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in the local bond market. the first is greater market liquidity which has allowed the bond market to adjust to the change in monetary policy without difficulties. and the second is the improved communication between policymakers and market participants, which has allowed the bond market to form its own expectations about policy direction and to respond accordingly. these two qualities, in my view, are positive for the development of the bond market in the longer - term. outlook and developments in the bond market this year the thai economy will continue to expand, driven by momentums in domestic demand and export, including the launching of new infrastructural projects. higher investment will imply higher funding requirement. given ample liquidity in the system, funding investment expansion domestically should be a preferred option to funding it from abroad. domestic funding will help make the domestic credit market competitive while helping to avoid the unnecessary pick - up in external debt. it is in this context of domestic resource mobilization that the bond market can have an important role to play. this is to say that while bank credit will continue to be a major intermediary for investment finance, the need for long - term investment financing will offer considerable opportunity for the bond market. on the supply side, the fixed income market can be an important channel for long - term capital mobilization, while on the demand side, there will be ample demand to invest in fixed income instruments from domestic institutional investors. it is in this context that the current efforts to develop the domestic bond market by the government are timely, and this priority now ranks high on the government's agenda. roles of the bank of thailand in developing the bond market a high - level domestic bond market development steering committee was set up by the government in january this year. the committee is chaired by the finance minister and comprises high - level representatives from both the public and private sectors, including the bank of thailand. the aim of the committee is to promote the development of the domestic bond market in five key areas, namely, ( 1 ) the primary market ( 2 ) the secondary market ( 3 ) taxes ( 4 ) market infrastructure and ( 5 ) market information. as for the bank of thailand, we have been tasked with the responsibility to develop an active secondary market. to meet this challenge, the bank of thailand has mapped out a multi - year strategy from which our work plan for bond market development this year will focus on six areas. first is the development of the private repo market. the repo market will provide bond market
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prasarn trairatvorakul : bank of thailand β s policy direction in 2012 speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the bank of thailand, bangkok, 27 january 2012. * * * good afternoon, honorable guests and members of the press, 2012 is a special year because it is the bank of thailand β s ( bot ) 70th anniversary, a mark of extensive experience for an institution. faced with numerous challenges to monetary policy and financial institutions policy implementation, the bot has through the past 70 years upheld the institutional value that our policies must be based on sound principles, yet embracing enough flexibility to accommodate the changing environment. our ultimate goal is to promote thailand β s long - term economic and financial stability. our policy direction in 2012 will continue to reaffirm our long - held determination to strengthen the country β s economic resiliency and the well - being of the thai people. notwithstanding short - term economic obstacles that have weighed on current sentiments, the thai economy β s main challenge has remained the same since my address last year. this major challenge is how we all can become more proactive since idleness during a time of rising competition could easily cause us to fall behind. as such, all parties should always be ready to improve oneself and to prepare for uncertainties that may occur in the future. in this same spirit, the bot has modified our strategy to fit the changing environment and is willing to work with all parties to ensure that the thai economy can continually expand in line with its potential. policy implementation in 2011 looking back at 2011, the bot implemented our monetary policy to ensure stability against the backdrop of robust economic expansion in the first three quarters of the year. thus, we continued to normalize the policy rate, as i had stated in last year β s policy statement. after the economy was hit hard by the flood crisis amid the stagnating global economy in the final quarter, the bot policy was adapted to the changing circumstances, evidenced by the monetary policy committee β s ( mpc ) decision to lower the policy rate in the last meeting of the year. throughout last year, the bot also paid particular attention to policies that facilitate businesses in normal times and in crisis times. these included policies that ensure the exchange rate movements consistent with the underlying economic fundamentals and that its volatility remained manageable by thai businesses. moreover, our policy on financial sector regulation and supervision has ensured that thai financial institutions maintain
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forecasts. the mpc is of the view that should the forecasts materialise, the hiking cycle may be nearing its end. however, this does not mean the interest rate reductions are imminent, as we would like to see inflation more firmly within the target range on a sustainable basis over the forecast horizon. we are also clear that the bar for any future rate cuts has been set very high. although our mandate is inflation, it does not mean that we ignore growth considerations. the constitution states that what we do should be in the interest of balanced and sustainable growth in the republic. we have to be clear, however, about what monetary policy can achieve in this respect. our view is that long - term trend growth or potential output is determined by real factors in the economy. these include infrastructure, education, labour and product market efficiency, productivity growth, and institutional strength, to name a few. monetary policy can only impact on cyclical variations of growth around the growth trend. monetary policy cannot be an engine for sustained growth. this requires structural reform, in order to arrest the declining trend of potential output that we have observed over the past few years. however, implementing structural reform is difficult and it requires strong institutions and political management. some of it requires changes in processes that are expenditure neutral, for example product market reforms, and changing competition laws or labour laws, while others could require huge investment layouts, as in the case of infrastructure. these are political decisions, which are often difficult, and inevitably involve entrenched interests. it is often difficult to get societal buy - in or to change expenditure priorities when the country β s requirements are diverse and the means limited. in south africa, we do have a structural reform framework in the form of the national development plan, which has been adopted by all parties. it is not the plan that is lacking, rather its implementation. it is far easier to look for a quick fix such as monetary policy. this is not a peculiar south african phenomenon, however. monetary policies, in conjunction with fiscal policies, were instrumental in avoiding worse outcomes to the global financial crisis. but monetary policy is not the appropriate policy to raise potential output. yet, in the absence of meaningful structural reforms, the focus globally remains on monetary policy to provide the solution. this creates a challenge for central banks. as mohamed el - erian has noted in his recent book, central banks are now seen as the β only game in town β due to slow progress in the implementation of
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late. global growth in 2015 was driven by the advanced economies and in particular by the sustained recoveries in the united states and united kingdom. the us experienced higherthan - expected growth in the third quarter, which, together with robust domestic private demand and job creation, allowed the fed last month to finally embark on its much anticipated lift - off as part of policy normalisation. market participants viewed the fed β s statement following the december fomc meeting as somewhat dovish, reinforcing the gradual prospective path of normalisation. furthermore, as demonstrated by the fomc β s β dot plots β over the last few fomc meetings, the range of the projected target federal funds rate has narrowed, signifying a more clearer and coherent path of normalisation. such perceived moderation of the fed β s expectations, together with ample advance notice through its communication strategy, no world economic outlook, imf, october 2015. bis central bankers β speeches doubt helped markets digest the dreaded β first hike in the cycle β ( the first increase in the fed funds target in almost ten years ) without major price swings. in japan and the euro area, however, growth remains weak and fragile. the euro area expanded by an annualised 1. 2 per cent in the third quarter, and indicators ranging from business confidence to credit growth are showing increasing signs of upward normalization. however, concerns over a lack of pricing pressures 2 prompted the ecb to lower its deposit rate and extend its qe programme last month. on the other hand, even as japan avoided a technical recession in the third quarter, inflation remains well below its 2 per cent target level. going forward, it is anticipated that growth in advanced economies will strengthen on the back of supportive fiscal and accommodative monetary policies and lower commodity prices. however, weaker growth in emerging markets and resultant feedback loops, harbour downside risks. emerging market growth continued to disappoint in 2015, with the slowdown in china, recessions in brazil and russia and weak commodity prices dominating the outlook going forward. china continues to rebalance its economy, and according to the imf is expected to have grown by 6. 8 per cent in 2015, and achieve growth of 6. 3 per cent in 2016. 3 monetary policy continues to support the economy, with the people β s bank of china reducing the policy rate by 165 basis points in 2015, and new fiscal measures announced in 2015 should help shore up demand and avoid a hard landing
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at the regional level, many of our economic education specialists offer training seminars to help educators teach economic and personal finance topics in their classrooms. in general, higher education is one of the strong points of the u. s. educational system. we must work diligently to maintain the quality of our educational system where it is strong and strive to improve it where it is not. in particular, we must find ways to move more of our students, especially minorities and those from disadvantaged backgrounds, into education after high school. the historically black colleges and universities have long played a vital role in this regard. they have proud record of accomplishment, dating back to 1837 with the founding of what is now cheyney university of pennsylvania. slavery and segregation cast long dark shadows on our nation's history and our society, and the historically black colleges and universities served as beacons of knowledge in the darkness. today, they are no longer the only places a young african american woman or man can obtain an education, but they are very fine choices for many students, and not just african americans β indeed, 90 four - year and 13 two - year institutions enroll more than 300, 000 students, including more than 50, 000 who are not african americans. in 2006, these institutions conferred more than 30, 000 undergraduate degrees and nearly 9, 000 advanced degrees. they have maintained their relevance by building on their tradition of educational excellence and by harnessing the loyalty and support of alumni. there are indeed many distinguished alumni of hbcus, including media personality and philanthropist oprah winfrey, professor and nobel prize - winning author toni morrison, former u. s. surgeon general david satcher, brown university president ruth j. simmons, and major general dennis via, among many others. i wish you a very successful conference. you have much to celebrate and, doubtless, much to discuss as you strive to find ways to carry the rich heritage of the historically black colleges and universities into the future.
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mpc schools challenge winners announcement wednesday, 31 august 2022 speaking notes for lesetja kganyago, governor of the south african reserve bank ( sarb ) good afternoon esteemed guests, bank officials, learners, and those join us online. i wish to acknowledge the presence of colleagues from the ministry of basic education led by minister angie motshekga. we are grateful for the privilege of working in partnership with the department of basic education ( dbe ) on the mpc schools challenge. as usual, representatives from all provincial departments of education collaborated with us from the very beginning, culminating in today β s announcement of the winners of the competition. this year, for the very first time we also extended an invitation to independent schools through the independent examination board ( ieb ), and i am happy that they too could join us here today. as some of you may recall, in 2021 we suspended the challenge due to the covid pandemic. in 2021, we hosted the entire process virtually. this year we introduced a hybrid approach, something we hope to continue to do going forward. we are pleased that 225 schools attended the briefing sessions for learners and teachers, and 102 schools submitted essays that are required to proceed to the next level of the competition. these essays are prepared in the same format as the sarb mpc statement. the statement must reflect global and domestic economic conditions and factors and reflect the decision of the learners on its monetary policy stance. it β s pleasing to note that essays were received from all provinces, confirming that this is indeed a national competition. assessment of candidates the essays received were subjected to a rigorous marking and moderation process. bank economists, representatives from the dbe and ieb participated in this process. eight schools made the final cut and had to present their mpc statement to a panel of judges β this part of the challenge was done in person. the judging panel was composed of senior staff of the bank β s economic research department. representatives from the dbe and ieb remained in the venue throughout all learner presentations and deliberations by judges about the ranking of finalists β a transparent and inclusive process. over the years, a trend has been forming. girls seem to make up the majority of finalists. this year 26 out of 32 finalists are female, so that makes it more than 80 % female. this is a trend worth noting, particularly during the month of august. officials were also happy with the quality of presentations as well as the confidence
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less liquid, and when financial leverage is layered on top of structural leverage. 2 these dynamics were evident during the financial crisis. before the crisis, market participants grew comfortable with borrowing collateralized by a variety of less - liquid assets, sometimes using structured investment vehicles ( sivs ), conduits, and other off - balance - sheet structures. directly or indirectly, market participants used short - term funding that needed to be renewed almost continually but lacked a formal liquidity backstop ( although, in some cases, such support was seen by market participants as implicit ). further, much of the financing β through repurchase agreements ( repos ), over - the - counter ( otc ) derivatives, and other mechanisms β was collateralized by securities that already embedded significant structural leverage. this layering of leverage had profound consequences when sentiment changed. lenders who had financed securities, either directly in the repo market or through structured vehicles, were suddenly no longer comfortable with the collateral and were unsure of their potential exposure to losses. given the uncertainties, the rational response went beyond raising haircuts or other means of tightening credit terms : banks simply stopped lending, typically by not β rolling over, β or renewing, short - term financing when trades matured. in addition, collateralized borrowing had taken on many transactional forms, including otc derivatives or securities financings, which were not always recognized as economically equivalent. given the extent of layering, and sometimes opacity of leverage, the result was a rapid and disorderly unwinding, over just weeks or months, of a very complicated system that had taken years to evolve. in january 2010, financial regulators issued an interagency advisory to remind financial institutions about supervisory expectations regarding sound practices for the management of interest rate risk. regulators noted that in an environment of historically low short - term interest rates, it is important for institutions to have robust processes for measuring and, where necessary, mitigating their exposure to potential increases in interest rates. see board of governors of the federal reserve system, division of banking supervision and regulation ( 2010 ), β interagency advisory on interest rate risk, β supervision and regulation letter sr 10 - 1 ( january 11 ). www. federalreserve. gov / boarddocs / srletters / sr1001. htm. structural leverage refers to design features of an instrument that produce large changes in valuation in response to small changes in risk factors. bis central bankers β
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that the committee approved last august. in our new framework, we acknowledge that policy decisions going forward will be based on the fomc β s estimates of β shortfalls [ emphasis added ] of employment from its maximum level β β not β deviations. β 5 this language means that going forward, a low unemployment rate, in and of itself, will not be sufficient to trigger a tightening of monetary policy absent any evidence from other indicators that inflation is at risk of moving above mandate - consistent levels. with regard to our price - stability mandate, while the new statement maintains our definition that the longer - run goal for inflation is 2 percent, it elevates the importance β and the the most recent version of the 2012 statement is available on the board β s website at https : / / www. federalreserve. gov / monetarypolicy / files / fomc _ longerrungoals _ 201901. pdf. - 5challenge β of keeping inflation expectations well anchored at 2 percent in a world in which an effective - lower - bound constraint is, in downturns, binding on the federal funds rate. to this end, the new statement conveys the committee β s judgment that, in order to anchor expectations at the 2 percent level consistent with price stability, it will conduct policy to achieve inflation outcomes that keep long - run inflation expectations anchored at our 2 percent longer - run goal. as chair powell indicated in his jackson hole remarks, we think of our new framework as an evolution from β flexible inflation targeting β to β flexible average inflation targeting. β 6 while this new framework represents a robust evolution in our monetary policy strategy, this strategy is in service to the dual - mandate goals of monetary policy assigned to the federal reserve by the congress β maximum employment and price stability β that remain unchanged. 7 concluding remarks while our interest rate and balance sheet tools are providing powerful support to the economy and will continue to do so as the recovery progresses, it will take some time for economic activity and employment to return to levels that prevailed at the business cycle peak reached last february. we are committed to using our full range of tools to support the economy until the job is well and truly done to help ensure that the economic recovery will be as robust and rapid as possible. see jerome h. powell ( 2020 ), β new economic challenges and the fed β s monetary policy review, β speech delivered at β navigating the decade ahead : implications for monetary policy, β a symposium
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nils bernstein : proposals for mortgage credit regulation speech by mr nils bernstein, governor of the national bank of denmark, at the annual meeting of the danish mortgage banks β federation, copenhagen, 30 march 2011. * * * growth in the global economy has accelerated over the last year and has become more robust. but recent events have, once again, shown how unpredictable the world is. the turmoil in the middle east β with an armed conflict in libya β and the natural disaster in japan with its alarming consequences will not halt the global economic upswing, but they will have an impact. * * * combined with a number of other factors, the upswing has contributed to a global price hike. inflation is driven by rising food and commodity prices. commodity prices are now almost back at the high level seen before the financial crisis. it looks as if the crisis just led to a short interruption of an upward underlying trend in commodity prices. with higher inflation, the level of interest rates is likely to normalise sooner than the markets have previously expected. the anchoring of inflation expectations is important if the higher prices are not to spill over to wages and trigger a price - wage spiral. the european central bank has stressed its commitment to keeping inflation at bay, and there is reason to believe that an undesirable price - wage spiral can be avoided, as long as there is plenty of spare capacity and labour. the financial crisis and not least the european sovereign debt crisis have clearly shown that there is a need for stronger economic cooperation in the eu. and so far the eu has been ready to respond to this need. the first important step was taken in the autumn, when the commission and the van rompuy task force presented their proposals for strengthening the stability and growth pact and other aspects of economic cooperation. the member states have now agreed on a series of amendments to strengthen fiscal discipline and β as a new element β introduce a surveillance mechanism to prevent fundamental macroeconomic imbalances in eu member states, including those outside the euro area. the second important step was taken on 11 march, when the heads of state or government of the euro area member states agreed on the euro pact. the pact is first and foremost a strong political signal of shared determination to introduce initiatives to strengthen competitiveness, employment, fiscal discipline and financial stability. as a non - euro area member state, denmark did not have to join the pact. at danmarks nationalbank we are pleased to note that there was broad support for doing so in
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to these targets, an investment in a danish bank or mortgage bank should yield a considerably higher return than an investment in danish government bonds. the reason for this high risk premium is not obvious to me. and certainly not if we take into account that the institutions have increased their capitalisation in recent years and are now seen as safer investments. the high targeted returns give cause for concern as they may trigger a need to increase the risks taken by credit institutions. this can be done on the assets side, e. g. via more risky lending. or on the liabilities side via higher leverage ratios. i hope that the high targets are not based on this type of strategic considerations. the credit institutions should carefully consider whether the current targeted returns are consistent with a prudent level of risk. * * * the long period of low interest rates may have had an impact on the expectations and behaviour of firms and households. the risk that interest rates may rise is disregarded. most people have clearly become accustomed to low interest rates. in relation to financial stability, this requires enhanced vigilance. if interest rates rise, this may lead to losses on the credit institutions β assets and the collateral behind their lending. for households, the costs of borrowing to purchase a home are historically low at present, even if the announced increases in administration margins are taken into account. how the administration margins are determined is no concern of ours. however, i would like to emphasise that there is a link between the very low level of interest rates, which also leads to a modest return on a credit institution β s equity, and the need for a certain level of earnings from other sources so that capital can be accumulated with a view to increasing lending. it should also be noted that improved earnings and better capitalisation of a mortgage bank benefit its customers by way of lower funding costs. this is reflected in the yield payable by the customers on the underlying bonds. combined with migration to the cities, the very low interest rates have led to a period of strong growth in house prices in some parts of denmark. adjusted for seasonal fluctuations, house prices continued to rise at a robust rate in the 2nd half of 2015 and at the beginning of this year. but there are signs of a slowdown compared with one year ago. trading activity has generally declined over the last year. this could indicate that price pressures will ease in the future. although substantial interest rate hikes are not on the cards for the time being, it is important that borrow
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income β increased by nearly 6 per cent in 2018. this was significantly faster than growth in gross household income. https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 26. html 13 / 17 3 / 26 / 2019 what's up ( and down ) with households? | speeches | rba despite the relatively weak picture for household income growth, the tax revenue collected from households has grown solidly in recent years. it's normal for growth in tax revenue to outpace income growth a bit : that is how a progressive tax system works. a useful rule of thumb is that, in the absence of adjustments to tax brackets to allow for bracket creep, for every one percentage point of growth in household income, taxes paid by households will on average increase by about 1. 4 percentage points. that's an on - average figure, though. the actual ratio can vary quite a bit. in the past year, taxes paid by households increased by around 8 per cent, more than double the rate of growth in gross household income of 3Β½ per cent. so the ratio is more like a bit over two - toone at the moment, rather than 1. 4 to one. that is at the high end of the range this ratio reaches, but as this graph shows, it is not unprecedented ( graph 12 ). but this effect has cumulated over time, so that the share of income that is paid in tax has been rising ( graph 12, bottom panel ). graph 12 what is noteworthy is that for all of the past six years, growth in tax paid has exceeded income growth by an above - average margin, at a time when income growth itself has been slow ( graph 13 ). https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 26. html 14 / 17 3 / 26 / 2019 what's up ( and down ) with households? | speeches | rba graph 13 there are likely to be several things going on here. aside from the usual bracket creep, some deductions and offsets have declined, boosting the overall tax take. interest rates on investment property loans are now higher than for owner - occupiers, but overall the interest rate structure on mortgages is lower than it was a few years ago. so landlords will have lower tax deductions for interest payments on loans on investment properties.
