that it is important not to delay policy decisions that are not expected by the market just in order to appear predictable. this, she argues, could impair the market ’ s understanding of the central bank ’ s reaction pattern and thus reduce predictability in the medium and long run. i fully share petra ’ s view. as a general rule, the central bank should do what it considers to be the appropriate thing to do in a given economic situation. predictability is not a goal in itself. however, one | to use endogenous interest rate forecasts in the monetary policy report. norges bank was the this process has also been acknowledged by the norwegian parliament : “ the majority think that it is a prerequisite for an effective monetary policy that the central bank is open about the interest rate forecasts, and are satisfied with the fact that norges bank emphasises this. ” ( innstilling fra finanskomiteen om kredittmeldinga 2007, innst. s. nr. 274, s. 11. woodford, m. ( 2005 ), “ central - bank communication and policy effectiveness, ” paper presented at frb kansas city symposium on “ the greenspan era : lessons for the future, ” jackson hole, wyoming, august 25 - 27, 2005. providing forecasts based on both a constant interest rate and market expectations give information not only about the sign but may also give some guidance about the range. see, for example, the following citation from the bank of england ’ s inflation report of february 2008 : “ under market interest rates, the central projection for inflation was a little above the target in the medium term, while under constant interest rates, it was below the target. ” this suggests that the likely interest rate path lies somewhere between a constant rate and market expectations. second central bank with endogenous interest rate assumptions, following the reserve bank of new zealand, who introduced it in 1997. more recently, the swedish riksbank, the czech national bank, and the central bank of iceland have also started to publish interest rate forecasts. publishing endogenous interest rate paths raises a number of issues, and there is disagreement among both academics and central bankers on whether being that precise about future policy intentions is beneficial or not. the key issue in the debate is whether such communication implies guidance or noise. some of the arguments for transparency relate to the beneficial effects when private agents understand the central bank ’ s reaction function, such that market interest rates will adjust more appropriately to economic news. publishing the interest rate forecast may not be sufficient to communicate the central bank ’ s reaction function, as one specific forecast does not in itself convey much information about how the central bank responds to various shocks. one could argue that three ingredients are required ; 1 ) the forecasts, 2 ) how the central bank responds to shocks, and 3 ) the criteria underlying the forecasts and reaction function. the first two ingredients provide efficiency in monetary policy, in the sense that private agents | 1 |
the “ subservient role ” they are supposed to play. such fears apply, for one thing, to the relations of the global financial markets with national monetary, economic and fiscal policy. anonymous market forces constrict policy makers ’ national room for manoeuvre. this may lead to tensions because domestic policy - making normally claims to be sovereign. but, at least insofar as the financial markets thereby lessen the scope for a monetary policy that is detrimental to stability and a fiscal policy that inflates debt, the economist will not deplore that fact unduly. for a policy that fosters inflation and exacerbates national debt widens scope, at the most, for a temporary period ; in the longer run, any such scope is narrowed. but there is a second dimension to the misgivings that the financial markets are no longer duly performing their subservient function. that relates to the relations with the real economy. in itself, a high volatility of financial market prices may affect real economic decisions. for example, enterprises may increasingly switch to hedging against the risk of sharply fluctuating exchange rates not only by means of financial contracts such as currency futures, but also by diversifying the locations, in terms of different currency areas. prolonged distortions, such as misalignments of exchange rates or bubbles in asset prices, are all the more problematic. it is not only that the financial markets distort real relationships. the relevant adjustments are often sudden and violent, as in the case of the european monetary system early in the nineties, or of mexico. it is precisely such crisis - like upheavals that prompt the question of whether and, if so, to what extent today ’ s financial markets have become more unstable, and whether systemic risk has increased? some people fear that the advance of professionalism among fund managers and institutional investors, in particular, might increase the incidence of such dangers. their thinking is determined primarily by the short - term performance of their portfolio. in certain situations, that may intensify the “ herd instinct ”, triggering a “ rush to the exit ”. at the same time, new financial instruments make it easier for them to incur higher risk positions. swings in sentiment may then lead all the more easily to precarious situations. on the other hand, the greater international diversification of investments makes the markets fundamentally more resilient today. furthermore, owing to the | exception of the united kingdom – is still predominantly bank - based, the us tradition is much more market - based. economists have debated which system is superior for decades, if not for centuries. 1 this is neither the time nor the place to repeat the whole debate about advantages and disadvantages of the respective systems. allow me, however, just to name some significant points of the discussion. there is empirical evidence to suggest that market - based systems react more procyclically than bank - based economies because of more pronounced asset levine, r ( 2002 ) : bank - based or market - based financial systems : which is better? in : journal of financial intermediation 11 ( 4 ), pp 398 – 428. bis central bankers ’ speeches price booms and busts. 