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guy debelle : remarks to the international monetary fund research conference remarks by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, to the international monetary fund research conference, washington dc, 8 november 2013. * * * it is a great honour and pleasure to be here. i, like many in this room, owe stan fischer a great debt. i was the last graduate student that he supervised. you could argue that i drove him out of academia into policymaking! when stan was teaching his macro course at mit, in the very first lecture he used to say : you learn [ the ] islm and mundell - fleming [ models ] in your undergraduate course ( and most of us learnt it from [ rudiger ] dornbusch and [ stanley ] fischer ), then you come to graduate school and we cover that in half a lecture before moving onto teaching more advanced technologies. but then you go out into the real world of policymaking and your first and best intuition still comes from mundell - fleming. so i must say i was struck by emmanuel farhi and ivan werning β s claim upfront in their paper1 that, to quote, β because our model has explicit microfoundations and a formal treatment of general equilibrium, it is better suited for normative analysis than the traditional mundell - fleming models β. that β s a pretty big claim. call me old - fashioned but i β m not sure that i buy it. before i get to that, let β s think a bit more about some issues that come with a floating exchange rate. emmanuel and ivan talk in their paper about emerging markets, but it β s not just an emerging market issue. i will also draw on the australian experience. when the exchange rate is moving in line with the terms of trade, the real fundamentals, it plays the appropriate macro stabilisation role. farhi and werning have that explicitly in their model. in australia β s case, over the 30 years of the float, the exchange rate has done just that most of the time. the problem is when financial factors cause the exchange rate to deviate from the real fundamentals. how can that come about? well let β s think of a country, which i β ll call the usual suspect or us for short. that country pursues an extremely expansionary monetary policy, which is completely justifiable from its perspective. this spills over to
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have experienced plunges in the markets for our goods. we recovered by developing new goods and services and entering new markets. there can be no doubt that we have the entrepreneurial spirit, the skills, the educated work force and the expertise to compete successfully in the global marketplace. but that does not make it easy. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches
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until mid - october this year. these decisions help facilitate the provision of credit to the euro area economy. at the same time, the governing council will continue, in the context of its medium - term monetary policy strategy, to implement the gradual phasing - out of any extraordinary liquidity measures that are no longer needed, taking due account of economic and financial market conditions. such a medium - term orientation is essential in order to fulfil the ecb β s mandate of maintaining price stability in the euro area. thus, phasing - out some of the non - standard measures to avoid risks to price stability at a later stage is fully in line with the ecb β s price stability mandate under the current circumstances. at the same time, the ecb will avoid too early an exit from its non - standard measures, as this would risk hurting the normalisation of financial markets and the recovery. of course, we do not know today what post - crisis normality would look like. nor do we yet know the design of the β final β post - crisis operational framework. however, when talking about the end - point of the phasing - out, the operational framework that prevailed prior to the start of the financial turmoil in august 2007 might provide a good benchmark. should we fully revert to this, only a very few policy parameters remain β in particular, the tender procedures to be applied in the main refinancing operations and the operations with a duration of one maintenance period, which is approximately one month ( a return to variable rate tenders ). the monetary policy framework recently, some voices have argued that central banks should act as risk managers by organising their working framework with a view to avoiding events that may lead to deflation. it has been further argued that, in such a working framework, central banks should relax their targets and aim for significantly higher inflation rates. in this vein the question has been raised as to whether it would not be appropriate to have a permanently higher inflation target of 4 %, as this would leave more room for monetary policy to react to large, adverse shocks. i strongly oppose this notion. any relaxing of central banks β mandates in this direction would be a serious mistake. let me explain why. certainly, it may be tempting for governments to suggest higher inflation in order to monetise the dramatic build - up of public debt. however, calling on central banks to raise inflation rates permanently takes the focus away from the overriding problem, which
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ben s bernanke : current economic and financial conditions and the federal budget testimony by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, before the committee on the budget, us house of representatives, washington dc, 3 june 2009. * * * chairman spratt, ranking member ryan, and other members of the committee, i am pleased to have this opportunity to offer my views on current economic and financial conditions and on issues pertaining to the federal budget. economic developments and outlook the u. s. economy has contracted sharply since last fall, with real gross domestic product ( gdp ) having dropped at an average annual rate of about 6 percent during the fourth quarter of 2008 and the first quarter of this year. among the enormous costs of the downturn is the loss of nearly 6 million jobs since the beginning of 2008. the most recent information on the labor market β the number of new and continuing claims for unemployment insurance through late may β suggests that sizable job losses and further increases in unemployment are likely over the next few months. however, the recent data also suggest that the pace of economic contraction may be slowing. notably, consumer spending, which dropped sharply in the second half of last year, has been roughly flat since the turn of the year, and consumer sentiment has improved. in coming months, households'spending power will be boosted by the fiscal stimulus program. nonetheless, a number of factors are likely to continue to weigh on consumer spending, among them the weak labor market, the declines in equity and housing wealth that households have experienced over the past two years, and still - tight credit conditions. activity in the housing market, after a long period of decline, has also shown some signs of bottoming. sales of existing homes have been fairly stable since late last year, and sales of new homes seem to have flattened out in the past couple of monthly readings, though both remain at depressed levels. meanwhile, construction of new homes has been sufficiently restrained to allow the backlog of unsold new homes to decline β a precondition for any recovery in homebuilding. businesses remain very cautious and continue to reduce their workforces and capital investments. on a more positive note, firms are making progress in shedding the unwanted inventories that they accumulated following last fall's sharp downturn in sales. the commerce department estimates that the pace of inventory liquidation quickened in the first quarter, accounting for a sizable portion of the reported decline in real gdp in that
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coen teulings and richard baldwin, eds., secular stagnation : facts, causes, and cures. london : cepr press, pp. 83 β 89. pinto, eugenio p., and stacey tevlin ( 2014 ). β perspectives on the recent weakness in investment, " feds notes, no. 2014 β 05 - 21. solow, robert m. ( 1957 ). β technical change and the aggregate production function, " review of economics and statistics, vol. 39 ( august ), pp. 312 β 20. united states. bureau of the census ( 1975 ). historical statistics of the united states, colonial times to 1970. washington : us department of commerce, bureau of the census, september,. 1 one needs also to recognize that changes in either the average workweek or the employment to population ratio may damp or augment the effect of labor productivity on gdp per capita. 2 byrne, fernald, and reinsdorf ( 2016 ) discuss known measurement challenges and conclude they cannot explain the deceleration of productivity. 3 gordon ( 2014, p. 25 ) enumerates the inventions of the information age β the personal computer, the internet, mobile phones, and so on β and notes that for innovation to continue at such a pace, β the achievements of the past 40 years set a hurdle that is dauntingly high. " 4 mokyr ( 2014, p. 83 ) considers advances in research methods and tools and concludes that β the indirect effects of science on productivity through the tools it provides scientific research may dwarf the direct effects in the long run. " 5 david ( 1990 ) cautions that the effect of general - purpose technologies, such as electricity and electronic computing, can take decades to fully unfold. brynjolfsson and hitt ( 2000 ) consider the process followed by firms in leveraging innovations in it equipment and emphasize the role of complementary investment in intangible assets like business reorganization. 6 mohnen and hall ( 2013 ) survey the empirical literature pointing to a link between r & d and productivity. 7 decker and others ( 2016 ) highlight the decline in entrepreneurship and worker mobility ; andrews, criscuolo, and gal ( 2015 ) emphasizes that productivity for firms at the global frontier continues to advance rapidly even as global aggregate productivity growth has slowed. 8 pinto and tevlin ( 2014 ) note that in the context of a long - run growth model, a slow pace of investment is not surprising
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billion pieces valued at 168 billion. as the demand for notes and coins is subject to diverse socio - economic, behavioural and other often unpredictable factors, the task of forecasting demand for currency is a challenging task and can be subject to large variations. at present, the system poses considerable difficulties in capturing the structural and cyclical demands for currency and projecting demand with precision. i would, therefore, also take this opportunity to extend an invitation to the delegates present here to come forward and see if they can work with us for making accurate projections for the demand of banknotes and coins. 8. the other challenges in currency management relates to ensuring durability of banknotes, ensuring adequate supply of all denominations, improving operational efficiency in distribution of notes by controlling cost of handling, distribution and security in transit / storage, providing last mile connectivity at reasonable cost, ensuring equity in distribution and repositioning rbi as an upstream facilitator in the fresh note / coin supply chain, rather than as a retailer with limited reach. let me highlight the challenge associated with durability of the banknotes in india by giving some figures. we in india, withdraw more number of banknotes from circulation than the number of banknotes collectively produced by all countries taken together with the exception of china. in fact, we are constrained to withdraw over 75 % of all notes that we circulate every year as may be seen from the table below : 9. such massive withdrawal of banknotes from circulation not only means additional cost for printing of fresh notes but also additional requirement of various resources used in production of banknotes. in this context, it becomes imperative that efforts are made to enhance the durability of the banknotes so that not only the wastages are reduced, but also resources are utilized in a sustainable manner, thereby ensuring that the environmental footprint of our currency management operations is minimized. 10. mechanization of soiled note processing while augmenting capacity has also thrown up new challenges like ensuring standardization of machine parameters, slow progress in improvement in processing capacity by commercial banks and security risks on account of manual intervention. another challenge with the likely potential to evolve into a reputational risk for rbi is the shortage / β perceived β shortage of coins and the lack of understanding on the exact role of the central bank in its distribution. it needs to be understood that while the bis central bankers β speeches responsibility for issue of coins is that of the government of india ( goi ), rbi β s role
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remote areas. a discussion paper on this scheme was placed on rbi website in june 2008 for public comments. the comments received were examined and the modalities of implementing the incentive scheme are being worked out in consultation with the indian banks β association. i would, however, like to take this opportunity to encourage the banks to be in readiness to embrace this latest technology for further improving the delivery of banking services, especially in the remote parts of the country, with a view to enhancing financial inclusion. financial inclusion 15. last but not the least, let me now dwell briefly on the issue of financial inclusion, in which the banks have a major role to play. given the socio - demographic complexities in india, the policy endeavour of the rbi has been to adopt a multi - institutional and multi - instrument approach to comprehensively address the issue of financial inclusion in all its dimensions, going beyond mere availability of credit to the masses. the term β financial inclusion β needs to be understood in a broader perspective to mean the provision of the full range of affordable financial services, viz., access to payments and remittance facilities, savings, loans and insurance services by the formal financial system to those who tend to be excluded from these services. the rbi, while recognising the concerns in regard to the banking practices that tend to exclude rather than attract vast sections of population, has been urging the banks to review their existing practices to align them with the objective of achieving greater financial inclusion. the rbi too has taken a number of measures with the objective of attracting the financially excluded population into the formalised financial system. let me briefly recount some of the measures taken in this direction. with a view to achieving greater financial inclusion, banks were advised in november 2005 to make available a basic banking β no frills β account either with β nil β or very low minimum balances as well as charges that would make such accounts accessible to vast sections of population. all the public and the private sector banks as well as the foreign banks, except those not having significant retail presence, are reported to have introduced the basic banking'no - frills'account. with the objective of providing hassle - free credit to the banks β constituents in rural and semi urban areas, the banks were advised in december 2005, to consider introduction of a general credit card ( gcc ) to such constituents. the card was to have a credit limit of up to rs. 25000 / -, based on the assessment of income
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2017b ), the imf and social protection : ieo survey of imf staff, background document no. bd / 17 - 01 / 03 ( 2008 ), a strategy for imf engagement on social spending, imf policy paper no. 19 / 016 lang and tavares ( 2018 ), the distribution of gains from globalization, imf working paper ridao - cano, cristobal ; bodewig, christian ( 2018 ), growing united : upgrading europe's convergence machine ( vol. 2 ) ( english ), washington, d. c. : world bank group www. bportugal. pt rossi, federico ( 2018 ), human capital and macro - economic development : a review of the evidence, policy research working paper no. 8650, ( washington : the world bank group ) standing, guy ( 2014 ), the precariat : the new dangerous class, bloomsbury academic schioppa, tommaso padoa ( 2010 ), β markets and government : before, during, and after the 2007 - 20xx crisis β, per jacobsson foundation, bis world bank ( 2018 ), inclusive growth : a synthesis of findings from recent ieg evaluations, washington, d. c. www. bportugal. pt appendix figures and tables from β¦ gill, indermit s., raiser, martin ( 2012 ), golden growth : restoring the lustre of the european economic model ( vol. 2 ) : main report ( english ), europe and central asia studies, washington dc, world bank. www. bportugal. pt www. bportugal. pt ridao - cano, cristobal ; bodewig, christian ( 2018 ), growing united : upgrading europe's convergence machine ( vol. 2 ) ( english ), washington, d. c. : world bank group www. bportugal. pt www. bportugal. pt www. bportugal. pt www. bportugal. pt associacao empresarial de portugal ( 2019 ), dinamicas socioeconomicas regionais, aep estudos e estrategia www. bportugal. pt lang and tavares ( 2018 ), the distribution of gains from globalization, imf working paper www. bportugal. pt
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of the education system or in territorial planning. www. bportugal. pt empirical evidence 2 points to social segregation in schools as a driver of skills inequality. the relatively poor performance by students from disadvantaged backgrounds is partly correlated to the fact that they are clustered together in lower quality schools. likewise, social housing policies should not bring about the creation of loser and winner communities. each community should include individuals considered winners and losers, in order for the former to be inspired by the latter and never stop believing they have equal opportunities to generate income. inclusive social housing is precisely one area of public policy that has benefited extensively from the expertise and contribution of the council of europe development bank, which has the noble mission of supporting social inclusion in europe. conclusion in conclusion, let me highlight the following key messages. β’ globalisation β s impact operates in at least two dimensions β income and employment. globalised trade impacts the level and distribution of income, but it also impacts the way employment is distributed across territories and across sectors. β’ redistribution will always be the reverse side of globalised trade. there will always be gains, but also losses β¦ there will always be creation, but also destruction. low - skilled workers and sectors competing with imports are evident examples. studies show that redistribution costs rapidly surpass trade gains. and some of those costs are not reversible. when, for example, a given regional cluster disappears due to competition, it may never resurge again. β’ if there are no compensation mechanisms, discontent will rise. the european convergence machine has partially compensated for the impacts of globalisation through cohesion policies. public transfers are adequate as a first, more agile, response. ridao - cano, cristobal ; bodewig, christian ( 2018 ). www. bportugal. pt β’ however, public transfers won β t effectively solve the problem of loser communities, socially and geographically marginalised. this redistribution across communities has been shown to be empirically more important than redistribution across skill levels. without any other complementary policy, public transfers may generate dependency and destroy incentives. this problem can only be effectively solved o by adapting policy to the cultural preferences of those communities ; o by designing basic institutions in a way that every community is involved in the production process and becomes the owner of its own destiny ; o and by submitting globalisation to a set of basic rules ensuring everyone benefits from a fair level playing field and public intervention is dully framed. β’ in sum, a fine balance
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jean - claude trichet : major issues related to the process of european financial integration β the regional and global perspective keynote luncheon remarks by mr jean - claude trichet, president of the european central bank, at the conference β transatlantic roundtable on finance and monetary affaris β, at the invitation of the european institute, washington, dc, 13 april 2007. * * * introduction ladies and gentlemen, i would like to thank the european institute for inviting me to share with you some thoughts on the financial integration process, both within the euro area and between the euro area and the rest of the world. i will structure my remarks into two parts. in the first part, i will elaborate on the regional dimension of european financial integration. after stressing the importance of financial integration for economic growth in europe, i will highlight some of the main achievements of european financial integration thus far, as well as the challenges still facing us. seen from an international perspective, the european process of regional financial integration should not be misunderstood as creating an isolated fortress, but on the contrary as a tool for european financial markets to become better integrated with global markets. in the second part of my speech, i will therefore provide some evidence illustrating that the financial links of the euro area with the rest of the world are already particularly strong in comparative terms. i will also show that the advent of the euro has given further impetus to such financial linkages, which now also increasingly include capital flows to and from key emerging market economies. the regional perspective implications of european financial integration for economic growth financial integration is of key importance for the european central bank ( ecb ), given its relevance for the conduct of the single monetary policy : a well - integrated financial system enhances the smooth and effective transmission of monetary policy impulses throughout the euro area. today, i would like to highlight a further implication of financial integration, namely that it raises the economy β s potential for stronger non - inflationary economic growth. generally speaking, financial systems serve to channel funds from those economic agents that have a surplus of savings to those with a shortage ; and to trade, hedge, diversify and pool risks. these functions are facilitated by financial integration. as a result, there is a better sharing and diversification of risk and a greater potential for stronger non - inflationary economic growth. regarding risk sharing, it is interesting to note that in the us, according to a particularly interesting research, capital markets would smoothe out 39 % of the asymmetric shocks
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to gross state product ( the equivalent of our gdp ), the credit channel would smoothe out 23 % of such shocks and the federal government, through the fiscal channel, 13 %. 25 % of the shocks would not be smoothed out. 1 hence in the united states financial markets and financial institutions would contribute 62 % to the absorption of state idiosyncratic shocks. the effect is very substantially higher than the effect of the federal budget. we see from the us example that the financial channel can be much more important than the fiscal channel and that is a particularly important additional reason to speed up financial integration in europe. financial integration is also very important for stimulating economic growth in europe via its impact on the development of the european financial system. financial development refers to the process of see p. asdrubali ; b. sorensen ; o. yosha, β channels of interstate risk sharing : united states 1963 - 1990 β, the quarterly journal of economics, vol. 111, no. 4, november 1996, pp. 1081 - 1110. financial innovation, and to the institutional and organisational improvements in a financial system that reduce asymmetric information, increase the completeness of markets, add possibilities for agents to engage in financial transaction through ( explicit or implicit ) contracts, reduce transaction costs and increase competition. progress in financial development can obviously also occur in perfectly integrated markets. therefore, by speeding up the reallocation of capital from declining to evolving and promising industries β the schumpeterian process of β creative destruction β β both financial integration and financial development positively influence the efficiency of a financial system, ultimately leading to a higher potential for economic growth. the introduction of the euro has already brought about important benefits resulting from increased financial integration. and the process of european financial integration and development is still ongoing : a research study by london economics estimates the benefits of the full integration of european bonds and equity markets to be around 1 % of gdp growth over a ten - year period, or approximately β¬100 billion. 2 this brings me to the next point i would like to make, namely the identification of major achievements and challenges of european financial integration. achievements and challenges of european financial integration let me first draw your attention to a new report entitled β financial integration in europe β, which the ecb published for the first time just three weeks ago. 3 the main purpose of this report, which will become an annual publication, is to contribute towards the advancement of european financial integration and to raise public awareness of
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. for most central banks in the emerging world, our mandate is broader. most certainly we are expected to have a role in contributing to addressing many of these challenges both directly and indirectly. most of all, not only do we have a voice but we also provide support to addressing many of these issues, whether it is on financial inclusion, financing of infrastructure or putting in place financial and social safety nets or on environmental bis central bankers β speeches sustainability. as much of these efforts will involve interface with other parts of the public sector, it has been my experience that the participation of the central bank in many of these agendas will require careful boundary management and a signing off when it is completed so that it does not remain permanently with the central bank. of great importance in this process is also to carefully safeguard the independence of the central bank. in conclusion, let me express my deep gratitude and appreciation to my fellow governors for all the cooperation and support that has been extended to me and to bank negara malaysia. for the friendship and for the collaboration, it has truly been enriching for me. and to the bis, thank you for this privilege to be part of the central bank community. bis central bankers β speeches