2 however, bank - based systems are also beset by procyclicality. a study conducted by the bank for international settlements has shown that, while bank - based systems are more effective at smoothing the impact of business cycle fluctuations, marketbased economies recover more quickly after crises. 3 leaving aside the pros and cons of the two systems, it is my strong belief that the question of the proper financing source cannot be answered with “ either / or ” but has to be “ both ”. in the end, it comes down to the uncontested argument of diversification. and the answer is highly dependent on the context. in europe for instance, the bank - based system reflects the corporate structure of the economy – there are many small and medium - sized entities, the so called smes. and – like in the united states – the smes tend to favour bank - based financing, if only as necessity because there are barriers for small companies to obtain market financing. against this backdrop, i very much appreciate the european commission ’ s efforts to establish a european capital markets union. by making it easier for small and medium - sized enterprises to access the capital markets, we could open up a further source of funding for them. to make one point clear : referring to what i said before about “ either / or ”, the objective of the european capital markets union is not to abandon bank - based funding but to supplement it with capital markets - based funding. and in europe of all places there is plenty of scope to do so. the european stock market is only 60 % of the size of the us stock market as measured in relation to gdp. similarly, the european market for venture capital is | 0.5 |
are just a step away from securing a single - a rating from s & p global. we are keen on hitting the minimum rating within the a territory over the next two years or so. of course, higher credit ratings are not an end goal in themselves. it is also a means to generate greater benefits for filipinos through translating economic growth to actual poverty reduction. with higher credit ratings, interest rates on government borrowings drop, which leads to savings on interest payments and, therefore, more fiscal space to fund infrastructure projects and social services. securing higher credit ratings requires the philippines to post even better numbers on various metrics on the economy, parallel to those exhibited by higher rated and richer economies. as such, aiming for a ratings goes hand in hand with the goal for the philippines to graduate into an upper middle income economy over the short term and to a high income economy over the long haul. then again, this is something no institution can singlehandedly accomplish. this requires concerted effort among all concerned institutions, public and private. as governor of the bsp, my personal aim is to bring bsp closer to the people. the primary means to do so is to vigorously pursue initiatives geared toward greater financial inclusion. we believe that with easier access to financial products and services, people are accorded more opportunities to pursue savings, investments, and entrepreneurial activities that help augment incomes. we are doing this through the following ( 1 ) financial technology, ( 2 ) financial education, and capital market development. on financial technology, the bsp continues to enable a regulatory environment supportive of the development of financial technology ( fintech ), while at the same time ensuring strengthened relevant risk governance and consumer protection systems. we want to advance the country ’ s digital financial ecosystem in such a way that every individual is able to open a deposit account and use digital financial services through simplified requirements and interoperable payment systems. under the bsp ’ s national retail payment system ( nrps ) framework, we have started implementation of the two interoperable payments systems, particularly the instapay for low value payments settled in real time and the pesonet for bigger amounts of payments settled typically within the same banking day. as of april 2019, there are 50 participants in the pesonet and 39 in the instapay. we expect more over the near term. on financial education, the bsp is partnering with various institutions so that we are able to teach its concepts and principles to our target | with financial stability. we are seen as one of the fastest growing and most resilient economies in the region and the world. the economy has experienced sustained uninterrupted expansion for the past 74 consecutive quarters — spanning 18 years! over the past five years, the domestic economy expanded by more than 6 percent annually, providing more opportunities across all segments of society. traditional central banking let me share an open secret : central banks worldwide ( and the bsp is no exception ) are traditionally conservative institutions and some would argue, boring. understandably so since stability is our main concern. thus, doing novel things may not be intuitively consistent with this goal. 1 / 5 bis central bankers'speeches in its invitation, the wtcmm asked me to share my plans and programs in the continuity of providing the country a strong monetary and financial system. this is really the traditional part of central banking, focusing on our core mandates of price and financial stability. the bsp adopted the inflation targeting framework in 2002 to achieve low and stable inflation. this was accomplished, providing credibility to what we do as a monetary authority. inflation continues to remain low and stable with well - anchored inflation expectations. headline inflation rose to 3. 4 percent year - on - year in september, making the resulting year - to - date average inflation rate of 3. 1 percent within the government ’ s target range of 3. 0 percent ± 1. 