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heart of their strategy, and 31 % are already purchasing the services of fintech companies. many are also partnering with fintech companies. for bank negara malaysia, we have also embraced the fintech agenda, setting up our internal fintech working group in 2016, launching our fintech sandbox not long after that and finally, organising our very own industry conference β the myfintech week in 2019. to be future ready, we are highly committed to support the digital transformation of the financial sector. earlier this year, we issued the e - kyc policy document to enable digital on - boarding of customers to occur anytime and anywhere. this is expected to be a catalyst in the provision of end - to - end financial services, particularly in a β low touch β environment. the financial industry is taking steps to ensure safe and secure introduction of e - kyc, with several banks planning to launch e - kyc solutions in the coming months with more to follow in 2021. we are also currently in the final stages of developing the licensing framework for digital banking, which we envision can enhance access to affordable and quality financial solutions, particularly for the underserved and hard - to - reach market segments. from our sandbox experience, we also observe similar digital alternatives and solutions being developed in the insurance and takaful sector. our shift towards e - payments has also been sustained, with a 47 % increase in the volume of transactions made through internet and mobile banking, and a 260 % increase in active e - wallet users between august 2019 and 2020. furthermore, good progress has been made in enabling the interoperability of e - wallet services offered by banks and non - bank e - money issuers. looking ahead, bank negara malaysia 1 / 3 bis central bankers'speeches will continue to focus on fostering well - designed regulations to facilitate digitalisation and innovation in financial services. all these efforts are intended to support the financial services industry accelerate its transition to an age of digitalisation and innovation. we have high hopes for islamic finance to capitalise on this. in 2017, we launched the value - based intermediation ( vbi ) initiative. vbi encapsulates the industry β s vision to be more impact driven, reinforcing the overarching intent of shariah to promote good and prevent harm on the people and planet, which closely aligns with the global shift towards sustainable finance and esg. through the vbi initiative, islamic financial institutions have also been
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the sector to deal with this risk. key to the development and operation of these systems and cultures is the need to nurture talent capable of addressing cyber security threats through prompt detection, investigation, reporting, prosecution and prevention. distinguished participants, let me also emphasize that cyber risks should be viewed from an enterprise - wide perspective. ict, security, operations, credit control, anti - money laundering and fraud investigation departments need to break down the various silos to facilitate faster detection and prevention of cyber financial crimes. no single department or function can be an island in this battle. in the same vein, no bank or financial institution can be an island. one financial institution brought down by a cyber - attack would impact other banks and could ultimately destabilize the entire financial sector. it is for this reason that i call upon all ceos 2 | page here present to ensure that cyber security is entrenched in our day - to - day operations and strategic plans. ladies and gentlemen, i am aware that other countries have set up computer incident response teams ( cirts ) for various industries, including the financial sector. it is high time that we seriously begin to consider setting up a financial sector cirt in zambia. i believe that the cirt would, not only assist in ensuring that all financial institutions are collaborating and working as one in mitigating cyber risks, but also enable information sharing. i am therefore calling upon bankers association of zambia to work with bank of zambia to ensure that this is achieved. ladies and gentlemen, i wish you the best and i encourage you to participate actively during the presentations and discussions. use every opportunity to tap into the vast experience of the resource persons and your peers during these few days. with these remarks, i declare this workshop officially open. thank you and god bless you all. 3 | page
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bank of zambia cyber security in the financial services sector workshop speech by dr. denny h. kalyalya governor β bank of zambia monday, 6th may 2019 intercontinental hotel, lusaka, zambia cyber security in the financial services sector workshop, speech by dr. denny h. kalyalya, governor β bank of zambia β 6 may 2019 chief executives of financial institutions in zambia, representatives from mefmi, members of staff from bank of zambia and other financial institutions distinguished resource persons, dear participants, ladies and gentlemen. i am honoured to welcome you all to this important workshop on β cyber security in the financial services sector β, which is being jointly conducted by the macroeconomic and financial management institute of eastern and southern africa ( mefmi ) and the bank of zambia. this workshop aims to discuss financial sector vulnerabilities arising from cyber threats and risks and to develop the necessary skills and tools to make the sector resilient. let me take this opportunity to extend a special welcome to our facilitator dr. rukanda. i am sure the delegates will greatly benefit from your experience and vast knowledge on the subject. ladies and gentlemen, as you are all aware, information and communication technology ( ict ) have over the years permeated all aspects of our lives and in particular, have become the mainstay of the world β s financial sector infrastructure. while these ever emerging technologies such as digital transformation, artificial intelligence, internet of things, cloud computing, enterprise mobility and mobile banking, have brought about efficiency and increased innovations, they have also exposed the financial services sector to cybercrime. some notable incidents of 1 | page cybercrime include, the attack on the central bank of bangladesh, russian retail bank and seven banks in the united kingdom. the financial services sector is a key target by criminals because it is the custodian of large amount of funds in the economy. for this same reason, the financial services sector has to also deal with other types of risks, which among others include, fraud, extortion, money laundering, illicit financial flows, market manipulation, data theft, and currency attacks. with statistics showing an increase of cyber - attacks in the financial sector, the importance of ensuring that our institutions are cyber resilient cannot be over - emphasized. ladies and gentlemen, the financial services sector has to see cybersecurity for what it is, a large scale operational risk deserving the utmost attention and thus develop the necessary systems and cultures throughout
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nor hindered. on the one hand, an international currency has advantages for citizens in the euro area, on the other, it may sometimes complicate the conduct of monetary policy when a large amount of euro is circulating outside the euro area. we shall leave the development of the international role of the euro to market participants and market forces. if history is a guide as to what will happen, there will be a gradual process whereby the euro will have an increasingly international role. such a gradual development would also be a welcome development, if only to prevent the euro from becoming too strong externally at some point in time. it is likely and understandable that interest in the euro is already considerable in those countries aspiring to join the eu, including poland. i shall elaborate on this issue at the end of my speech. coming back to our monetary policy strategy, i should like to point out that it is important to make clear what monetary policy can and cannot do. monetary policy can maintain price stability, but only in the medium term. in the short term prices are also influenced by non - monetary developments. moreover, monetary policy measures only have an impact on prices with long, variable and not entirely predictable time - lags of between 1. 5 and 2 years. therefore, monetary policy - making should have a forward - looking character. today β s inflation is the result of past policy measures, and current policy measures only affect future inflation. the uncertainty of the economic process in a market economy is another reason for policy - makers to be modest. the ecb does not pursue an activist policy. precise steering of the business cycle or a cyclically - oriented monetary policy are not feasible and are likely to destabilise rather than stabilise the economy. some commentators have interpreted our recent interest rate reduction as a change to a more cyclically - oriented monetary policy strategy. this is not true. our strategy was, is and shall remain medium term - oriented and firmly focused on maintaining the price stability which currently prevails in the euro area. monetary policy should be supported by sound budgetary policies and wage developments in line with productivity growth and taking into account the objective of price stability. otherwise, price stability can only be maintained at a high cost in terms of lost output and employment. this also explains why independence should not mean isolation. it is important to have a regular exchange of information and views with other policy - makers. the maastricht treaty stipulates that the president of the ecb
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italy and the others? before the crisis there were marked differences in wage costs and competitiveness, in greece in particular. these persistent differences have created serious tensions within the euro area. macroeconomic imbalance adjustments are not made via the exchange rate in the monetary union. that β s why it β s essential that the labour market and the goods and services markets work well. the bank for international settlements is worried about risks caused by monetary policies that are too accommodative. what β s your reply to that? our main objective is to ensure price stability. the financial crisis has created deflationary risks. our monetary policy measures have played a key role in the economic recovery, which is necessary for inflation to gradually return to levels in line with our objective. the question is knowing whether the central bank has gone too far in its monetary policy easing. now that the gap between growth potential and real activity is narrowing, have we accomplished our mission? at this stage, my reply is no. the economic expansion that is under way is not yet feeding through into higher inflation. we are not changing our priorities, but we must take into account the improvement in economic conditions when calibrating our measures. should an end date for qe be announced? no new decision has been taken since the governing council meeting on 7 september. we had concluded that a very accommodative monetary policy stance would remain essential to our mission and that we would decide in the autumn on the calibration of our purchase programme for the period beyond the end of the year. 2 / 2 bis central bankers'speeches
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axel a weber : central banks and globalisation introduction by professor axel a weber, president of the deutsche bundesbank, to the 10th bundesbank spring conference ( in cooperation with the imfs ), eltville, 22 may 2008. * * * introduction ladies and gentlemen, it is a pleasure for me to welcome you to the 10th bundesbank spring conference, which has been organised in cooperation with the institute for monetary and financial stability ( imfs ). and for those who have never been to our training centre before β welcome to our facilities here! i am sure you will like this location, not least because of its direct proximity to the rhine and the picturesque town centre of eltville. the title of this spring conference is β central banks and globalisation β. with regard to globalisation, i think it is quite justified to say that this term has been a key economic topic over the past ten years β and i don β t think this is going to change in the foreseeable future. why is this so? nowadays, there is almost no economic phenomenon that is not influenced β at least to a certain extent β by what we call β globalisation β. β globalisation β seems to be everywhere β a search on google yields more than 25 million hits. evidently, the process of globalisation has many different historical, political, social, and economic facets. some of the economic facets β in particular, those that are of interest to central banks β are going to be covered over the course of the next two days, as highlighted in the conference programme. when looking at this programme, i am very pleased to see that β once again β we have been able to bring together many distinguished participants who are going to present the results of their recent research on globalisation - related issues. i hope or, more specifically, i am pretty sure that this conference will generate useful insights and that it will lead to a productive exchange of ideas and views among the participants. in my remarks over the next 15 minutes or so, i shall cover some issues related to globalisation which are of particular importance to central bank policymakers. therefore, after highlighting some basic characteristics with respect to globalisation, i shall focus on globalisation and inflation, leaving aside the important and interesting issue of globalisation and monetary policy. in this context, the fundamental question is whether globalisation has altered the setting for central banks, in particular with a view to delivering price stability. my basic conclusion will be
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, therefore, is to examine this technology and its implications in detail and gather key insights about it. this is true, not least, for central banks and regulators. so what lies behind this technology? even when it comes to a basic definition, we see that the word blockchain is not always used to mean the same thing. often, the term β distributed ledger technology β is used as a synonym for blockchain. if we regard distributed ledger technology as the principle behind distributed databases, blockchain represents a sub - category thereof. however, there is, as yet, no uniform 1 / 4 bis central bankers'speeches definition of the term. an elementary understanding of the technology is a prerequisite for discussing its potential, which is why module 1, entitled β blockchain β basics, technological achievements and general potential ", is dedicated to this question. blockchain became known, above all, as the technology behind the bitcoin cryptocurrency. the term is derived from the fact that transactions are grouped together in β blocks ". these blocks are chained together through a complex mathematical procedure that is unforgeable and tamperproof. essentially, blockchain allows a ledger of transactions to be run on a decentralised basis within a network. the technology therefore enables the safe transmission of all manner of assets ( not just bitcoin ), without the need for confirmation from a central institution. with blockchain, reconciliation between participants occurs automatically. but what are we to do with this technical innovation? plato once said that : " necessity is the mother of invention ". but in the case of blockchain, we are seeing the exact opposite. the invention, ie blockchain, has already been born. now people in many places are searching for the necessity β for the specific cases where it can be applied in practice. blockchain - based technologies offer up the chance of simplifying complex intermediation processes for payment and settlement activities. virtually all payment service providers are therefore currently looking for ways to apply this technology. its use in payment transactions is an obvious choice, as the cryptocurrency bitcoin has already been created for this purpose. but does it make sense to use blockchain in this of all areas? and in what form should it be used in the area of payment transactions? these questions will be addressed in module 2 of the workshop : β possible business cases for payments ". payment transactions based
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demand in order to equate supply with demand. accordingly, this factor tends to magnify the impact of quantitative tightening on the term premium11. second, the impact of balance sheet policies may also vary depending on liquidity conditions. in qe times, more liquidity injected into the system did not have a major impact since the market was saturated with excess cash and thus money market conditions were rather insensitive to additional liquidity injections. but in qt times, the gradual withdrawal of excess liquidity will make money market conditions increasingly sensitive to the amount of cash that is withdrawn from the system, and this could mean more volatility in the overnight rate transmitting in the form of more term premium throughout the curve. indeed, several episodes in the past have shown these potential effects associated with qt12. likewise, if we enter into a co ntext o f higher interest rate - gro wth differential, in the absence o f a clear fiscal co nso lidation path, fiscal sustainability co ncerns co uld also increase, given that debt levels might stabilise at higher levels o r a higher structural balance might be needed to achieve the same level. and this impact co uld be hetero geneous amo ng co untries, depending o n specific fiscal and eco no mic co nditions. fo r example, when the fed first anno unced, in may 2013, that it intended to slo w do wn the asset purchases, markets were surprised, causing the yield o n ten - year treasuries to sho ot rapidly upwards fro m roughly 2 % to 3 %. or the us mo ney market crash in mid - september 2019 which was caused by an abrupt halt in trading due to scarcity o f liquidity. mo re recently, bo nd markets are also exhibiting elevated vo latility. in particular, in the uk, after the go vernment anno unced large tax cuts and no curb in go vernment expenditure in september, the bank o f england was fo rced to intervene quickly in respo nse to rising government bo nd yields which threatened the so lvency o f british pensio n funds. the bank o f england made it clear that it was acting to ensure financial stability, rather than changing its mo netary po licy stance, and ended its interventio n in octo ber. there are,
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bottlenecks. what is more, the pass - through of these supply shocks to prices has been faster and stronger than in the past. indeed, according to banco de espana estimates, close to 75 % of the current inflation rate in the euro area is due to the direct and indirect effect of higher energy and food prices. but there is also a pent - up demand component from the post - pandemic recovery that, while weakening, is still driving up prices, especially in the services sector. 1 the depreciation of the euro is another factor contributing to high inflation. all in all, as i mentioned, the inflation spike is proving highly persistent and has also broadened. high inflation is causing a rapid loss of purchasing power and deteriorating consumer confidence in the euro area. both households and businesses are facing a highly uncertain fo r further details, see the ecb press release β mo netary po licy decisio ns β of 27 octo ber 2022. environment due to the consequences of the war in ukraine and, in particular, the energy crisis. these factors, and the progressive tightening of financial conditions as a result of the monetary policy response from the main central banks around the world, are weakening economic activity quite rapidly. indeed, euro area gdp growth moderated significantly in the third quarter of the year, and recent data point to a possible contraction of economic activity in the fourth quarter. nevertheless, the labour market continued to perform well in the third quarter, and the unemployment rate remained at a historically low level. moreover, energy commodity prices in wholesale markets have moderated recently, mainly reflecting the worse economic prospects at the global level. in europe, the extraordinary spike observed in natural gas prices over the summer has significantly corrected. this reflects a reduction in demand, mild weather, high storage levels and the european commission β s recent proposals to address high gas prices in the european union and to ensure the security of supply during the winter. in addition, over the past few months supply chain bottlenecks have eased and freight costs have declined sharply. 2 slower growth, the recent correction in energy commodity prices and the improvements in global supply chains will help ease inflation. however, according to our forecast, inflation will stay above the target for an extended period. and, more generally, the longer inflation stays at high levels, the greater the risk of a de - anchoring of inflation expectations or the materialisation of second round effects through wages or mark - ups. on the basis
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businessmen and politicians. this will be supported by the relatively β young β population β in many arab countries more than 50 per cent of the population are younger than 20. this in itself provides for a rising competiveness and creativity in the economy. ii having this in mind europe may be of special interest for arab countries for two reasons : first, as a potential partner for economic cooperation and second, as an example of successful integration. the main development for financial markets in europe has been the launch of a new currency, the euro. the financial sector in europe benefits to a large extent from the monetary union and the evolution of a single european financial market. that implies greater transparency, more competition and more liquidity. germany as a financial centre benefits from this β in everyone β s interests. functioning, liquid and sound financial markets steer capital towards those areas of the real economy where it brings the highest yield. in this way, they contribute to improving welfare, strengthen the economy and create jobs. the ecb, as a constituent part and the centre of the european system of central banks, is domiciled here in frankfurt. this has positive implications for germany as a financial centre. it does strengthen the self - confidence of the credit institutions located in frankfurt, and β at least every fortnight β it draws the attention to frankfurt when the meetings of the governing council of the european central bank take place. this is where european monetary policy decisions are taken. the direct advantages of the monetary union are increasingly being appreciated. it is no longer possible for exchange - rate fluctuations to distort competition. there is no longer a need for the economy to engage in hedging activities in cross - border trade and foreign direct investment. transaction costs in the markets have diminished, and prices are directly comparable. these are advantages not only for the economy, but also for every citizen β advantages which make themselves felt for every transaction, every trading operation, every trip abroad. the question arises as to whether the introduction of the single currency has led to the development of a single, enlarged european financial market. it is precisely in this area that much was expected from the euro β when compared with the us financial market. regarding the money market, these expectations have undisputedly been met. the individual national money markets in the euro area have rapidly combined to form a single euro money market. the capital markets are changing somewhat more slowly. on the capital markets the euro is not the only factor promoting change. the trends towards global
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currently. 2 β’ economic and financial globalization has been one of the main characteristics of the world economy in recent years. this has been the source of many benefits, but it has also been accompanied by new challenges. in particular, as the global financial crisis ( gfc ) has clearly shown, the growing interdependence that has resulted from globalization means the economic problems of one country can be rapidly transmitted to others. in this context, policy options that are apparently reasonable shares based on ppp β adjusted figures for gdp. figures provided by, or calculated with data from, international monetary fund ( 2015 ) : world economic outlook database, october. see also mohan, rakesh and muneesh kapur ( 2015 ) : β emerging powers and global governance : whither the imf? β, imf working paper no. wp / 15 / 219, october. bis central bankers β speeches at the national level are not necessarily so when adopting a global vision. therefore, a highly globalized world presents the typical prisoner β s dilemma, where a non β cooperative approach leads to poorer results for all the parties involved as opposed to one based on cooperation. in other words, the nature of today β s challenges underscores the need for a framework of global governance with a much higher level of cooperation and, consequently, a level playing field. β’ the gfc brought to the forefront many of the limitations of the governance framework in place. to start with, it showed that contrary to the then prevailing views, advanced economies ( aes ) are at least as vulnerable to crises as emes. it also made clear that no effective mechanisms were in place to ensure consistency between the economic policies in the main advanced countries and global economic and financial stability. naturally, this gave rise to serious concerns about the legitimacy of the existing global economic governance arrangements. to put it in jean β claude trichet β s words, β β¦ the industrialized countries have proven particularly clumsy in their handling of global finance before the crisis at a time when their responsibility in global governance was obviously overwhelming. there was therefore no reason to confirm their exclusive prime responsibility β. 3 the gfc sparked an effort of cooperation of the international community, unprecedented in terms of its complexity and reach, which allowed to prevent the collapse of the global financial system. in addition, as a result of the crisis, major steps were taken to adjust the global economic governance structure. in particular, emes were given a more prominent role in the global decision
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to g - secs beyond an internally agreed total proportion of assets ; or the excess slr should be commensurate in risk terms with the bank β s capital allocation for investments. 6. in order to further address treasury - level incentive issues, banks may consider imposing dynamic stop loss limits. in order to avoid further losses once they exceed a particular percentage of assigned risk capital, any risk addition must slow down, potentially even stop ( depending on the extent of realized capital loss ), and not be gerrymandered through security rotation or by senior management turning a blind eye. instead, the realised losses and residual risks should escalate through cro to the bank board and the risk in the investment portfolio gradually scaled down in a time - bound manner depending on its size. 7. in addition, there should be ex - post settling up as a career incentive for the treasury head and all significant risk - takers : those who swing bank investment portfolio for the fences and put bank capital at excessive limits relative to the approved levels should be held accountable when their bets go bad due to poor or no risk management. not all volatility is due to β black swan β events that deserve risk - takers being carried through. 8. finally, there is usually an uninspiring chatter every time g - sec yields show a sustained rise that the market is irrational in its movements. not only is it not difficult to separate rational market movements from irrational ones at high frequency, such proclamations are a sign that those betting on government bonds while chatting such are clueless about the drivers of market movements. isn β t that a good time for the bank senior management to rein in their treasury portfolio risks? none of this is rocket science but does require at the highest level of bank governance mechanisms a recognition of interest rate risk, an incentive to manage it, and a top - down organizational strategy to implement it. measures that address the duration risk of banks how may banks better manage their duration risk? the efficiency with which this risk is currently managed leaves a lot to be desired. while duration risk management is constrained by the g - secs issuer β s choice of maturity structure and liquidity in the secondary bond market, the risk can be managed more nimbly by also availing of hedging markets. psbs account for about 70. 6 % of the banking sector assets. however, their participation in such hedging markets is limited or negligible. while their share in
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in addition to deferment in recognition of valuation losses by six months, from september 2013 to march 2014. the impact of the persistent rise in yields during phase ii was eased to a great degree by regular open market purchases by rbi, which are typically employed for durable liquidity management and to ensure the proximity of money market rates to the overnight policy rate, rather than for management of long - term g - sec yields. these are also the sort of measures some banks have again requested rbi to adopt in the current phase of rising yields, wherein yields have moved up from around 6. 50 % at end - august 2017 to around 7. 45 % now. interest rate risk of banks cannot be managed over and over again by their regulator. the regulator, in interest of financial stability, is caught in such situations between a rock and a hard place, and often obliges. however, the trend of regular use of ex post regulatory dispensation to ease the interest rate risk of banks is not desirable from the point of view of efficient price discovery in the g - sec market and effective market discipline on the g - sec issuer. nor does it augur well for developing a sound risk management culture at banks. recourse to such 8 / 12 bis central bankers'speeches asymmetric options β heads i win, tails the regulator dispenses β is akin to the use of steroids. they get addictive and have long - term adverse effects in the form of frequent relapse even though their use may be justified to relieve occasional intense pain. hence, it would be better for the banking system to build its own immunity and strength, i. e., emphasise internally β and put in place processes for β efficient management of interest - rate risk. 2 let me then discuss what could be done by banks to achieve this. managing interest rate risk at banks management of the increasing interest rate exposure of the banking system needs to address both sides of the sovereign - bank nexus. while the long - term investor participation in government bond market needs to be deepened β both domestically and internationally, and the maturity structure of government debt kept sensitive to implications for bank balance - sheets, banks also need to manage the interest rate risk on the balance sheet by dynamically managing its size and duration as well as accessing markets for risk transfer. the desirable options follow from the bond price equation i presented earlier : βp = β p Γ d Γ βy. interest rate risk management options can
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yandraduth googoolye : the importance of promoting and safeguarding correspondent banking speech by mr yandraduth googoolye, governor of the bank of mauritius, at the correspondent banking academy hosted by standard chartered bank, port louis, 27 may 2019. * * * distinguished guests ladies and gentlemen good morning it is a great pleasure to be in your midst today. i wish to thank standard chartered bank ( mauritius ) ltd for having organized this correspondent banking academy and for inviting me to share my thoughts with you. i understand that the academy was launched in 2015. the standard chartered group has already reached out to more than 1, 000 banks in over 70 countries through such academies. as an internationally active bank with a presence in more than 60 markets around the world, standard chartered bank is an excellent launch pad for this session on correspondent banking. events such as these offer valuable opportunities for stakeholders to engage and share ideas. respondent banks will be provided with unique insights on the expectations of a global player offering correspondent banking services. i would, therefore, urge bankers to make the most of this initiative. it will help them clear out any doubts they may have on correspondent banking facilities. correspondent banking is as old as international finance. it is the lifeblood of international payments and financial flows, and provides vital support to economic growth and development. global trade, remittances, portfolio and direct investment flows, and even humanitarian financial flows across countries are fundamentally dependent on correspondent banking services. today, more than ever, our financial system is inextricably linked with those of other countries. as with any other products offered by banks, the provision of correspondent banking services entails certain risks. these risks stem predominantly from aml / cft. in the recent past, several international banks have been fined heftily for shortcomings in their aml / cft controls and processes. as this line of business carries high volume but a thin margin, many banks have reconsidered their involvement in correspondent banking services. international banks have indicated that the cost of compliance dwarfs the business returns from smaller territories, particularly if these are classified as high - risk clients and deal with high - risk products. the financial stability board had previously highlighted that the corridors for correspondent banking services were shrinking on a global basis. 1 fewer institutions are now providing such services. however, given that the volume of transactions is not declining, this development is increasing the concentration risks posed by the reliance on only a few institutions.
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at the level of the bank of mauritius, our approach has been characterized by an open door and open dialogue policy. we are ever ready to have an open dialogue with correspondent banks to explain the supervisory framework in mauritius and give reassurance on its robustness. aml / cft is one of the key priorities for mauritius and the bank of mauritius. as you are certainly aware, the mutual evaluation report ( mer ) of the assessment of the aml / cft measures of mauritius was published by the eastern and southern africa anti - money laundering group ( esaamlg ) in september 2018. the mer revealed that mauritius had not done enough to keep up with the changes which the fatf brought in 2012 to the international standards on combating money laundering and the financing of terrorism and proliferation. following the revision of the fatf recommendations in 2012, the assessment of compliance with the fatf recommendations is not limited to technical compliance and the forty recommendations made. it also involves an assessment of the effectiveness of a country β s aml / cft systems with a view to ascertaining whether the country β s β financial systems and the broader economy are protected from the threats of money laundering and the financing of terrorism, thereby strengthening financial sector integrity and contributing to safety and security. β i must say that even before the publication of the mauritius mer in september 2018, mauritius had already started bringing legislative amendments to various pieces of legislation β including the financial intelligence and anti - money laundering act and the banking laws β to address the deficiencies. new regulations were promulgated under the financial intelligence and anti - money laundering act in october 2018, which mirrored the provisions of the fatf recommendations. following these legislative changes, mauritius submitted an application for technical compliance re - rating of 12 recommendations, among which 11 were successfully upgraded. 2 / 4 bis central bankers'speeches just last weekΒΉ, two new pieces of legislations were voted at the national assembly. these are the united nations ( financial prohibitions, arms embargo and travel ban ) sanctions bill, and the anti - money laundering and combatting the financing of terrorism and proliferation ( miscellaneous provisions ) bill. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ΒΉ tuesday 21 may 2019 the legislation reinforces the arsenal of mauritius in the fight against financial crimes. they will support the country β s second application for technical compliance rerating on 20 fatf recommendations. these are clear testament of the progress made
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exports to china have increased, but are still limited. over several years, enterprises in central european countries have been a source of competition for norwegian jobs. integration is also opening new markets and providing new sources of income for norwegian enterprises. at the same time, tender requirements and the freedom of establishment have increased the competition facing norwegian industries that were previously sheltered. a steadily larger share of norway β s consumer goods imports come from china and central european countries. growth in imports from china was provided with an additional impetus after china became a member of the world trade organization in 2001. imports from eastern europe have also continued to grow. there are many economic agents in norway that are benefiting from globalisation. consumers are enjoying lower prices for goods and services. input prices have fallen and companies can sell their products in new markets. but there are also costs. norwegian businesses and jobs may lose in the competition. the challenge lies in moving idle resources to new business activities. this requires adaptability and a sound cost policy. the norwegian economy is unique in being both a fully developed economy and a major oil exporter. norway is the world β s third largest oil exporter. in the future, we will become an increasingly important exporter of natural gas. the petroleum sector accounts for 44 per cent of exports and 17 per cent of gdp. the present value of remaining petroleum reserves has been estimated at close to nok 2 000 billion ( present rate of net cash flow ). the bulk of norway β s petroleum wealth will be extracted over a period of 40 years, from 1990 to 2030. we are now in a phase where petroleum wealth is being converted from natural resources under the seabed to financial assets abroad. the government petroleum fund was established in 1990 with a view to promoting an even distribution of wealth across generations. the intention behind the petroleum fund is that the cash flow from petroleum production should be channeled to the fund and invested abroad. by doing so, changes in oil prices have little effect on the mainland economy. this chart illustrates how petroleum activity is separated from the mainland economy. oil companies β revenues are in foreign currency. the government net cash flow from taxes and direct ownership in oil companies is transferred directly to the petroleum fund. the return on the petroleum fund investments also adds to the capital. of the total capital accumulated last year, nok 59 billion was spent over the fiscal budget. the petroleum fund invests only in foreign markets. the fund serves as a buffer against shocks. changes in petroleum revenues are
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below zero. if the economy is again exposed to unexpected negative disturbances, we will have little scope for manoeuvre. the most important contribution monetary policy can make to sound economic developments in the long term is low and stable inflation. the inflation target provides an anchor for economic agents β expectations concerning future inflation. we have a very open economy with free capital movements. stable inflation expectations also contribute to more stable krone exchange rate expectations. inflation targeting means setting the interest rate so as to achieve a numerical target for inflation. norges bank sets the interest rate with a view to stabilising inflation at 2. 5 per cent within a reasonable time horizon, normally 1 - 3 years. the more precise horizon will depend on disturbances to which the economy is exposed, and how they affect the path for inflation and output. the inflation target represents a framework for, not an obstacle to, monetary policy β s contribution to stabilising output and employment. we have chosen flexible inflation targeting. variability in output and employment as well as inflation is given weight. the objective of monetary policy is to safeguard the value of money in the long term, and seek to contribute to stabilising economic developments in the short and medium term. the objective of monetary policy is low and stable inflation. the instrument is the interest rate. the interest rate influences inflation with a lag and with varying intensity. as interest rates fall, household and local government consumption and investment tend to accelerate. higher demand leads to higher output and employment. wage growth may pick up. higher wage growth combined with higher profit margins will result in higher inflation. lower interest rates normally lead to a depreciation of the krone. imported goods then become more expensive and inflation accelerates. expectations play a key role in price and wage formation, and they are influenced by the interest rate. expectations concerning future inflation and economic stability have considerable impact, not least in the foreign exchange market. in the long term, output and employment are determined by the supply of labour, capital and technology and restructuring capacity. monetary policy can contribute to smoothing fluctuations in output and employment. norges bank weighs stable inflation against stable output and employment. the economy grows over time. output will in some periods lie below long - term trend growth and in others above trend. stabilising output growth means seeking to maintain actual output near trend. the output gap is a measure of the difference between the actual level of output and potential output. developments in the output gap provide a basis for assessing cyclic
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path for the swiss economy. the output gap β i. e. the gap between normal and actual utilisation of resources β will diminish. monetary development alongside the figures for the real economy, movements in monetary and credit aggregates also indicate that economic recovery is underway. since adopting a resolutely expansionary monetary policy three years ago, mortgage lending has grown at an annual rate of over 5 %. we continue to monitor developments in the real estate market closely. since september, other loans have also recorded positive rates of growth with respect to year - back figures. in the past, a development of this kind usually indicated a strengthening in economic recovery. the economy is well supplied with liquidity as a result of the expansionary monetary policy. although the growth of the broadly - defined monetary aggregate, m3, had fallen to 1 % in october 2004, it has since climbed back to over 6 %. however, excess liquidity will be gradually reduced as a result of the interest rate increase announced today. in this way, we aim to ensure that price stability is not endangered in future. the monetary policy decision the economic and monetary situation has developed in the way we anticipated. the inflation outlook prior to today β s decision was largely in line with the figures presented at the last monetary policy assessment. for 2006, however, we forecast a slightly higher level of inflation to that presented in the last assessment. this is due to revisions made to certain figures that point to a higher rate of utilisation in the economy. in view of this inflation outlook, what is the justification for our decision to increase the target range for three - month libor by 25 basis points? while we anticipate falling rates of inflation next year, this decline is not relevant in terms of monetary policy. recent inflation levels of over 1 % are probably largely due to the rise in oil prices which began in the first half of 2004. at the time, we decided not to take this increased inflation into account in our monetary policy decisions, due to the fact that its consequences could not be neutralised through monetary policy measures. it seems logical, therefore, not to take account of a decline in inflation attributable to subsiding oil prices, particularly since this drop also results from a statistical effect. a number of inflation components are likely to persist at a low level, even in 2006. we are working on the assumption that the prices of imported products will continue to fall, due especially to the continued pressure ex
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, it was up by 2. 3 %. together with the gdp figures for the third quarter, seco also presented revised figures for the first two quarters. the new figures are substantially higher than before, even after the considerable increase in the figure for the first quarter that was presented in september. most observers were surprised by the size of the growth estimate for the third quarter. what is more, the retrospective revisions have considerably modified the perception of the economic situation in the first half of the year. nevertheless, interpretation of the quarterly estimates is difficult in view of the sizable fluctuations in final demand and the fact that the main factor impacting on gdp momentum are changes in inventories. other indicators, such as the consumer confidence index, company expectations, labour demand and the continued low level of inflation expectations, appear to indicate a more modest level of economic momentum. despite the uncertainty with respect to the gdp estimates, the information currently available to us indicates that economic recovery has accelerated over the past few months. fourth - quarter indicators point to a continuation in the economic upswing. although export growth is slowing, international demand remains robust. this momentum is increasingly shifting into the domestic sector, where it is acting as a stimulus. gradually, the utilisation of industrial production capacities is improving. meanwhile, companies expect demand to pick up over the next few months. there were signs of a recovery in corporate investment in the third quarter. over the next few quarters, a high utilisation rate of technical capacity in industry and a more favourable sales outlook are likely to provide greater support for investments in equipment and a gradual increase in labour demand. as a result, the disequilibrium in the labour market is likely to diminish. in the last quarter, private consumption remained strong. since employment can be expected to increase over the course of 2006, consumer confidence should strengthen. by contrast, the stimulus provided by construction investment is likely to subside next year. in particular, we may expect that, after three years of robust growth, investments in residential construction will stagnate at a high level. overall, we project gdp growth of just over 1. 5 % this year. previously, we had expected growth to reach about 1 %. to a large extent, this correction to our growth forecast is due to seco β s revision of the figures for the first two quarters. for 2006, we forecast economic growth of a little more than 2 %. this would take gdp growth to a level above the potential growth
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, therefore, the central bank will aim at maintaining a substantial amount of free liquidity in the financial system, to drive down market interest rates further. and, in line with this objective, foreign investments abroad by residents have been discouraged, to ensure that there are sufficient funds available for domestic investments. this stance of monetary policy will be reviewed when government β s budget for 2010 / 11 is finalized in june this year. now let me say something briefly about interest rates. 4. interest rates and bank fees ladies and gentlemen, in the past twelve months or so, there has been much criticism by the private sector and the public at large of our relatively high interest rate environment. this debate has been ongoing since the outbreak of the global recession two years ago. reflecting the continued easing of monetary policy, the central bank β s official interest rates have declined steeply to record low levels. consequently, the commercial banks β deposit rates have also fallen sharply. in the event, the commercial banks β weighted average lending rate has declined to 10. 7 percent in january this year, from 12. 5 percent in march 2008. the commercial banks have undertaken to effect further reductions in their lending rates in the near future. these further reductions reflect the maturity of several long term wholesale deposits which have been reinvested at lower rates. in the medium to long term, the central bank is aiming at reducing the interest rates in samoa, to be closer to those of our major trading partners ( such as fiji ). that way, our local industries will be able to compete on a more equal footing against their rivals, not only in relation to import prices but export prices as well. the momentum for more meaningful reductions in interest rates is well underway. this, in part, reflects the implementation of a credit friendly monetary policy stance over the past two financial years. moral suasion, the relatively weak state of the domestic economy and the large volume of excess liquidity are factors which have assisted in the central bank β s efforts to drive interest rates down. in addition, amendments to the central bank act are currently being proposed to, amongst other things, allow the central bank to extend loans to non - bank financial institutions for specific purposes, as well as regulating bank fees and charges. 5. expanding the central bank β s mandate reflecting the leading roles increasingly played by many overseas central banks in driving financial inclusion in their economies, the board of the central bank of samoa recently approved for the bank β s mandate to be expanded to include financial inclusion
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as well as broader measures of prices indicate that inflation moved down further, even as the economy strengthened. although declining oil prices contributed to this development, pricing leverage in the goods - producing sector more generally was held in check by reduced demand from asia that, among other things, has led to a softening of commodity prices, a strong dollar that has contributed to bargain prices on many imports, and rising industrial capacity. service price inflation, less influenced by - 3international events, has remained steady at about a 3 percent rate since before the beginning of the crisis. some elements in the goods price mix clearly were transitory. indeed, the more recent price data suggest that overall consumer price inflation moved up in the second quarter. but, even so, the increase remained moderate. in any event, it would be a mistake for monetary policy makers to focus on any single index in gauging inflation pressures in the economy. although much public attention is directed to the cpi, the federal reserve monitors a wide variety of aggregate price measures. each is designed for a particular purpose and has its own strengths and weaknesses. price pressures appear especially absent in some of the measures in the national income accounts, which are available through the first quarter. the chain - weight price index for personal consumption expenditures excluding food and energy, for example, rose 1. 5 percent over the year ending in the first quarter, considerably less than the 2. 3 percent rise in the core cpi over the same period. an even broader price measure, that for overall gdp, rose 1. 4 percent. these indexes, while certainly subject to many of the measurement difficulties the bureau of labor statistics has been grappling with in the cpi, have the advantages that their chain - weighting avoids some aspects of so - called substitution bias and that already published data can be revised to incorporate new information and measurement techniques. taken together, while the various price indexes show some differences, the basic message is that inflation to date has remained low. economic fundamentals : the virtuous cycle so far this year, our economy has continued to enjoy a virtuous cycle. evidence of accelerated productivity has been bolstering expectations of future corporate earnings, thereby fueling still further increases in equity values, and the improvements in productivity have been helping to reduce inflation. in the context of subdued price increases and generally supportive credit conditions, rising equity values have provided impetus to spending and, in turn, the expansion of output, employment, and productivity - enhancing
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also more effective. conclusion the first mais lectures launched the fight against inflation. with time and increased confidence policymakers would win that war only to lose the peace. as a consequence, george osborne β s 2010 lecture heralded the return of prudential supervision and the introduction of macroprudential policy to the bank of england. today β s challenge is to create a macroeconomic environment that provides the basis for strong, sustainable and balanced growth, the economist β s equivalent of a land fit for heroes. this evening i have sketched how the bank of england intends to makes its contribution. i am in no doubt that those who come after me will add to our collective knowledge of how best to coordinate the bank β s vast array of policy levers to achieve our fundamental mission. an open and confident bank will welcome such advice and criticism. why? because the need for broad macroeconomic management is not just an intellectual curiosity, but rather a reality that will persist for years to come. as the mpc has signalled, a low for long interest rate environment will likely be with us for some time. the mpc β s new guidance that any adjustments in rates, when they come, will be limited and gradual helps provide confidence to households and businesses that the mpc won β t take risks with the recovery. this in turn helps make the attainment of the inflation target more likely. at the same time, policymakers across the bank β s statutory committees are fully aware that an environment of relatively low and predictable interest rates could encourage excessive risk taking in financial markets and by households. 22 this puts a tremendous burden on both microprudential supervision and macroprudential management. moreover, the nature of a rapidly evolving global economy reinforces these pressures. sustained imbalances across countries, intense capital flow volatility and powerful disinflationary forces driven by the integration of the other half of humanity into the global economy will buffet our economy and financial sector for years to come. the bank can help turn those challenges into opportunities. through the coordinated use of the bank β s tools, risks to monetary and financial stability can be mitigated. through changes to the hard and soft infrastructure of markets fair, open and competitive markets can be re - built. through ideas and engagement, the global financial system can be reformed to secure an open, resilient system in which all countries have confidence and in which british businesses can thrive. to achieve this we are building a central bank for
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account of the recent developments. i hope you will have fruitful discussions at this two - day meeting and subsequent meetings of the g20, leading up to the finance ministers and central bank governors meeting in fukuoka in june. i look forward to meeting you all again later this year. thank you for your attention.