0 percentage point for 2017. we expect to sustain this through 2018 to 2019 based on our forecast. in 2016, we formally adopted the interest rate corridor ( irc ) system, which enhances the link between the bsp ’ s monetary policy stance and financial markets. the primary benefit of the adoption of an irc system in the philippines is the strengthening of monetary policy transmission by ensuring that money market interest rates are meaningfully influenced by the bsp ’ s policy rate. we continue to refine the implementation of the irc system to make it more marketfriendly. our financial sector also demonstrates stability and robust growth. domestic liquidity conditions remain ample to support lending. banks remain strong, supported by a stable capital base and satisfactory asset quality. the non - performing loan ratio ( npl ) is down to just 2. 0 percent as of end - august 2017. actually, it ’ s negative if we net out the generous allowance for loan losses. as of end - june 2017, capital adequacy ratio ( car ) of universal and commercial banks is very | 0.5 |
i am in no doubt that it will adapt and come to terms with any changes the negotiations might bring. 4. importance and boundaries of politics ladies and gentlemen, i have given you an impression of the role i see for supervisors and 3 / 4 bis central bankers'speeches central banks. of course, there is another party from the public sector that plays a role : politicians. and the importance of politicians can ’ t be overestimated when it comes to the future relations between the uk and the eu. how these turn out can only be determined by the elected representatives of the people. " but there are also areas where politicians have, for very good reasons, restricted their own influence. i am talking about the realm of monetary policy and, to some degree, banking and financial supervision. as governor carney put it : " the objectives are what are set by the politicians ; the policies are done by technocrats. " nevertheless, we have seen some criticism of central banks and their policies from politicians lately. this concerned, for example, the handling of brexit as well as conducting monetary policy and setting interest rates more generally. in light of this criticism, it may be time for a friendly reminder that central bank independence is not debatable. experience shows that political influence over central banks always leads into disorder. at the end of the day, independent central banks best guarantee price stability. calling central bank independence into question, even only implicitly, can confuse markets as well as the public about who is in charge when it comes to monetary policy and supervisory decisions. in summary, politicians are well advised not to exert influence in the wrong place or with the wrong measures. in this context, i am also worried about some rather protectionist tones in recent economic and legal debates. politicians as well as public authorities must resist any temptation to give preferential treatment to domestic companies and banks – or to exert excessively tough action on foreign businesses. as barack obama recently said : " a nation ringed by walls would only imprison itself. " 5. conclusion ladies and gentleman, over the past few minutes i offered you an overview of what i believe the banking sector can expect from supervisors, regulators and politicians – and what not. it turned out to be quite a long list. if, as a bank representative, you were to ask me what i expect from banks in return, i would say just one thing : i expect you to take up the challenge. in a market economy, coping with | multiple challenges and an adverse business environment is the core responsibility of a business ’ s management. no one else ’ s. at the beginning of my speech today, i spoke about an imminent and profound change in the banking sector. after the dust has settled, there will not only be winners. but if we honour the division of responsibility between banks, supervisors and policymakers, we can open up the path towards a banking sector that is both stable and profitable. of course, this is not to say that there shouldn ’ t be communication or even cooperation among the parties involved – quite the contrary, in fact. that ’ s why it ’ s so important to have opportunities, like today ’ s conference, to get together and discuss not just the challenges, but also the strategies needed to overcome them. i am looking forward to having this conversation with you now. thank you very much for your attention. 4 / 4 bis central bankers'speeches | 1 |
njuguna ndung ’ u : central bank of kenya ’ s new website – improving communication speech by prof njuguna ndung ’ u, governor of the central bank of kenya, at the official launch of the central bank of kenya ’ s new website, nairobi, 1 september 2009. * * * mr. mutua kilaka, financial secretary, ministry of finance ; dr. geoffrey mwau, economic secretary, ministry of finance ; dr. bitange ndemo, permanent secretary, ministry of information & communication ; board members here present ; distinguished guests ; ladies and gentlemen : you are all welcome to the launch of the new cbk website today. let me at this early juncture thank our chief guest, mr. mutua kilaka for accepting to launch our new website and to all our distinguished guests for joining the central bank fraternity in marking this occasion. ladies and gentlemen, it is important to note from the very onset that central banking has undergone dramatic changes in recent decades and many central banks now post and communicate their policies and forecasts in their websites. conventional wisdom in central banking previously held that monetary policymakers should say as little as possible and say it cryptically. in recent years, the understanding of central bank transparency and communication has changed dramatically. on its part, the central bank of kenya has employed a wide range of communication channels to ensure it efficiently and effectively communicates with the market as well as target audience. the launch of our new website today marks a major milestone towards the achievement of the bank ’ s vision of becoming a world class, modern central bank. our new website is also part of the bank ’ s communication strategy aimed at improving central bank communication platform and policy. ladies & gentlemen, central bank communication is important for financial market participants as it forms the basis for their extrapolations regarding current and future policy actions that might impact the value of their financial assets. so far, communication between the central bank and financial markets has worked fairly well. market participants have learnt over time to distinguish between information and “ noise ”. the central bank, on its part, has remained committed to provide markets with information while avoiding the “ noise ”. it has become increasingly clear to us that managing public expectations through effective communication is a central part of monetary policy and indeed, of central banking. this is an important aspect of formulating and communicating policy. public expectations are more likely to help foster economic stability when the public has a clear understanding of what the central bank | needs for the recovery to take root and to contribute to our citizens ’ well - being. * * * the road is undoubtedly proving to be a long and complex one. far behind us now is the summer of 2007, when the sub - prime mortgage crisis broke, spreading its risks across agents and markets through securitisations and credit derivatives. that episode, which did not initially impact spanish banks as they had no investments in those products, was actually the trigger for a chain of events and effects on the world economy and financial markets that would soon be felt in spain. the first symptom seen was the deterioration in financing and liquidity conditions. the authorities responded to this with support measures, such as the programmes for the purchase of financial assets and the backing of debt issues, and the european central bank set in place its new and ample liquidity provision criteria. in late 2008 the spanish economy went into recession. the decline in output and rising unemployment placed upward pressure on bank and savings - bank doubtful assets ratios and the subsequent need for loan loss provisions. this combined with the increase in financial bis central bankers ’ speeches costs owing to growing dependence on wholesale funding and to sudden difficulties on these markets. moreover, many institutions, highly concentrated in the real estate development and construction sector, were faced with the housing market grinding to a halt. what ’ s more, savings banks had a singular legal regime, associated with their legal status, that entailed clear limits on their ability to raise top - quality capital and to set in place the governance rules needed to retain the confidence of third - party investors as to their future. given this outlook, there was an evident need to restructure the sector and to support the process with an instrument that would help strengthen the solvency of those institutions that decided to pursue plans to improve their efficiency by means of mergers or other integration operations. in july 2009 the frob was duly created. and over the course of 2010 it granted – or committed itself to – aid amounting to €11. 6 billion for eight integration processes ( although one of these did not finally go ahead when the initial banco base project collapsed ) and for the restructuring of a non - viable institution, cajasur, and its integration into bbk. the other savings bank officially intervened due to its lack of viability, caja castilla - la mancha, received aid from the deposit guarantee fund, at a time when the frob had not yet been created. the year 2010 also saw | 0 |
. in september, increasing doubts were voiced as to the sustainability of the economic upswing in the us : compared with earlier cycles, the essential element of an improving labour market was missing. this led to a consolidation on the capital markets even though the economic indicators remained largely positive. with the first signs of the us labour market recovering at the end of september, coupled with rapid growth in gross domestic product in the third quarter ( 8. 2 % ), the strength of the economic revival in the us economy was confirmed. just how sustained this pick - up proves to be will become evident in the coming months when the extraordinary fiscal and monetary stimuli weaken. foreign exchange markets fluctuations in the us dollar dominated the foreign exchange markets. after having lost considerable ground during the first half of the year, the greenback rebounded slightly by october amid growing signs of an acceleration of growth. recently, the focus of market participants returned to the sustainability of the us recovery and the continued rise in america ’ s current account deficit. as a result, the dollar weakened again ( see graph 2 ). since the middle of the year, the swiss franc has moved sideways against the euro. heavier fluctuations were recorded vis - a - vis the dollar. with positive economic data emanating in the us from june onwards, the franc initially weakened before firming again as part of the general dollar consolidation witnessed since september. on the whole, the swiss franc hardly registered any independent movements. it depreciated strongly during the first half of the year after our interest rate decision and has remained stable since the summer. in relation both to switzerland ’ s 24 major trading partners and to the euro zone, the real exchange rate index of the swiss franc is now slightly below its level at the beginning of 1999, i. e. at the time of the euro launch. gold market owing to the more favourable economic situation, raw material prices continued the rise which had started in 2001. at over 400 usd / ounce, the gold price was at a seven - year high at the beginning of december. because of the weak dollar, the gold price increase in francs was more modest. however, its peak of approximately 17, 000 chf / kg was still the highest for several years. the main reason for this rise was persistently modest hedging activity by gold producers. equity markets international equity markets exhibited a positive course overall, steadily making up lost ground after