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of a short - term impact of large purchases and sales - - the result of limits to liquidity in the very short run - - than to the perhaps more important question of whether those transactions have a lasting effect on yields. on this latter issue, clear evidence is harder to come by. several pieces of indirect evidence suggest that the long - term effect of foreign purchases on yields may be moderate. notably, the global market for dollar - denominated bonds is enormous - - perhaps around $ 25 trillion, including dollar - denominated debt issued by other countries as well as debt issued abroad by u. s. residents. in the long run, therefore, the market should be able to absorb purchases and sales of large absolute magnitude with relatively modest changes in yields. indeed, long - term yields continued to fall over recent quarters even as foreign official holdings of treasury securities increased at a slower pace than previously. don h. kim and jonathan h. wright ( 2005 ), " an arbitrage - free three - factor term structure model and the recent behavior of long - term yields and distant - horizon forward rates, " finance and economics discussion series 2005 - 33 ( washington : board of governors of the federal reserve system, august ). ben s. bernanke ( 2004 ), " the great moderation, " speech delivered at the meetings of the eastern economic association, washington, d. c., february 20. ben s. bernanke, brian p. sack, and vincent r. reinhart ( 2004 ), " monetary policy alternatives at the zero bound : an empirical assessment, " brookings papers on economic analysis ( 2 ), pp. 1 - 100. the performance of treasuries relative to that of other fixed - income instruments also argues against a dominant influence of foreign official portfolio decisions on long - term rates. if foreign official holdings of treasuries were the source of the decline in their yields, then we would expect to observe increased spreads between yields on treasury securities and the returns to other types of debt less favored by foreign official holders. but we have not seen a significant widening of private yield spreads relative to treasuries - - quite the contrary - - and, as i noted earlier, yields in other industrial economies have fallen as well, in many cases by more than u. s. yields. a reasonable conclusion is that the accumulation of dollar reserves abroad has influenced u. s. yields, but reserve accumulation abroad is not the only, or
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100 percent in 1990 to over 400 percent today. that change reflects the fact that an increasingly large share of the world β s wealth is invested abroad, much of it in u. s. debt, including treasury securities. the rise in foreign official and private purchases of treasury securities resulted in an increase in the price of u. s. treasury securities, driving down yields. the second factor causing demand for treasury securities to grow more than supply was the large buildup of official reserves that started after the reforms that followed the 1998 financial crisis in asia. one consequence of removing capital controls and other financial market liberalization in other countries over the past 30 years has been - 8to make foreign governments more vulnerable to sudden capital outflows and financial crises. many countries have responded by building up their foreign exchange reserves to help weather such stress. global foreign exchange reserves have increased from around $ 1 trillion in the early 1990s to $ 12 trillion today. notwithstanding the drumbeat of warnings from some that the u. s. dollar is in danger of losing its primacy in global trade and finance, it remains by a very large margin the world β s reserve currency. u. s. government debt, likewise, remains the primary form of low - risk asset, which is reflected in the huge stock of treasury securities held as foreign exchange reserves around the world. the resulting demand for treasury securities has contributed to pushing down yields and, thus, lowering r *. the third factor driving prices up and yields down for treasuries and similarly affecting r * is sovereign wealth funds. in addition to foreign exchange reserve holdings, sovereign wealth funds from some economies, especially those rich in natural resources, have become an increasingly important way for governments to invest abroad and diversify their national wealth. they are an increasingly significant force in global financial markets. although sovereign wealth funds are diverse in their holdings, u. s. government debt is typically a sizable share of these funds. sovereign wealth funds have grown from $ 1 trillion in assets in 2000 to $ 11 trillion last year, and a lot of those assets are presumably in u. s. treasuries. for example, norway β s sovereign wealth fund holdings of treasuries grew from $ 5. 6 billion to $ 132. 4 billion over this period. 8 the growth in treasury holdings by sovereign wealth funds has clearly contributed to the decline in treasury yields. see global swf β s website at https : / / globalswf. com. - 9the fourth
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our stakeholders. we also look forward to learning from you as you constructively critique the effectiveness of our communication and offer suggestions. key questions moving forward in this partnership are : what are the practical steps that will anchor the partnerships between us? how do we ensure a sustainably structured framework in which policy intentions of the central bank gain traction in the public domain? how do we reduce superfluous noise that occasionally cloud the greater and more fundamental achievements in the policy terrain? how do we move forward with the agenda emerging from the cross - fertilization of ideas that will emerge from the workshop? ladies and gentlemen ; the central bank proposes a structured capacity building programme targeting business writers who cover the financial sector. in collaboration with the kenya school of monetary studies ( ksms ), the central bank will be seeking the input of the financial media to develop an appropriate business editors β training curriculum that takes cognizance of the needs of the financial sector, in light our stage of development. in addition, the bank will be hosting a business journalists workshop once a year, which will be appropriately themed to reflect the issues of the time. furthermore, the central bank in partnership with other financial sector regulators proposes the formation of a business editors & financial regulators forum. the role of this forum shall be largely advisory and will be tasked with providing appropriate advice on public education campaigns on broad latitude of themes such as financial education & literacy campaigns, and other mutually agreed programmes within the core competencies of the media. i believe these proposals will be refined as we go along and what emerges from this workshop will further shed more light in this regard. once again i thank you for taking time off your busy schedules to participate in this workshop. may i also take this opportunity to appreciate my colleagues at the central bank for organizing this workshop successfully. and to the management and staff of enashipai resort and spa for the excellent hospitality extended to us. bis central bankers β speeches ladies and gentlemen ; with these remarks, it is now my humble pleasure to declare this workshop officially opened. thank you. bis central bankers β speeches
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backed by an increase in exports reflecting the recovery in overseas economies and by a rise in rebuilding demand. in the longer run, however, attention should be paid to the downside risks to economic activity. in the short run, the restoration of supply chains is making steady progress and there is an increasing probability that the degree of constraints on economic activity due to electricity shortages this summer will be less significant than anticipated, although some concerns remain. on the other hand, uncertainty is also increasing somewhat regarding overseas economies, and therefore the current risks to the japanese economy are shifting from the supply side to the demand side. in addition, from a relatively long - term perspective, uncertainty about electric power supply is increasing somewhat, reflecting the issues regarding the resumption of operations at nuclear power plants following regular inspections. considering factors such as the appreciation of the yen, high corporate tax rates, and delays in the negotiation of free trade agreements ( ftas ) and economic partnership agreements ( epas ), manufacturers already regard japan as a somewhat unfavorable place to locate their production sites. it is my great concern that the shift of japanese firms β production sites to overseas might accelerate if anxiety about electric power supply lingers. c. price developments next, i will move on to price developments. international commodity prices had been increasing on the back of high growth in emerging economies. they have declined slightly of bis central bankers β speeches late due to the instability in global financial markets, but are still hovering at high levels. as a result, import prices in japan and the domestic corporate goods price index ( cgpi ), which measures fluctuations in prices of goods traded between firms in japan, have also been at high levels. meanwhile, the year - on - year rate of change in the consumer price index ( cpi ) for all items excluding fresh food, or the core cpi β which measures the prices of goods and services purchased by households β had been in negative territory for about two years since march 2009 but turned positive in april 2011 against the background of the increase in international commodity prices and the narrowing of the negative output gap. in sum, the japanese economy continues to be headed in the direction of overcoming deflation. as for the outlook, the year - on - year rate of change in the core cpi is expected to be slightly positive, reflecting the rise in international commodity prices and the narrowing of the negative output gap. however, this outlook is attended by a range of risks, examples of which include a substantial rise in international commodity
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tackling the challenges and taking advantage of opportunities that arise. in this regard, i thank all the institutions under the fap that have contributed in various ways towards these finaccess surveys, particularly the 2013 survey β notably the fsd, kenya, kenya national bureau of statistics ( knbs ), kenya bankers association, the research house tns - rms, kenya institute for public policy research and analysis ( kippra ), kenya commercial bank ( kcb ), development alternative international ( dai ) and the cbk. ladies and gentlemen : beside the finaccess studies that provide us all with valuable information as to where we should focus our efforts most in order to achieve our goal of providing affordable and accessible financial services and products to majority kenyans. i wish to inform you that fap is also working with cbk, fsd, kenya and bill and melinda gates foundation on the spatial mapping of all financial access touch points, the findings of which will improve our understanding on how to enhance financial inclusion. with these few remarks, ladies and gentlemen, i welcome you to this breakfast event and look forward to the launch. thank you. bis central bankers β speeches
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. the proportion of the financially excluded on the other hand has been falling steadily from 39. 3 % in 2006 to 31. 4 % in 2009 and now stands at 25. 4 % of the adult population. equally and more striking, the proportion of the population using informed financial services has declined to 7. 8 % from 35. 2 % in 2006 and 26. 8 % in 2009. these findings demonstrate impressive achievements and vindicate policy strategies and reforms undertaken by government and initiatives and innovations by the financial sector players β as having helped expand financial inclusion. it is even more interesting to note from the results that many more people are now accessing and using financial services and products supplied by diverse providers. this shows that people are now moving towards using a broader portfolio of financial services and products to satisfy their needs. the use of combinations of all formal prudential, formal non - prudential, other formal and informal financial services except the excluded has been rising from 16 % in 2006 to 25 % in 2009 and to 29 % in 2013. these patterns demonstrate that financial sector participants require choices and therefore the need to maintain diversity and encourage competition amongst providers of the different financial products in different market segments. ladies and gentlemen : the survey results we are releasing today are as a result of developments in the wider economy, policy and regulatory reforms, increased competition and innovation and advances in information and communication technology. these developments have set off a dramatic shift away from the traditional delivery of financial services. in the banking industry, the introduction of automatic teller machines ( atm ) a few years ago already moved customers out of the physical branches. and now more than ever, access through point - of - sale ( pos ) devices, the internet and mostly through mobile phones platforms have accelerated and are still poised to accelerate the swing to branchless banking. we, however, still have some ground to cover in expanding access to financial services, given that about 25 % of the population remains totally excluded. bis central bankers β speeches ladies and gentlemen : the information generated by the past three finaccess surveys will help financial service providers identify where opportunities exist. i am delighted that the sector now has such useful information resource at its disposal. in conclusion, ladies and gentlemen, let me also observe that the finaccess studies have been championed and driven by a partnership between public and private institutions. i commend and support such initiatives and hope that this lays the foundation for a deeper and sustained partnership between the public and private sector in
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mr mboweni discusses e - money and its impact on the central bank β s operations address by mr tito mboweni, governor of the south african reserve bank, at the sun microsystems conference 1999, held in vodaworld, midrand on 11 october 1999. * 1. * * introduction electronic commerce, or e - commerce, is the catch - all phrase for many advances in technology centered on the internet and heralds fundamental changes for the world economy. the expansion of the internet on a global basis, has made it an ideal means to conduct commerce. in south africa, as in the rest of the world, the internet is being used more and more to advertise and sell goods and services. the internet has brought about a need not only for micro payments, e. g. a small payment of perhaps only a few cents for viewing a specific piece of information, but also growing interest in developing more reliable and secure methods of payment for large commercial transactions. e - commerce and, perhaps more important from the reserve bank β s point of view, electronic money will probably have significant implications for most persons and institutions. this evening, i would like to concentrate only on two aspects, namely a comparison between electronic payment methods and the current conventional payment instruments, such as currency and credit cards, and the possible effect that e - money may have on the operations of the reserve bank. 2. the development of e - commerce the internet, and its application to e - commerce is turning many industries inside out. some firms have tried to only partially adopt the new e - commerce technologies, but are increasingly realising the importance of making e - commerce a seamless, integral part of their business plans. south africa has begun to reach the stage where the previous wholesale financial markets structures are beginning to change as the internet spreads through them. retail investors, empowered by the web, are fast becoming much more proactive. certain financial institutions face the prospect of traditional revenue streams contracting or disappearing altogether as the internet brings transparency and efficiency to once closed areas. the financial world is taking e - commerce seriously, but no one knows exactly how or how quickly these new technologies will change the business landscape. however, one thing is certain β e - commerce will speed up the process of globalisation and will lay bare the weaknesses in any institution. central banks worldwide are considering their positions with regard to electronic commerce, internet banking and electronic money applications. there are a number of electronic money products which are either in the process of
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, where elevated inflation has necessitated higher interest rates. while the domestic labour market also continues to recover gradually, an environment of weak growth implies that we may start seeing renewed job losses. furthermore, while nominal wages have shown a recovery, real incomes, however, remain constrained. nonetheless, we do expect household spending to remain supportive of the little growth that is projected for the year. this view is also corroborated by today's gdp report, which continued to show positive growth in household consumption. furthermore, although having moderated over recent quarters, growth in fixed investment showed some recovery in q4 and is also expected to contribute positively going into 2023. from this it is clear that the outlook for even the relatively low growth rates we project over the medium term, remains highly uncertain β in light of our own domestic constraints. the outlook also hinges on how quickly south africa's structural constraints can be addressed over the medium term. from an external accounts'perspective, south africa has benefitted from the generally high commodity prices that have prevailed over the past two years. these, however, have been moderating since the second half of 2022, in line with the slowdown in global growth, with further declines in south africa's commodity export prices expected in 2023. while the reopening of the chinese economy led to renewed strength for key commodities such as iron ore, platinum, copper and steel at the beginning of the year, this may not be sustained. the recovery in china's economy should mostly be led by services, while the commodity - intensive construction sector is unlikely to rebound at a fast pace. 3 / 5 bis - central bankers'speeches at the same time, the persistence of domestic electricity supply constraints implies that more businesses and households may be investing in alternative energy solutions, thereby driving up imports. this, balanced against projections of lower export volumes, equates to a deteriorated current account balance over the short to medium term. the role of the financial channel financial markets are another channel through which global conditions affect south africa. global growth, inflation and the pace of policy normalisation in advanced economies affect investor risk appetite, cross - border capital flows and, hence, the availability and cost of external funding. so far, considering the pace of policy normalisation in major economies and the extent to which'safe assets'have re - priced, the shock has not been strong by historical standards. capital outflows from emerging markets were moderate for most of 2022 and recovered in
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uncertainty about the nature and timing of the policy, behavioral, and technological changes that will occur during the transition to a sustainable economy. this uncertainty could create significant challenges for financial stability. in addition, climate change might be expected to increase financial system vulnerabilities. 11 financial system vulnerabilities could arise if intermediaries engage in financial contracts or take on leverage to shift climate risk in ways that leave the overall system vulnerable to the amplifying effects of shocks. in addition, even well - informed investors could underestimate the likelihood of large shocks related to climate change, resulting in systematic mispricing of risk. this mispricing could occur if the physical effects of climate change arrive sooner or with greater intensity than expected or investors systematically err in their expectations about the transition. finally, see celso brunetti, benjamin dennis, dylan gates, diana hancock, david ignell, elizabeth k. kiser, gurubala kotta, anna kovner, richard j. rosen, and nicholas k. tabor ( 2021 ), β climate change and financial stability, β feds notes ( washington : board of governors of the federal reserve system, march 19 ), https : / / www. federalreserve. gov / econres / notes / feds - notes / climate - change - and - financial - stability20210319. htm. - 6vulnerabilities could result if climate risks in the aggregate are systematically correlated across participants in the economy and financial system. these correlated aggregate exposures could be missed by risk models and difficult or impossible to mitigate fully. it might be useful to consider some examples of climate - related risks that could manifest as shocks or increase financial system vulnerabilities or both. 12 one example is property and casualty insurance, which enables financial firms to engage in financial contracts to hedge climate - related risks. while reinsurance contracts and agreements among investors can shift risks across the global financial system, as i noted earlier, some level of risk is likely to remain. 13 a lack of transparency across participants in the financial sector could cause climate - related risks to build up in hidden pockets, embedding vulnerabilities that could result in cascading losses in the event of large - scale adverse weather outcomes or other shocks to asset valuations. we can already see examples of how such ripple effects might work. as physical risks manifest, insurers update the availability and pricing of coverage to more