their mid - march low ( see graph 3 ). as the equity | tarisa watanagase : dealing with volatile capital flows welcome address by dr tarisa watanagase, governor of the bank of thailand, at the 42nd seacen governors ’ conference, bangkok, 28 july 2007. * * * your excellency minister of finance, mr. rodrigo de rato, mr. herve hannoun, fellow governors, distinguished guests, ladies and gentlemen, i would like to begin by extending a very warm welcome to all of you to bangkok. we are pleased to host the 42nd seacen governors ’ conference and the 26th meeting of seacen board of governors here in bangkok. i would also like to express my sincere appreciation to his excellency chalongphob sussangkarn, finance minister of thailand, for his presence here to officially open the conference. this year ’ s theme on “ living with volatilities : is seacen prepared for rising fluctuations in exchange rate and capital flows? ” comes at an opportune moment, given a recent volatile and uncertain market conditions. this volatility has posed challenges to central banks in maintaining monetary and financial stability. let me share with you some of my views on this very important issue. it is traditionally believed that emerging markets are subject to more volatile capital flows than developed countries due to underdevelopment of our financial markets and weak institutions. thus, putting in place a more flexible exchange rate policy, credible monetary policy and sound domestic financial system could help emerging markets reduce the volatility of capital flows as well as its negative effect on the economic stability. the asian financial crisis in 1997 taught us a number of painful lessons from volatile capital flows associated with such weak institutions. since then, we have seen a large number of developing countries moving towards flexible exchange rate regime, adopting inflationtargeting framework, and improving the resilience of financial system. yet, the challenges from volatile capital flows have become more intensified and we still see the implications of volatile capital flows on our economies. we are, therefore, very fortunate to have with us mr. rodrigo de rato, managing director of the imf, and mr. herve hannoun, deputy general manager of the bis, to share their views and insight on this issue. i believe that we can greatly benefit from the imf ’ s new surveillance framework, which put greater emphasis on the volatile financial market, as well as from the bis expertise on analysis of capital flows during the morning session. i am certain that | 0 |
backed securities, by structuring asset pools into tranches with different risk levels, could potentially contribute to such diversification. there are commission´s proposals in other areas. among them : the setting - up of an european monetary fund, which would take over the current functions of the european stabilization mechanism, eventually adding the role of common backstop for the single resolution fund ; the establishment of an european minister of finance, who would also be vice - president of the european commission and chairman of the eurogroup ; and the creation of a common stabilisation tool for investment, which should not preclude the future development of a genuine european budgetary capacity for economic stabilisation purposes. those are proposals that deserve careful consideration. moreover, the crisis has made it clear that the european budgetary framework is very complex, which highlights the need to simplify it. recent proposals, which seek to reduce the current excessive number of rules, by focusing on the public debt to gdp ratio, as a medium - term anchor, and to the expenditure rule, as an operational tool, seem promising. in any event, reinforcing the oversight and control of fiscal rules is necessary to ensure their fulfilment. the aim should be that the budgetary governance framework is able to encourage countries to generate room for manoeuvre during expansionary phases, so that the stabilising capacity of fiscal policy may increase in the euro area, as a whole, at times of crisis. 8 / 9 summing up : much work remains to be done in the coming months and years. we should make good use of the current benign environment to progress in our european integration agenda. much is at stake, most notably keeping our achievements alive, preserving our political, economic and social model, and ensuring a pivotal role for a united europe in an increasingly globalised world. 9 / 9 | 01. 07. 2022 closing ceremony of the academic year 2021 - 2022 centro de estudios monetarios y financieros ( cemfi ) pablo hernandez de cos governor good afternoon rector and colleagues. and good afternoon class of 2022. it is a pleasure for me to participate in this graduation ceremony together with carlos andradas, rector of the universidad internacional menendez pelayo, and rafael repullo, director of the cemfi. i would especially like to thank carlos andradas for being here today. as you know the main activity of the universidad internacional menendez pelayo takes place in the summer in the delightful, charming and vibrant city of santander ( you can take this description at face value, with no need to apply a haircut due to my own origins in the region ). so i greatly appreciate his coming to madrid to participate in this graduation ceremony. the partnership of the cemfi with the universidad internacional menendez pelayo, dating back to 2006, has been instrumental in improving our ability to attract first - rate students and the quality of our graduate programme, and i am very grateful for this. our society needs this constant drive for excellence, especially in the present circumstances. these are difficult times. following the covid - 19 pandemic and its economic consequences, the russian invasion of ukraine last february has provided a further negative shock, heightening uncertainty and worsening inflationary pressures and growth prospects. this is a particularly challenging environment for economic policy. to address current structural and cyclical challenges we need to rely on the analysis and advice of well - trained economists whether they are in the academia, in the public administration, central banks or the private sector. this is why it is so important to have academic institutions like cemfi, that produce groundbreaking research and invest heavily in boosting the single most important determinant of economic growth : human capital. students of the class of 2022, what you take from here – your knowledge and the tools needed to analyse and understand reality – is the accumulated capital stemming from what is probably the most important investment you will make in your whole life. you have invested your time and effort. and the yield on this investment will be a wide array of opportunities. but, above all, this human capital you now possess is something that nobody can take away from you. it will accompany you everywhere you go and you can apply it in every endeavour you may undertake. | 0.5 |