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##s are ultimately likely to be important. 10 there are situations, however, where microprudential and macroprudential goals do not fully align so that it is important to take into account the implications both for individual firms β safety and soundness and also for the broader financial system. for example, the use of climate - related risk mitigants such as insurance or financial derivatives may shift risk away from a particular financial institution but may not reduce or eliminate risk from the system as a whole. in developing a framework to address climate - related financial risks, we need to be mindful of this cascade of effects and the implications across the federal reserve β s range of responsibilities. financial system shocks and vulnerabilities arising from climate change our macroprudential work program is focused on assessing not only potential climate shocks, but also whether climate change might make the financial system more vulnerable in ways that could amplify these shocks and cause broader knock - on effects that could harm households, businesses, and communities. in some respects, climate change can be seen as similar to other financial stability shocks emanating from outside the financial system, such as covid - 19, which are difficult to predict with precision and can lead to an abrupt reassessment of a broad array of economic and financial outcomes, prices, and incentives. however, climate change shocks differ in a few important ways. unlike episodic or transitory shocks, climate change is an ongoing, cumulative process, which is expected to produce a series of shocks. over time, these shocks can see allison herren lee ( 2021 ), β public input welcomed on climate change disclosures, β public statement by the acting chair of the u. s. securities and exchange commission, march 15, https : / / www. sec. gov / news / public - statement / lee - climate - change - disclosures. - 5change the statistical time - series properties of economic variables, making forecasting based on historical experience more difficult and less reliable. the physical properties of the earth β s atmosphere shown by scientific climate records and climatological forecasts include the risk of irreversible climate β tipping points, β which can cause as yet unseen disruptions in weather systems, regional water supplies, and the habitability of large land masses β at large magnitudes. quantifying the risks and implications of potentially catastrophic climate - related tipping points for the economy and financial system is extremely difficult. second, there is substantial
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macroeconomy, creating a cycle of resource led booms and slumps. the export of natural resources and the spending of the revenues thus generated in the domestic economy can also cause real exchange rate appreciation, which damages the competitiveness of the non resource traded goods sectors of the economy, such as agriculture and manufacturing ; this is a phenomenon called β dutch disease β. avoiding the pitfalls of natural resource dependency β the so called β resource curse β β is only possible with sound economic policies and good economic governance, a subject i will return to shortly. the eac is now implementing the second stage of its regional economic integration project ; the common market which will allow for trade in services within the eac, including the right of establishment of firms in the service sectors, and the free movement of capital and labour. the eac customs union has already yielded major benefits for uganda. uganda β s exports to our eac partner states have risen from only $ 68 million in 2001 / 02 to $ 676 million in 2011 / 12. intra - eac exports now comprise 25 percent of uganda β s total exports, compared to 14 percent 10 years ago. regional economic integration can help to accelerate uganda β s transition to an efficiency driven economy in several ways. first, it will expand the size of the market for domestic firms, allowing them to realise economies of scale and become more efficient. in terms of value, the combined gdp of the eac partner states is the equivalent of nearly $ 90 billion, which is four times the size of the ugandan economy alone. secondly, it will strengthen competitive pressures in the national market, by exposing domestic firms to greater competition from firms from other eac partner states. competition provides the best incentive for firms to increase their productivity. thirdly, regional integration will provide a stepping stone for industries which are not yet competitive globally to begin exporting, and thus stimulate the improvements in productivity which will eventually enable them to compete on global markets. this is likely to be especially important for the domestic food sector, which could produce substantial surpluses for export. in turn, the opportunity to sell on regional export markets will give farmers in uganda incentives to focus on production for the market and to produce higher value bis central bankers β speeches products. finally, cooperation at the regional level is necessary to develop the infrastructure to support growth in the region β s economies ; for example road and rail links from landlocked countries to the coast. this will be particularly important for the development of the
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are still dominated by traditional, informal activities, productivity is stagnant. the global competitiveness index, which is produced by the world economic forum, the african development bank and the world bank, distinguishes three stages of economic development which are related to competitiveness. in the first stage, which characterises most low income countries, economies compete on the basis of their endowments ; unskilled labour and natural resources. the second stage is an efficiency driven stage of development, in which economies compete by continuously raising their productivity. improvements in factor productivity are the main driver of economic growth in this second stage of development. it is on the threshold of the second stage of development that the ugandan economy now stands. in industries such as food processing, construction materials, telecommunications and financial services, modern, high productivity industries have been set up and are bis central bankers β speeches expanding, although they still employ only a relatively small share of the workforce. if we can make the transition to an efficiency driven economy successfully, uganda can accelerate the structural transformation of its economy and move towards middle income status. the commercial exploitation of hydrocarbon and mineral deposits offers both opportunities and challenges for uganda. the opportunities arise because oil and minerals will generate substantial increments to public revenue and to foreign exchange earnings ; resources which could be used to invest in the physical and human capital needed to strengthen competitiveness and thus help to create the foundation for productivity driven economic growth. the world bank β s doing business indicators report that an inadequate supply of infrastructure is cited by firms as the third most problematic factor for doing business in uganda ( the most problematic factor is corruption and the second most is access to finance ). strengthening the transport and power infrastructure could reduce significantly the costs of doing business in uganda and thereby help to promote private investment in modern, high productivity, industries. better infrastructure is also necessary to enable uganda to export minerals or to process them in the country. productivity growth also requires investment in human capital. uganda has made great progress in making access to primary education virtually universal across the country, but we now need to build on this and expand access to secondary education and to provide the workforce with the vocational skills needed for modern industries. unfortunately, oil and minerals can also impede development, as demonstrated by the experience of many developing countries which are rich in resources. natural resource revenues are often very volatile because of the inherent volatility of global prices and sometimes because production volumes may also be erratic, and this volatility can be transmitted to the
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a more proactive approach when positioning themselves with respects to their customers. it is not enough to be on the sidelines as, say, a purely auto financing or mortgage provider. banks need to position themselves at the center of the ecosystem, providing their customers with the best products, services and advice as and when customers require. according to the accenture study, 48 % of customers said they wanted relevant advice and product information from their banks as they go about their daily lives. they also want banks to play a supporting role in the purchasing process for products such as a house or new car, and even related services such as insurance. banks need to focus on providing long - term value for customers, rather than viewing them as a short - term opportunity for sales. we have already seen the harmful impact of this β short - term β outlook that led to the subprime - mortgage crisis, as banks sold mortgages to customers who couldn β t afford them. banks β profits surged in the short term, but everyone suffered in the end ; not only customers and the broader economy but also the banks. banks therefore need to revisit their value propositions towards their customers in order to ensure that they are truly providing the products and services their customers need while keeping the interest of their customers and the society in central bank of kuwait - public ΨΉΨ§Ω
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Ψ±ΩΨ²Ω - 11 - mind. it will be helpful for the industry to reflect upon its ultimate objectives β to ensure inclusive prosperity and put the welfare of society on a sustainable footing. iii. battle for efficiency to win over customers and provide value, banks must operate in an efficient and intelligent manner, with their limited resources optimally deployed. the battle for efficiency is the third of the battles that banks need to win. a critical front in this battle is the leveraging of technology and data. banks need to use available data to improve their predictive analysis, not just for operational efficiency and planning, but also for insights into customer behavior and preferences. what is particularly surprising to me is that banks, though custodians of vast quantities of customer and transactions data, are not utilizing it effectively. banks will need to change the way they segment customers, not by their income levels or types of accounts, but potentially by their life cycle, growth potential, and behavior patterns. data analysis can provide a bank with actionable insights into multiple factors that impact its business, allowing it to
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. i will begin with a brief overview of the major challenges that the industry faces today. second, i will reflect on the key areas that banks will need to focus on in order to stay relevant. finally, i will touch upon the role that enabling stakeholders need to play to support the banking industry through its transformative journey. 1 - challenging operating environment so, let me start with a brief discussion on the key challenges that the banking industry faces today. three challenges are particularly worth highlighting : the state of the global economy ; the revolution in financial technology ; and the rapidly evolving needs and expectations of customers. i. global economy first, let us look at the global economy where headwinds are intensifying. the imf has twice lowered its global growth projections for 2019 to 3. 2 %, with developed economies expected to grow at a much slower rate of 1. 9 % 1. a key driver of this slowdown is the economic uncertainty brought about by rising trade tensions and protectionist policies. if trade tensions continue, the imf may central bank of kuwait - public ΨΉΨ§Ω
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Ψ±ΩΨ²Ω further revise down its economic growth projections. the bank of england estimates that a 10 % increase in tariffs between the us and its trading partners could lead to a reduction of 2. 5 % in us gdp, and 1 % in global gdp excluding the us. 2 in its recent publication, the institute of international finance ( iif ) also highlighted economic policy uncertainty as a key risk to business sentiment. the iif estimates that economic policy uncertainty in both the us and china is at a record high, and its impact is being felt in terms of reduced investments and lower consumption. 3 we have already seen the impact of trade disputes and attendant economic uncertainty on markets across the globe. prominent indices such as the dow jones industrial average, s & p 500, nasdaq composite, ftse 100 and the nikkei 225 have declined by an average of around 7 % in mid - august, from highs in july. another factor linked to the economic outlook is the role of monetary policy. economic growth in the last decade has mainly been driven by the use of unconventional monetary policies. while these policies have supported economic recovery following the global financial crisis, by ensuring a low interest rate environment, they have led to other unintended consequences like fueling debt levels across the globe. thanks to low interest rates, global debt has ballooned to
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to publish for public comment a set of proposed rules that would provide an optional capital framework β basel committee on banking supervision announcement on strengthening the banking system, http : / / www. bis. org / press / p080416. htm. known as the standardized approach β for those banks not subject to the advanced approaches of basel ii. the proposed standardized approach would help increase risk sensitivity and foster competitive equity. since we have not yet formally issued the proposed rules for public comment, i will provide just a brief overview on aspects of the proposal that the agencies have already discussed publicly. the proposed u. s. standardized approach will be based on the approach of the same name in the international basel ii framework, modified in some areas to suit the u. s. banking system. the standardized approach would enhance risk sensitivity by increasing the number of risk - weight categories to which a bank would assign credit exposures. it also would increase capital requirements for certain off - balance sheet exposures, such as liquidity commitments, and allow for broader recognition of credit risk mitigants, such as collateral and guarantees. in addition, the approach will include a specific capital requirement for operational risk. banks not required to adopt the basel ii advanced approaches are facing a choice about whether to opt - in to them. some of these banks may be sophisticated institutions that exhibit sound risk management, but they might not wish to undertake the extensive effort to meet the advanced approaches of basel ii. the agencies recognize that such institutions should be afforded an alternative to more - risk - sensitive capital requirements, one not as complex as the advanced approaches. therefore, the proposal is being developed as an optional riskbased capital framework for all banking organizations not required to adopt the basel ii advanced approaches. we plan to retain our existing basel i - based regulatory capital framework for those banks that would prefer to remain under that regime. i encourage all interested parties to review and comment on this proposal once it has been issued. we are keenly aware of the need for capital requirements to make sense from a standpoint that considers safety, soundness, and competitiveness ; we recognize that a onesize - fits - all approach is probably not the best for our banking system, in light of our wide range of institutions. we remain sensitive to the principle that if we have multiple regulatory capital frameworks they must work together to support the safety and soundness of our entire banking system without artificially creating competitive inequalities. conclusion my remarks today have focused
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credit, private parties may be persuaded that avoiding such an outcome is in their self - interest. but central banks must be careful that moral suasion is not perceived as coercion or an implied promise of official indemnification for private losses. if the central bank concludes that it must lend to individual depository institutions to avoid significant economic disruption, in most situations any such loans should be on terms sufficiently onerous to discourage reliance on public - sector credit. the federal reserve tries to find the approach that reduces the odds on economy - wide spillover effects while interfering as little as possible with the market and allowing people and institutions to suffer the consequences of decisions that turn out to be bad. nearly every major bout of financial instability has called for some degree of monetary easing - most often only temporarily until the threat of the low - probability but high - cost economic disruption has passed. other tools have been used occasionally, and an assessment of their costs and benefits has depended on the nature of the crisis. moral suasion was an element in dealing with the panicky private - sector actions associated with the sharp and apparently self - feeding market price breaks of 1987 and 1998. lending through the discount window helped to promote an orderly unwinding of distressed institutions in the period of prolonged and widespread problems among important intermediaries in the late 1980s and early 1990s. and such lending was crucial in getting liquidity to the right places after the disruption of 9 / 11. in each case, the nature of the response has depended on the state of the economy and financial markets before the event. when the economy is strong and financial systems robust, a shock to the financial system is less likely to feed back on the economy. information flows in a crisis clearly, judgments in a crisis must balance a number of difficult considerations in rapidly changing circumstances in which up - to - date, accurate, information is scarce. our experience suggests some of the key questions that might arise when confronting a crisis : how large is the financial disruption - how many firms or market participants are involved and how large are they? what is the potential for direct and indirect contagion, both domestic and international? who are the counterparties and what is their exposure? who else has similar exposures and might be vulnerable to further changes in asset prices that could be triggered by a firm β s failure and unwinding of positions? how long are the financial disruptions likely to last? are substitute providers of financial services available, and how easily and quickly
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open foreign exchange positions, and guidelines for internal controls, some bank directors were assuming that they were necessarily behaving prudently provided they were operating within those limits and guidelines. they stopped addressing the risks which their own banks were facing and simply complied with the general limits and guidelines. to the extent that that was true β and we found some evidence that it was true in some banks β we concluded that our banking supervision might actually be increasing the risk of bank failure, by reducing the incentive for bank directors and bank managers to make their own careful assessment of risk. the outcome of our review was to substantially strengthen disciplines on the directors and managers of banks to operate their banks prudently, and to strengthen the ability of the marketplace to discipline banks. we also retain a system of supervisory discipline, which we take very seriously. but we retain only a few absolute rules within that framework, principally that all banks must at least meet the basel capital adequacy rules. we rely mainly on a requirement that banks disclose to the public a substantial amount of financial and risk information quarterly. in addition, all bank directors must sign off these quarterly statements, at the same time attesting to the fact that the internal controls of their banks are appropriate to the nature of their banking business, and that those controls are being properly applied. we in the reserve bank do not attempt to tell banks what those controls should look like, but directors signing those quarterly statements without making a careful assessment of the adequacy of internal controls are exposing themselves to very considerable legal risk in the event that their bank gets into difficulty. we have also gone out of our way on a number of occasions to make it clear to the public that neither the reserve bank nor the government of new zealand is guaranteeing individual banks, and we published a booklet designed to assist the general public to interpret banks β financial information. none of these actions is a guarantee against imprudent bank behaviour of course, but we believe that we have gone a considerable distance towards ensuring that banks face strong incentives to behave prudently. no bank operating in new zealand is now owned by government, none is guaranteed by government, none is obliged to lend to particular sectors or companies, and our supervision is based heavily on mandatory public disclosure and director attestations. three years ago, alan greenspan commented that β regulation by government unavoidably involves some element of perverse incentives. if private market participants believe that government is protecting their interests, their own efforts
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the private sector which has been borrowing heavily from overseas, not the public sector. and while some of this borrowing has been done by the corporate sector directly, much of it has been done by the banking sector. comparable levels of overseas borrowing by banks in other countries have been sufficient to make foreign lenders very nervous ( for example, in some asian countries in recent years ), and yet similar nervousness has not been at all evident in new zealand. why? i can only conclude that the foreign lenders take considerable comfort from the fact that most of the banks operating in new zealand now are in fact wholly - owned by foreign banks, or are indeed branches of foreign banks. those parents are seen as being financially strong, and fully able to back the operations of their new zealand subsidiaries or branches. ( it may also be relevant that, overwhelmingly, the overseas borrowing being undertaken by new zealand banks carries no foreign exchange risk for the banks themselves. ) in some countries, there is political reluctance to allow foreign institutions unrestricted entry into local banking sectors. i would have to say that, as a country where all but one of our 17 banks are owned and controlled overseas, we have seen absolutely no disadvantages from this situation, and many advantages. we have a financially stable banking sector, with vigorously competing and highly innovative banks, all of them subject to the monetary policy influence of the central bank. i have no doubt at all that the banking sector is considerably more stable than would have been the case had all the banks been domestically - owned, whether in the private sector or in the public sector. monetary policy lessons from new zealand lesson 3 : keep prices stable the third lesson from our experience has been the crucial importance for financial system stability of keeping prices stable. i am sure that for this audience the assignment of monetary policy to the objective of keeping prices stable is not extraordinary, as evidenced by price stability being the primary objective of the single monetary policy of the eurosystem. but let me comment on the link between price stability and financial system stability. by the late eighties, new zealand had experienced nearly 20 years during which consumer price inflation had been above 10 per cent almost without a break. interest rates after adjustment for tax and inflation were often strongly negative, and there was as a consequence a strong incentive to invest in real estate and shares, using as much borrowed money as could be obtained. this was undoubtedly an important contributor to the severe difficulties which both the corporate sector and some parts of the banking sector experienced when