you can count on it : happy new year to you all and to our country! 3 / 3 bis central bankers'speeches | banks as well as temporary purchases of assets, both private and public. circumvent the zero lower bound and bring down real long - term interest rates through purchases of government bonds, and / or interest rate guidance. as a consequence, central banks ’ balance sheets expanded by a factor of three, dramatically increasing their role in financial intermediation and sometimes raising concerns, at least in some quarters, about the possible inflationary impacttogether, this diversification and the increase in size have created more complex interactions with fiscal policies. specifically, asset purchases are sometimes seen as “ quasi fiscal policies ” both on the asset side ( due to the potential risks attached ) and the liability side ( when they contribute significantly to meeting the funding needs of the sovereigns ). bis central bankers ’ speeches at the time they were decided, those exceptional interventions were absolutely necessary. although it had been forgotten, central banks were initially created to protect the economy from excessive financial disturbances. this was, historically, their “ raison d ’ etre ”. as ultimate and unique providers of liquidity, they cannot escape this responsibility and let the financial system and the economy collapse. at the same time, by doing so, central banks have exposed themselves to a number of risks first, there are risks linked to balance sheet expansion. they cannot be ignored, although all central banks have been extremely careful in valuing the assets purchased or taken as collateral. second, they run the risk of blurring the lines between fiscal and monetary responsibilities. a dynamic use of their balance sheets by central banks has effects on the allocation and distribution of resources in the economy. they may favour or penalise some types of collateral or certain borrowers. if central banks take on additional responsibilities in the area of financial stability, they will have to do so in close cooperation with fiscal authorities, thus exposing themselves to possible interferences with monetary policy. the major risk, however, is the risk of confusion. a multiplicity of interventions could be interpreted as a relative dilution of objectives. there is a tendency by market participants and some policymakers to consider central banks to be “ universal problem solvers ” whose balance sheets can be used, without cost, for all purposes. there is also a doubt, at least an ambiguity, in the minds of some analysts, about the true purpose of government bond purchases. central banks ’ activism may create doubts as to their ability to stick to their core mandate – price stability – in the face of increasing pressures and constraints. | 0.5 |
mark w olson : basel ii - its implications for second - tier and community - size banks speech by mr mark w olson, member of the board of governors of the us federal reserve system, at the 2003 banking institute, center for banking and finance, university of north carolina, charlotte, 10 april 2003. * * * as important as the gramm - leach - bliley act has been to american banking - - codifying the new realities of the marketplace - - i would argue that the 1988 basel capital accord brought about an even more dramatic change in banking rules of the game. in the late 1980s, as the congress struggled unsuccessfully to reach agreement on a plan for managing interstate banking, the banking regulators of the group of ten ( g - 10 ) countries were able to develop a common set of rules for bank capital. what is referred to now as basel i established a competitive balance among the banking systems of the major industrialized countries. it made the international competitive climate considerably more fair, and it greatly improved bank safety and soundness worldwide. let me elaborate briefly on the advances embodied in basel i before i discuss the limitations that have become more evident in the years since it was implemented. in the mid - 1980s, it was a major step forward to acknowledge, for example, that residential mortgage lending carried substantially less credit risk than did automobile lending and that certain state and municipal bond issues carried less of a credit risk than home mortgage loans. as a result, when basel i allowed for loans and investments to be grouped into four " buckets " with risk weightings of 0 percent, 20 percent, 50 percent, and 100 percent, respectively, banks were allowed for the first time to allocate and maintain capital in a manner somewhat consistent with the risk profile of the asset side of their balance sheets. also, overwhelmingly, banks of all sizes in the united states now had risk capital ratios significantly in excess of their leverage capital ratios. though the risk buckets were limited and did not fully reflect the range of risk sensitivities in the 100 percent bucket, their implementation represented a significant improvement. the banking industry has changed in many ways, however, since basel i was implemented in 1988. two specific areas of change - - the expanded use of securitization and derivatives in secondary markets and vastly improved risk - management systems - - have significant implications for basel i. the use of secondary markets and the sophistication of risk - management systems correlate significantly with bank size. while | policy design near price stability ”, journal of the japanese and international economies, 14 ( 4 ), 327 – 365. peersman, gert, and smets, frank ( 2003 ), “ the monetary transmission mechanism in the euro area : more evidence from var analysis ”, in angeloni, ignazio, kashyap, anil, and mojon, benoit, editors, monetary policy transmission in the euro area, cambridge university press, chapter 2, 36 - 55. primiceri, giorgio e. ( 2005 ), “ time varying structural vector autoregressions and monetary policy ”, review of economic studies, 72 ( 3 ), 821 - 852. reis, ricardo, and mckay, alisdair ( 2008 ), “ the brevity and violence of contractions and expansions ”, journal of monetary economics, 55 ( 4 ), 738 - 751. ruge - murcia, francisco j. ( 2003 ), “ inflation targeting under asymmetric preferences ”, journal of money, credit and banking, 35 ( 5 ), 763 - 785. ruge - murcia, francisco j. ( 2004 ), “ the inflation bias when the central banker targets the natural rate of unemployment ”, european economic review, 48 ( 1 ), 91 - 107. smets, frank, and wouters, raf ( 2003 ), “ an estimated stochastic dynamic general equilibrium model of the euro area ”, journal of the european economic association, 1 ( 5 ), 1123 - 1175. smets, frank, and wouters, raf ( 2005 ), “ comparing shocks and frictions in u. s. and euro area business cycles : a bayesian dsge approach ”, journal of applied econometrics, 20 ( 2 ), 161 - 183. surico, paolo ( 2007 ), “ the fed ’ s monetary policy rule and u. s. inflation : the case of asymmetric preferences ”, journal of economic dynamics and control, 31 ( 1 ), 305 - 324. svensson, lars e. o. ( 1997 ), “ inflation forecast targeting : implementing and monitoring inflation targets ”, european economic review, 41 ( 6 ), 1111 - 1146. taylor, john b. ( 2007 ), “ housing and monetary policy ”, panel remarks at the kansas city fed conference on “ housing, housing finance, and monetary policy | 0 |
26. 09. 2022 economic developments in the current inflationary setting and the economic policy response * fundacion la caixa. “ economy and society ” lecture series pablo hernandez de cos governor * ienglish translation from the original in spanish. ladies and gentlemen, first allow me to thank fundacion la caixa for inviting me to participate in this series of lectures entitled “ economy and society ”, which has become a benchmark for in - depth analysis of current affairs. against the current backdrop of high inflation and considerable uncertainty over the economic outlook, tragically marked by russia ’ s invasion of ukraine, the first part of my address will focus on describing the banco de espana ’ s diagnosis of the economic situation and outlook. i will then analyse the monetary policy response of the european central bank ( ecb ) to this setting and some of its possible effects on the spanish economy. lastly, i would like to highlight the role that other economic policies can play in tackling the challenges we currently face. 1. the main determinants of the current economic outlook inflationary pressures are proving particularly high and persistent, causing significant drops in real income inflation has surged persistently worldwide, becoming one of the major determinants of economic developments. the reasons behind the rise in inflation are manifold and combine supply and demand - side factors, whose weights differ depending on the geographical area in question. these factors include high commodity prices on international markets, production bottlenecks affecting certain goods ( due to supply - demand mismatches triggered by the lifting of pandemic restrictions ) and shipping bottlenecks. lifting the health restrictions has also resulted in some of the demand for services being released, prompting an acceleration in recreation, hospitality and tourism prices. in addition, changes in practices, such as the rise of working from home, have led to higher spending on household appliances, exerting further pressure on their prices. in the case of the euro area and spain, analysing the disaggregated data reveals the following stylised facts : 1. the magnitude of the increase in inflation is unprecedented in recent times. in the euro area, august saw the harmonised index of consumer prices ( hicp ) reach 9. 1 %. in spain, it has risen from slightly negative rates at end - 2020 to 10. 5 % in august 2022. for context, to encounter a similar rise we need to go back to 1977. 2. this inflationary episode is characterised by its high | relates to possible second - round effects, i. e. when high inflation passes through to wage increases and these, in turn, push up consumer prices to the extent that firms seek to maintain ( or widen ) their margins. again, this would make inflation far more persistent and increase the likelihood of the feared de - anchoring of inflation expectations. as i said, while there is no evidence of such effects occurring at present, at least on a widespread basis, the current high inflation does make this more likely. naturally, the extent of the economic downturn – over which, as i indicated earlier, there is significant uncertainty –, and its effects on wages and profit margins, will be a key determinant of the medium - term inflation outlook and, therefore, of our monetary policy decisions. ultimately, our next decisions will be based on the incoming data and their implications for achieving our medium - term inflation target, in line with the “ meeting - to - meeting ” approach that we have adopted. in any event, interest rates will have to reach a level that allows us to ensure a gradual convergence of inflation to our medium - term target, and how quickly we reach that level will be conditioned by the same target. whether this means reaching interest rates at levels close to neutral or higher will therefore depend on that target. the normalisation of monetary policy is prompting a tightening of financial conditions. the process of monetary policy normalisation has translated into a significant increase in market interest rates. since early 2022 the 12 - month euribor has climbed by more than 290 bp, while the 10 - year overnight index swap ( ois ) rate ( typically used as the risk - free benchmark interest rate ) has risen by 240 bp. these increases have begun to pass through to the cost of bank financing for firms and households, which will help to contain inflationary pressures. in spain, long - term government bond yields have risen by 2. 