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for cities. universities uk ( 2017 ), β patterns and trends in uk higher education β, universities uk. van reenen, j, bloom, n, draca, m, kretschmer, t, sadun, r, overman, h and schankerman, m ( 2010 ), β the economic impact of ict β, smart n. 2007 / 0020. willetts, d ( 2017 ), a university education, oxford university press. all speeches are available online at www. bankofengland. co. uk / speeches annex chart 1 : world gdp per head since 1000 ad 1990 international dollars year sources : de long ( 1998 ). chart 2 : uk productivity, real wages and gdp per head index, 1760 = 100 productivity real wages gdp per head sources : bank of england, β a millennium of macroeconomic data β, available online. notes : labour productivity per head uses gdp at factor cost. real wages defined as nominal wage divided by gdp deflator at factor cost. all speeches are available online at www. bankofengland. co. uk / speeches chart 3 : literacy rates in western europe sources : ourworldindata. org, based on buringh and van zanden ( 2009 ) and broadberry and o β rourke ( 2010 ). chart 4 : long - run uk gdp growth sources : broadberry and wallis ( 2017 ) and bank calculations. all speeches are available online at www. bankofengland. co. uk / speeches chart 5 : expanding and contracting periods in uk gdp growth sources : broadberry and wallis ( 2017 ) and bank calculations. all speeches are available online at www. bankofengland. co. uk / speeches table 1 : estimates for job destruction and creation from automation ( mit ( 2018 ) ) jobs destroyed when where jobs created predictor worldwide 900, 000 to 1, 500, 000 metra martech us jobs 3, 078, 340 forrester worldwide 1, 000, 000 - 2, 000, 000 metra martech worldwide 1, 800, 000 2, 300, 000 gartner sampling of 15 countries 7, 100, 000 2, 000, 000 world economic forum ( wef ) worldwide 1, 900, 000 - 3, 500, 000 the international federation of robotics us jobs 9, 108, 900 forrester worldwide 1, 000, 000, 000 thomas frey us jobs 24, 186, 240 us jobs 3, 400, 000 us jobs
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and payments services depends upon depositors generally having a high degree of confidence that their funds will in fact be available on demand and it depends upon the cost of the services. in providing the services, therefore, the banks need to strike a balance between deploying their deposits in low - yielding, high quality, liquid assets to meet cash withdrawals, and riskier investments to generate a higher return. in this latter context banks have traditionally played a key role in financing the corporate and household sectors, earning their return by gathering information about, and assessing and monitoring, the creditworthiness of private sector borrowers, especially those who do not or cannot cost - effectively provide the comprehensive, public, information that would allow them to access the capital markets. much of the banks β lending, while nominally at short - term, for example in the form of callable overdrafts, is in practice illiquid and non - marketable. so a further distinctive characteristic of banks is that they typically function with a mismatch between their highly liquid liabilities and their less liquid, non - marketable, assets. there is no need, i think, to labour the importance to the economy as a whole of these distinctive banking functions, or the damage that would be caused if the banks β role - as the repository of liquidity, as the core payments mechanism, and as the principal source of finance to at least a large part of the economy - were seriously interrupted. that in itself helps to explain the public interest in the effective functioning of the banking system, or why banks collectively have been regarded as special. but beyond that, the distinctive banking characteristics that i have described, of liquid liabilities and less liquid assets, give rise to special needs. given the banks β role in the payments system they may need late access to liquidity to square their positions vis - a - vis each other after executing payments instructions on behalf of their customers. this explains why, in their routine monetary operations to relieve shortages in the money - market, central banks in many countries tend to confine their ( late ) lending to banks even when they accept a wider range of counterparties in providing liquidity through open market operations. the same distinctive characteristics make banks especially dependent upon public confidence. bank depositors are not generally in a position to monitor or assess the financial condition of their bank, so that any suggestion that a particular bank may not be in a position to meet its liabilities is likely to lead to the panic withdrawal of
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, in the short - term money markets, the overnight call rate continues to hover at very close to zero percent. moreover, longer - term interest rates such as tb and fb rates continue to be at low levels as a whole, although the markets remain nervous reflecting weak bank stock prices. yields on long - term government bonds continue to move at around 1. 0 percent. yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds remain virtually unchanged. stock prices turned up in late - november, but weakened again in december in line with a decline in u. s. and european stock prices. the nikkei 225 stock average is recently moving at around 8, 500 yen. in the foreign exchange market, the yen declined until the beginning of december reflecting the improvement in some u. s. economic indicators. thereafter, the yen rebounded as the u. s. dollar weakened again on the whole due mainly to geopolitical factors. the yen is currently traded in the range of 120 - 122 yen to the u. s. dollar. 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 have become slightly more severe. in the corporate bond and cp markets, the issuing environment for firms with high credit ratings is accommodative, but the environment for firms with low credit ratings is severe. credit demand in the private sector continues to follow a downtrend mainly because firms β business fixed investment remains sluggish while continuously reducing their debts. amid these developments, private banks β lending continues to decline by about 2 - 3 percent on a yearon - year basis. the growth rate of the amount outstanding of corporate bonds and cp issued is on a declining trend. meanwhile, according to business surveys, the financial position of firms, particularly that of small firms, remains severe. the monetary base exhibits a high year - on - year growth rate of around 20 percent. the year - on - year growth rate of the money stock remains around 3. 0 - 3. 5 percent. funding costs for firms continue to be at extremely low levels on the whole. against the above background, the financial developments are summarized as follows. money market conditions as a whole continues to be extremely easy. long - term interest rates are low. the money stock and the monetary base maintain high growth rates relative to
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in some peripheral european countries. although trust in the government β s conduct of fiscal policy has been maintained so far, it could crumble without warning and when least expected. therefore, the burning issue to be tackled is the creation and implementation of a roadmap for fiscal consolidation in an effort to maintain trust both at home and abroad. bis central bankers β speeches c. measures taken by the bank the bank continues to consistently make contributions as the central bank in order to overcome deflation and return the japanese economy to a sustainable growth path with price stability. the bank β s efforts through the conduct of monetary policy also aim to facilitate economic revitalization. the bank must always be ready to proactively implement the necessary policies to achieve its objectives. going forward, the bank should continue to be proactive and do its utmost to bring the japanese economy back to a sustainable growth path with price stability. bis central bankers β speeches
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and financial stability. over the next few minutes i would like to share with you some reflections on the policy actions that central banks in general β and the ecb in particular β have undertaken and on the challenges that we are likely to face in each of these three areas. liquidity policy before discussing liquidity management interventions, it is useful to recall that the ecb β s measures to provide support to money markets have been based on the fundamental principle of the separation between monetary policy decisions and their implementation. this principle is important in order to reduce the risk that economic agents may mistakenly interpret volatility in short - term money market rates, triggered by temporary and unpredictable fluctuations in liquidity conditions, as containing information on the desired monetary policy stance ( which is instead given by the rate applied to the main refinancing operations ). the separation principle has proved to be particularly effective during the financial market turmoil and at times of high volatility in the short - term money market rates. ( i ) addressing liquidity risk through increased intermediation let me now try to explain in somewhat greater detail the rationale behind the operational measures of the eurosystem during the financial market turmoil. from the start of the turmoil until the collapse of lehman brothers in mid - september 2008, the ecb engaged in active liquidity management by adjusting the temporal and quantitative distribution of its liquidity provision within the maintenance period. 5 besides, from october 2007, the eurosystem has engaged in increasing international cooperation to ease tensions in global money markets, particularly by facilitating the access of euro area banks to us dollar liquidity. through the adjustments to its euro operations, the ecb responded to the perceived change in the pattern of banks β demand for liquidity over the maintenance period, in particular for illustration, one may adapt the poole 1970 - paradigm to liquidity management during a financial turmoil : when the demand for liquidity becomes unstable ( different demand pattern ), the central bank focuses on stabilising interest rates directly, rather than stabilising interest rates by managing the quantity ( β excess β allotments above benchmark ). responding to the increasing evidence that interest rates were no longer necessarily linked to liquidity conditions on the last day of the maintenance period ( as postulated by the so - called β martingale hypothesis β ). indeed, unlike in normal times, banks seemed to no longer regard reserve holdings on different days of the maintenance period as substitutes. by contrast, there was evidence of the emergence of
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deviate from this target by more than 1Β½ percentage points in either direction, the bank is to provide the government with a written public account explaining what has caused this deviation, how the bank intends to respond and how long it expects that it will take for inflation to once again return to within the targeted inflation limits. the central bank has only one instrument at its disposal to achieve this objective : interest rates. the significant interest rate here is that used in the bank β s repurchase transactions with credit institutions, sometimes referred to as the central bank β s policy interest rate. such transactions in fact represent the bank β s liquidity facility for these institutions. the commercial and savings banks subsequently set their own rates of interest, having regard to the central bank β s policy rate, and short - term market interest rates generally change in phase with the central bank rate. if other factors remain constant, changes in the central bank interest rate also affect long - term interest rates, but here other aspects also enter the picture. the response of these rates to changes in the central bank rate is therefore not always predictable and tends to occur with a certain time lag. inflation forecasting plays a crucial role in central bank policy. it produces four forecasts annually, which are published in its quarterly monetary bulletin. the inflation forecast extends just over two years into the future, on a quarter - by - quarter basis. as in other countries, interest rate changes by the central bank take quite some time to have an impact throughout the economy. this makes it necessary to have a forward - looking policy, with the inflation forecast based on state - of - the - art methodologies. in addition to its inflation forecast, the central bank publishes a quarterly assessment of the economic and monetary situation and prospects, including a national economic forecast, and their probable impact on price level developments. if inflation looks likely to exceed the bank β s target limits in a long - term perspective, the bank will raise its policy interest rate, or cut this rate if inflation is heading below the target limit. in preparing its inflation forecasts and regular assessment of the economic situation and outlook, the central bank examines a wide variety of indicators. these include both statistical data and information obtained from interviews with representatives of industry, special interest groups, credit institutions and others. much of this statistical data is available on the bank β s website. decisions by the central bank β s board of governors are made following in - depth examination of these indicators, based on the bank β
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can also limit banks β lending capacity and / or interfere with policy transmission and therefore impair the effectiveness of monetary policy. although the banking sector β s npl ratio has declined from 23. 5 percent in april 2018 to 18. 9 percent in april 2019, the current ratio still remains very high. with such high npl levels, transmission mechanism of monetary policy to lending rates is weakened and financial intermediation to support economic activity is constrained. page | 3 β’ to make effective the transmission channel through the npl angle, the bank of ghana is engaging banks to improve their risk management frameworks while the loan loss write - off policy is on - going. we are also strengthening credit conditions through the collateral registry and the credit referencing bureaus. market development to ease transmission mechanism β’ the need to broaden the scope of government financing needs without crowding out the private sector through the development of a liquid bond market is critical to effectively help manage debt without repercussions on macroeconomic stability. an efficient and liquid bond market provides some scope for effective transmission mechanism for monetary policy. β’ with sound fiscal and monetary policies, improved regulatory environment and improved payments and settlement infrastructure, government has lengthened the yield curve to 15years on the domestic money market. β’ government re - profiling has supported the shift towards more medium - to - long term bonds to reduce re - financing risks, driving down interest rates at the short - end of the market and has helped correct the yield curve. external vulnerabilities β’ exchange rate movements are relatively important for a small open - economy with a flexible exchange rate mechanism, like ghana. exchange rate dynamics have significant effects on the ultimate goal of price stability and hence on monetary policy decisions. β’ the impact effects of external vulnerabilities on the domestic economy are channelled through three main sources β first, with a commodity - dependent export base, the economy is highly vulnerable to negative terms of trade shocks. second, the increased levels of outflows in the service and income accounts due to the dividends and profit repatriation by large multinational companies in the energy, mining and telecoms sectors pose significant risks to reserves and in the process constrains out ability to effectively deal with shocks. third, the increased nonpage | 4 resident participation in the domestic bond market has exposed the economy to vulnerabilities stemming from changes in sentiments of these investors. these sources of vulnerabilities, when they materialize, can distort external sector conditions
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these guidelines is to engender public confidence in banking institutions and to ensure that the management and board of directors exhibit integrity and professionalism in the running of the banking institutions. banking institutions are prohibited from the extension of financing and credit facilities to related parties including its directors and staff as well as family members and interested corporations. such prohibitions are aimed at preventing misconduct and irregular practices in provision of finance whilst ensuring fair and equitable treatment to the public. these governance are universal in nature and therefore, islamic banking institutions would not be faced with any difficulty in adopting these values. secondly, the objective is to prevent conflict of interests and accord responsibility on the banking institutions to provide complete and accurate information. bank negara malaysia has undertaken a number of initiatives in promoting transparency and good banking practices in islamic banking institutions. to achieve these objectives, bank negara malaysia has adopted an all - encompassing approach which is focussed on strengthening the institutional capacity of the islamic banking institutions, broadening the range of financial products and services and deepening the islamic financial markets by intensifying research and development efforts as well as creating awareness in addition to strengthening the regulatory framework for islamic banking. one aspect that has been carried out by bank negara is the introduction of a structured framework in the determination of the rate of return for islamic banking operations. previously, there were various modes of framework in the disclosure of the rate of return used by the islamic banking institutions and it has, to a certain extent, made it difficult to assess the performance of the islamic banking industry. it also created distortions in the rate of return as the spreads can vary significantly among islamic banking institutions. the new framework addresses the issue of uniformity as banks are required to observe a single framework, thereby reducing the potential for distortions in the rate of return, and generating a more equitable distribution of income, as well as increasing the level of transparency. on the part of the regulator, it has provided us with better means of assessing the efficiency of islamic banking institutions as well as their profitability, prudent management and fairness. in a dual banking system as that operating in malaysia where conventional banks also provide islamic banking facilities, the regulator is accountable to instil confidence to the public of the existence of firewalls between the conventional and islamic funds. since the introduction of a dual banking system in malaysia and the inception of the islamic banking institutions participating in islamic banking scheme ( ibs banks ), bank negara malaysia has made it mandatory for the islamic banking
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urged accounting standard setters to develop a single set of high - quality accounting standards. a global set of accounting standards is desirable from the perspective of both investors and regulators since it improves the comparability and transparency on a global basis. this contributes towards sounder investment decisions and thus to a more efficient allocation of resources as well as overall functioning of capital markets. moreover, the financial crisis clearly revealed the shortcomings of different accounting rules on both sides of the atlantic, as differences in rules contributed towards a lower degree of confidence in financial reporting. for all these reasons, the ecb welcomes the ongoing efforts of the accounting standard setters to achieve fully compatible, high - quality accounting standards in a direct response to the g20 request. however, we are concerned to hear that the fasb and the iasb are still far from reaching a consensus on key accounting concepts, such as the classification and measurement of financial instruments. the iasb has confirmed a β mixed measurement model β that measures financial instruments both at amortised cost and fair value. in contrast, the us standard setter, the fasb, is determined to move towards a β full fair value model β, claiming that only fair value provides decision - useful information to investors. i have already mentioned in my intervention how the financial crisis has blatantly revealed the flaws with this measurement and how in certain circumstances, namely when markets are dislocated, applying full fair value accounting to the financial statements of the banking sector raises financial stability concerns and does not provide decision - useful information to investors. just to re - emphasise, the ecb strongly opposes a full fair value approach. in this context, convergence should not come at the expense of high - quality accounting standards. finally, with regard to recent assertions made by the iasb and fasb that convergence is on track, i would like to highlight that we are not so optimistic. in this regard, putting in place a reconciliation mechanism that simply discloses figures at amortised cost and fair value for each item on the balance sheet would certainly not achieve the aim of convergence. as regards governance, which improvements do you envisage in relation to the elaboration of accounting rules? first, i would like to stress that the ecb fully supports the concept of β independent accounting standard setting β. in their april 2009 declaration on strengthening the financial system, when identifying the main areas of concern in the accounting area, the leaders of the g20 never challenged this concept
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lessons from the crisis was the need to make the shadow banking sector more transparent. this becomes more urgent as we tighten the regulatory net for the banking sector. otherwise we may simply shift risks to unregulated or more loosely regulated entities. in this respect let me mention the otc derivative markets. these markets should be subject to greater transparency by promoting the reporting of non - centralised trades to trade repositories. additionally, we should promote the clearing of eligible otc derivatives transactions through central counterparties, which should be themselves subject to high prudential and operational standards. finally, we need to effectively address the risks posed by systemically important financial institutions. in particular, we need to define a regulatory framework addressing the risks posed by large and complex financial institutions, and to discuss possible measures aimed to ensure a smooth winding - up of ailing systemically important financial institutions. it is crucial that a consistent framework is agreed at international level to avoid conflicting national regimes applied to multinational institutions and regulatory arbitrage. in this context, i strongly support the current work being carried out by the financial stability board and the basel committee.