5 pp this year, and the risk premium relative to the german benchmark has increased by 35 bp, although it has remained stable since the tpi was approved. meanwhile, the average cost of long - term corporate debt issuance has also risen sharply ( over 220 bp ) and, as with public debt, has reached levels not seen since 2014. moreover, the ibex 35 has fallen by nearly 11 % since early 2022. the impact on bank lending conditions has been more subdued. the average cost of new loans rose up to july ( latest available figure | 1 |
vitas vasiliauskas : monetary policy and financial stability in the time of covid - 19 keynote address by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the 8th regional meeting of regional governors and bankers, virtual, 2 october 2020. * * * good morning, governor vujcic, dear governors, central bankers, banking sector representatives, it is my great honour to finally join you today – even if only virtually. i was scheduled to address this very meeting back in march and give a talk about financial stability and the real estate market. i had my speaking points written down, my flight booked – all ready to meet you and share perspectives on the topic we had chosen. i was also keen to visit rovinj and gaze for a moment at its venetian architecture. and then … we all know what happened. the world has turned upside down. i will try to reflect on this new world in my brief intervention today. i will first mention the lessons learned during the global financial crisis ( gfc ) in terms of banking sector regulation and how they enabled us to stand our ground in the face of the covid - 19 shock. i will then cover the actions taken on the monetary policy front by the european central bank ( ecb ). i will remind of the limits to what monetary policy authorities can do, stressing the importance of fiscal policy, sound investment strategies, and structural reforms. finally, i will turn to macroprudential policy as the last – but not least – piece of the puzzle. i will zoom in on lithuania specifically, where macroprudential decisions had increased the resilience of the financial sector prior to the pandemic - induced downturn and helped deliver a timely countercyclical response. the effect of regulatory reforms since the gfc dear colleagues, despite all the turmoil, the global financial system has got through the immediate shock, preventing a health crisis from turning into a systemic financial crisis. this is in part due to the international regulatory reforms implemented over the past decade. in europe, banks entered the year 2020 in much better shape compared to the beginning of the great recession. they improved asset quality, strengthened capital positions and increased liquidity buffers. for instance, the common equity tier 1 ( cet1 ) ratio in the eu banking sector – a key indicator of financial soundness – rose from 9 % in 2009 to nearly 15 % in the fourth quarter of 2019, well above | to 16 % of the total mortgage flow, pointing to possibly speculative housing purchases with credit. to tame such behaviour, we have decided to impose a stricter loan - to - value ( ltv ) requirement for all second or subsequent mortgages, except to those borrowers whose primary loans are significantly amortized. in addition to this, we plan to introduce a sectoral systemic risk buffer requirement to banks and credit union groups operating in lithuania, applicable to their overall mortgage portfolio. this sectoral systemic risk buffer would contribute to financial sector resilience to housing market turbulence. the official decisions will be made after ongoing consultations with market participants, the ecb, and other authorities. these measures will come into force next year. at the same time, to discipline speculative tendencies in the housing market in general, our government is considering revising its real estate taxation policy. proposals currently focus on increasing taxation for those owning multiple residential properties, rather than on taxing properties only in situations where property value exceeds a certain threshold. if implemented, such fiscal policy measures, in combination to the intended changes in the borrower - based instruments, would have a powerful impact in cooling the currently heated housing market. if fiscal and macroprudential policy work together, they have the potential to achieve maximum impact. but let me return to the status quo. the currently binding framework for housing loans in lithuania is nicely summarized in this slide. we have an ltv limit of 85 %, dsti of 40 %, and maximum mortgage maturity of 30 years. this framework helped in creating a level playing field for mortgage lenders and propagated more prudent lending and borrowing practices since 2011. the world today, however, is not as it was in 2011. therefore, we gather here not only to share our experiences and views on current borrower - based measures, but also to look ahead and consider possible enhancements to the use of macroprudential instruments in the future. dear colleagues : i see three main challenges we must consider when revising the macroprudential policy framework. first, we need to consider the effectiveness of macroprudential instruments to tackle systemic risks arising from the low interest rate environment. second, we need to think how to minimize distributional consequences of the borrower - based instruments. and third, we need to investigate to what extent macroprudential instruments can mitigate climate change risks. regarding the first challenge, no eu member state so far has explicitly used macroprude | 0.5 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.