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we established a corresponding stress testing framework, and organized 19 domestic systemically important banks ( sibs ) to carry out carbon cost sensitivity stress tests for eight key carbonemitting industries, including electricity, steel, building materials, non - ferrous metals, aviation, petrochemicals, chemicals, and paper - making. in addition, based on regional economic structure and transition policies, we organized banks in some regions to conduct stress tests on climate risks. through these efforts, we've raised the awareness and capabilities of financial institutions to manage climate risks, so they can properly handle the relationship between emission reduction and development, as well as the link between local and overall development, and support the green and lowcarbon transition of the economy in a more reasonable pace and intensity. in this process, we've managed to give full play to the decisive role of market in allocating resources, and better leverage the role of government at the same time. achieving the " 30 - 60 " decarbonization goal requires substantial investment in green transition and green technologies. according to relevant research institutes, the required investment will reach the magnitude of rmb100 trillion. as government funds can cover only a small part of such huge funding demand, social funds will be counted on and mobilized, thus making market play a decisive role in allocating resources, and taping the price discovery and risk management functions of financial instruments to achieve the optimal growth path under constraints. by establishing green finance standards, promoting environmental information disclosure to appropriately improve information transparency, and providing low - cost funds, the financial sector can reduce the cost of social funds invested in green transition and facilitate the development of green finance market. up to date, china has developed a multi - level market system for green finance, in which green loans and green bonds play a dominant role while a variety of green finance instruments are booming. at the end of q1 2023, 3 / 5 bis - central bankers'speeches outstanding china's green loans in domestic and foreign currencies exceeded rmb25 trillion, and outstanding green bonds exceeded rmb1. 5 trillion, both of which rank among the top of the world. fourth, climate change is a global issue, and to properly address this issue requires enhanced international cooperation and coordinated response. president xi jinping pointed out that mankind is a community with a shared future, and protecting the ecological environment is a common challenge and responsibility facing all humanity. we have firmly upheld multilateralism, and proactively participated in
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and accuracy of carbon emission data, and only in this way can risks such as " green - washing ", capital arbitrage, and project fraud be prevented, which lays a solid foundation for other carbon emission reduction policies. over the years, we have gradually clarified the environmental information disclosure requirements for financial institutions, and encouraged financial institutions as well as enterprises issuing green bonds to disclose relevant environmental information. the second is to improve the policy incentive and restraint system. we should use " carrot and stick " to attain the " 30 - 60 " decarbonization goal. a significant increase in 2 / 5 bis - central bankers'speeches the cost of carbon emissions can be understood as a " big stick ", a moderate increase is a " medium stick " or a " small stick ", and the facility launched by the pboc is a " carrot " in an incentive mechanism. in 2021, the pboc launched two monetary policy instruments, namely, the carbon emission reduction facility ( cerf ) and the special central bank lending for clean and efficient coal use, to support the development of key areas of carbon emission reduction. for carbon emission reduction loans issued by financial institutions to key areas in the regard, the pboc provides funding for 60 percent of the principal through central bank lending for a certain period of time, with an interest rate of 1. 75 percent, which provides targeted and direct support for green and low - carbon projects. as the central bank lending offered by the pboc to financial institutions should be repaid when they expire, financial institutions who issue carbon emission reduction loans to enterprises need to bear relevant risks on their own. in this sense, the " carrot ", or the incentive, is moderate and market - oriented. at the same time, financial institutions that receive the low - cost funds from the pboc must pledge to disclose such information as the outstanding balance and interest rates of carbon emission reduction loans as well as their effects on carbon emission reduction. besides, they are subject to verification by independent third - party agencies and oversight by the public. by end - april 2023, the cerf, with a balance of around rmb400 billion, had motivated financial institutions to issue over rmb670 billion in loans and facilitated carbon emission cut in the amount of 150 million tons. this is a satisfactory result. the third is to conduct stress tests on climate risks. the pboc attaches great importance to the stress tests on climate risks. in 2021,
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emdes expectations. india had committed to the cop26, its panchamrit goals ( nationally determined contributions ( ndcs ) ). it is estimated that the funding requirement to achieve these targets ranges around usd 160 billion per year10. there are manifold challenges both at national and international levels for the effective flow of sustainable finance. first and foremost is inherent riskiness of the green or sustainable projects / proposals. at the forefront of climate risk mitigation is going to be the availability of green and sustainable substitutes which requires considerable technological development. given the fact that, green or sustainable projects are based on relatively newer technologies which are yet to stabilise and are mainstreamed, assessment of financial and techno - economic viability of these projects becomes that much more challenging. this leads to an inherent increased credit risk as compared to traditional projects. 4 / 6 bis - central bankers'speeches moreover, when it comes to sustainable finance, in a country such as ours, apart from mitigation, flow of resources for adaptation is equally important. bankable projects invariably find credit, however there are issues with partially bankable and nonbankable projects, which generally gets associated with adaptation. several issues in the form of data, knowledge and capacity gaps, technical, and institutional constraints limit the proper identification and development of adaptation projects which limits the access to both international as well as private finance. there is, thus an urgent need to develop an ecosystem to mainstream adaptation finance and to rise above the typical corporate social responsibility linked funding and public investments. the government has also been at the forefront in fostering sustainable and climate finance be it green hydrogen mission, national solar mission, pm - kusum, pmsuryaghar yojana, sovereign green bonds, long - term low emission development strategy ( lt - leds ) etc. there is a need to further augment these efforts by forging public - private partnerships and look at blended finance options, including the role of development financial institutions ( dfis ). efforts are needed to address commercial viability of projects and related market failures, along - with transparency, integrity, and disclosures. there is a need to collectively think as to how sustainable projects involving new and evolving technologies can be derisked without subjecting the financial system to any spill - over risks. there is also a need for more intense focus on promoting research & development in the area of sustainable technologies. a related area that comes up for discussion at various fora is the non - availability of
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interesting because the level of competition is going to increase manifold, both for customers as well as for talent, transforming even the sleepiest areas in financial services. profitable because new technologies, information, and new techniques will open up vastly new business opportunities and customers. challenging because competition and novelty constitute a particularly volatile mix in terms of risk. in this talk, i will speak about how we see these aspects at the central bank. interesting and profitable over the next year, 17 new niche banks will begin business. in addition, licensing for universal banks is now on tap, so fit and proper applicants with innovative business plans and good track records will enter. fintech will throw up a variety of new ways of accessing the customer and serving her, so new institutions that we have little awareness of today will soon be a source of competition. these will finally draw customer sectors, firms, and individuals without access today into the formal financial system. those customers that are already being served will be spoiled for choice. bis central bankers β speeches for the service provider, even though greater competition will tend to reduce spreads, access to new customers and new needs will increase volumes. moreover, risk - and cost reduction through information technology and risk management techniques will tend to increase effective risk - adjusted spreads. in sum then, despite increased competition, profitability can increase. the comparative advantage of banks may lie in their access to lower cost deposit financing, the data they have on customers, the reach of their network, their ability to manage and warehouse risks, and their ability to access liquidity from the central bank. these should then be the basis for the products they focus on. perhaps a couple of examples may be useful. india will have enormous project financing needs in the coming days. even though bankers are very risk averse today, and few projects are coming up for financing, this will change soon. what is in the pipeline is truly enormous β airports, railway lines, power plants, roads, manufacturing plants, etc. bankers will remember the period of irrational exuberance in 2007 - 2008 when they lent without asking too many questions. i am hopeful that this time will be different. here are ways it can be different and risks lowered. first, significantly more in - house expertise can be brought to project evaluation, including understanding demand projections for the project β s output, likely competition, and the expertise and reliability of the promoter. bankers will have to develop industry knowledge in key areas since consultants can be biased. second, real risks have
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way that increased production would be reflected in larger export earnings. secondly, it was argued that given the large domestic market, exports need not be an engine of growth. thirdly, growth in external demand for india's products was likely to be inelastic because of the traditional nature of our exports. finally, there was what was known as the prebisch - singer argument that primary commodity exports face a secular deterioration in the terms of trade. accordingly, exports were regarded as a residual, a vent - for - surplus on those occasions when such surpluses were available. the inward looking industrialisation strategy during the first three plans resulted in higher rate of industrial growth. however, the signs of strain in the balance of payments were clearly visible in the second plan ( see table 1 attached for trends in india's current account ). as the import demand surged on account of development of heavy industries, current account deficit ( cad ) in the second plan surged to 2. 3 per cent of gdp. the difficulties in financing fast growing imports with stagnant exports put considerable strain on reserves as import cover of reserves ( or foreign currency assets ) plunged to barely two months β by the terminal year of the second plan. in the third plan, improved export performance and slowdown in import demand led to some improvement in cad and at the same time the financing requirements were met through stepping up of official assistance. the third plan reflected the first signs of rethinking in the policy strategy by dedicating itself to β self sustaining growth β, which required β domestic saving to progressively meet the demand of investment and for the balance of payment gap to be bridged over β. while it envisaged that normal capital flows will continue, it set out the early indications of the concept of self reliance by foreseeing a steady reduction in the reliance on special foreign aid programmes and dispensing with them after a period of time. a more liberal view of self reliance evolved over the third plan with a shift in stress from'import substitution'to policy emphasis on'efficient substitution of imports '. however, in reality, until the end of the 1970s, exports were primarily regarded as a source of foreign exchange rather than an efficient means of resource allocation. though the devaluation of 1966 brought to the fore the problems associated with the overvalued exchange rate, it did not bring immediate desired improvement in the balance of payments position. in fact, cad - gdp ratio widened to 2. 0 per
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##sight is it now clear that the bis central bankers β speeches prolonged period of price stability blindsided policy makers to the cancer of financial instability growing in the underbelly. 12. so that much is now clear. central banks should be mindful of financial stability concerns. but does it necessarily mean that they should take care of it themselves? a review of the pre - crisis institutional arrangements for financial sector regulation across different countries suggests different answers. abstracting from the details, it is possible to see two stylized models. the first is a model where the central bank is just a minder of inflation with no regulatory responsibilities, the rationale being that a central bank will be able to deliver on its price stability objective more effectively if it is not burdened by other responsibilities. the other model is one where a central bank has also some, and in a few cases, the entire responsibility for regulating the financial sector, and hence has an implicit responsibility for financial stability. 13. the experience of the crisis has generated a vigorous debate on whether a central bank can remain immune to financial stability concerns no matter how limited its mandate. using a metaphor which is by now notoriously famous, is the central bank β s job confined just to mopping up the mess after the bubble has burst? this is not a totally settled debate, but the dominant view post - crisis is that central banks should have a substantial role in the financial stability function. once again, abstracting from all the nuanced positions, there are three main arguments. ( i ) the first argument is that monetary policy and financial stability are generally interlinked. policies in one dimension have implications for the other. for example, monetary policy can affect systemic risk through the asset price channel. interest rates represent the opportunity cost of holding assets and an accommodative monetary policy can influence credit expansion for financing asset purchases. should this happen in times of excessive optimism, it can lead to asset price bubbles threatening systemic stability. the causation can run in the reverse direction too β policies for financial stability can influence the monetary dimension. for example, as i said earlier, measures aimed at strengthening the resilience of the financial system potentially buttress monetary policy by preventing sharp financial disruptions. this inter - dependency between the two dimensions suggests that the central bank, with inherent responsibility for monetary policy, should also act as a systemic regulator in charge of financial stability. with such a mandate, a central bank can take a holistic view of policy options
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far as equity markets are concerned. a major area of managing the capital account relates to external debt and the objective in this regard is, in a way, to ensure that short - term debt obligations conform to what is known as guidotti - greenspan prescription for avoiding crisis in the emerging economies. as regards residents, a distinction is made between resident individuals, the corporates, and financial intermediaries - and a process of gradual liberalisation for each category, as appropriate, is the general approach. currently, there is virtually full capital account convertibility for indian corporates while a roadmap for the future in regard to fuller capital account convertibility is expected from a recently appointed committee on the subject, by endjuly 2006. the emphasis on balance and gradual rebalancing, keeping in view the desired direction and the need to avoid any roll - back, is thus evident in regard to the external sector and is equally significant for progress in the financial sector - basically following the visionary design of dr. c. rangarajan, one of my predecessors. a few illustrations of gradualism may be in order. first, the reserve bank was, till recently, de facto obliged to provide money to the government whenever needed, be it through overdrafts or through private placement of government debt with the reserve bank or through participation in the primary issues. these have been eliminated with effect from april of this year, but the formal process was commenced in 1997, with a memorandum of understanding with the government to eliminate automatic monetisation. more recently, private placement or participation was avoided. after being convinced that the new system works in practice, it has been possible to discharge the relevant mandate of the fiscal responsibility and budget management act with effect from april 2006. a second example relates to relaxations in foreign exchange regulations. the foreign exchange regulations act, 1973 prohibited most of the forex transactions unless exempted, and so, the initial process of liberalisation involved enlarging the list of exemptions. this culminated in replacing the above act with the foreign exchange management act in june 2000, where all transactions are permitted unless prohibited or regulated. a third example relates to competition and ownership of banks. competition has been enhanced by gradually removing administered interest rate structures, permitting entry of new private sector banks, and expanding the branch network of foreign banks. unlike in most countries, a branch of a foreign bank in india can conduct any business that a bank incorporated in india may do. on ownership, while over 70
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the socio - economic conditions, is undeniable. tenth, there is often a concern about jobless growth, but in reality it is necessary to distinguish between lack - lustre growth in employment in the organised sector and expansion and intensification of employment in the unorganised sector. by way of illustration, thirty years ago, eighty per cent of engineers or doctors moved into the organised sector, while now, sixty to seventy per cent are selfemployed. this implies a shift in the balance from what may be termed as β job orientation β to β work orientation β. despite these positive developments, the greatest challenge before the nation is to create productive work for the millions that are entering the market. finally, during the process of reform there is an initial tendency to be pro - business to get quick results while for lasting impact, policy needs to be pro - market. the processes of decision - making, often considered painfully slow in india, are gradually emphasising an increasingly pro - market stance. reforms in external and financial sectors - balance and harmony what are the dominant characteristics of reform in the external sector? on the trade account, the approach was to indicate the direction and to encourage participants to equip themselves better, notwithstanding the risks of anticipatory actions undermining the policy intent. in this context, a distinction needs to be made between promoting growth and enhancing efficiency in the context of economic reforms. trade reforms in india were designed to enable domestic firms to restructure and spread the costs of adjustments over time β thus enabling enhanced efficiency through a gradual process. growth is promoted on a longer - term basis in view of efficiency gains that were made possible by the gradualist approach. on the capital account also, there has been a continuous resetting with a view to the accelerating gradual pace of liberalisation depending on the domestic and global situation but the direction has not been compromised. while there is full convertibility on the current account, and also for all authorised inflows as well as outflows on the capital account, the process of managing the capital account consists of operating two routes, namely automatic and non - automatic. as far as foreign direct investment is concerned, consistent rebalancing in the desired direction is done by expanding the automatic route and by moving most of the prohibited transactions to the non - automatic but approval route and at a later stage, to an automatic or deregulated regime. there is full convertibility for portfolio flows through foreign institutional investors as
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bank β s views on the domestic economy at some length in our quarterly inflation report only last month. but in summary we have seen a gradual pick - up in the pace of activity over the past year, driven by domestic demand - notably consumer spending - so that the money supply and both demand and output are now growing at above - trend rates. other things equal we would expect that to continue. the picture is, however, complicated by the exaggerated strengthening of sterling since last summer - particularly against the european currencies - which probably reflects uncertainties affecting the continental countries at least as much as developments in our own economy. this strength of sterling poses, for the time being, a genuine monetary policy dilemma. it will lead to a fall in inflation in the short run - over the rest of this year - as import prices fall. and it makes life very difficult for uk manufacturers exposed to international competition, so that our external trade position is likely to deteriorate - and that may have a longer - lasting effect on inflation. but these effects may not be enough to offset the gradual emergence of inflationary pressure looking forward to next year, stemming from continuing above - trend growth of domestic demand. on that basis we advocated a moderate tightening of policy in order to slow the domestic expansion to a pace that can be sustained in the medium and longer term. let me be quite clear, for those who insist on over - dramatising these things, we were not calling in the inflation report for β an immediate interest rate hike to bring an incipient boom to a juddering halt! β i should like to think that in the present more stable environment that kind of language is anachronistic. what we in fact expected over the next couple of years is continuing growth somewhat above trend with inflation picking up towards 3 %, though rising which by our own past standards is a relatively benign outlook. what we are seeking to do is to moderate the pace of expansion before inflationary pressures begin to build in order to ensure that the outlook remains benign next year, and a year after, and well into the future. and that, mr. chairman, is precisely what most business people - whether in industry or commerce or financial businesses - tell us they would want us to do. it is also the purpose of the government β s inflation target. let me then turn to europe and the question of monetary union. i do not think anyone questions that economic prosperity in europe is crucial to economic prosperity in this country. our
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mario draghi : overview of economic and financial developments in italy concluding remarks by mr mario draghi, governor of the bank of italy, at the ordinary meeting of shareholders, rome, 31 may 2007. * * * ladies and gentlemen, i wish to pay grateful and affectionate tribute to the members of the directorate who left the bank in 2006 after decades of dedicated, rigorous and judicious work. they accompanied me in my first steps in this institution, providing the support of their loyalty and experience. vincenzo desario, who was appointed director general in 1994, served the bank in the exercise of highly sensitive functions, notably in the area of banking supervision. he led the bank on an interim basis after the resignation of antonio fazio. he stamped his mark indelibly on the bank β s approach to prudential supervision, principles of internal organization and daily administrative practices. the board of directors has named him honorary director general. pierluigi ciocca, who had been deputy director general since 1995, gave the bank the benefit of his profound, original thinking and his vast economic and legal knowledge. he promoted the study of law and economics, inspired research for many years and helped to refine the analysis of the functions of central banking. in 2006 the directorate acquired new members with expertise and experience, some of it gained abroad. fabrizio saccomanni, who as vice president of the european bank for reconstruction and development was in charge of risk management at that institution for three years, has been director general since october. ignazio visco, central manager for economic research and previously chief economist of the oecd for five years, and giovanni carosio, formerly central manager for banking and financial supervision, joined antonio finocchiaro as deputy directors general in december. the directorate β s new membership combines valuable experience in the international arena with intimate knowledge of the bank, analytical and research skills with specialization in the area of regulation and central banking. the bank β s new statute was approved last year. it modifies the operations of the bank β s decisionmaking bodies : the board of directors, the board of auditors and the directorate. it establishes the principle of collegiality for measures that have external significance. the bank intends to renew itself, and has already begun to do so. the reorganization taking place affects the functions of the head office, the branch network and the representative offices abroad ; it provides for the full integration of the italian foreign exchange office. the
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the global interbank funding market, but because of their strong balance sheets, canadian banks have been somewhat less affected. over time, market forces can still be expected to work out these problems. but markets need information to operate efficiently. so, it is in the interest of market participants to make sure that parties have access to all necessary information. globally, markets for structured asset - backed securities remain under stress. in canada, the problems have been most acute in the market for structured, non - bank - sponsored, assetbacked commercial paper. the information needed to properly price these products is only now beginning to be made available. with this information, investors and the providers of assets and liquidity are now progressing towards restructuring agreements. as we go forward, we can expect that investors will demand greater transparency where it is now lacking. vendors of financial instruments will then need to structure them in such a way that market players can clearly see what they are buying. more fundamentally, investors must take on more responsibility for diligent research, so that they can better understand the nature of their investments. put another way, investors must demand access to appropriate information so that they can do their own homework, and then they must do that homework. it seems to me that many of these desired outcomes will be accomplished through natural market forces responding to these events. for example, when investors demand much higher rates of return for opaque products, there will be a strong incentive for vendors to provide products that are more transparent. let me touch briefly on the role of credit - rating agencies in all of this. there is an article in the current fsr that expands on the issues related to the possible reform of the credit - rating process. 5 one thing that is clear is that in the future, credit - rating agencies will find it to their advantage to explain more clearly the rationale for, and limitations of, their ratings for highly structured products. there are some natural, self - correcting market forces at work that should lead the rating agencies to improve their processes. indeed, those credit - rating agencies that do not work harder to improve their processes will likely have fewer clients willing to pay for their services. as i understand it, most agencies are working on such improvements. but credit - rating agencies are not to blame for the lack of information about those highly structured products that were sold to highly - sophisticated investors in the so - called exempt market. in the retail market, securities regulators impose strict requirements about the information that must be provided
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, fiscal agent, and adviser on funds management. the objective of this work is to provide these services effectively and efficiently. the responsibility includes managing canada's foreign exchange reserves, the government's cash, and, in collaboration with the department of finance, the public debt, including canada savings bonds, which go on sale this year on october 5. as part of this responsibility, the bank also gives advice to the department of finance on these issues, as well as on issues that have arisen in the context of the financial crisis. for example, our advice fed into the design of the insured mortgage purchase program, which allowed the federal government to buy pools of insured mortgages through the canada mortgage and housing corporation, as well as the design of the canadian secured credit facility, which was set up to purchase asset - backed securities. managing and providing advice on debt and reserves also require taking a long view. generally speaking, the management of financial assets and liabilities requires a forwardlooking risk - management framework, as well as long - term strategies. and of course it's essential to be completely transparent when it comes to managing government funds and public money. the bank discusses the various tools it uses and reports on the operations and actions it carries out to manage financial assets and the outstanding stock of federal debt. it does this via its own website, the department of finance's website, and in the bank's annual report. finally, in our funds - management work, we always look at the big picture. the range and complexity of operations and the need to carefully manage risk require us to consider a very broad picture when we develop our framework for the governance of funds management and formulate our policies. now i'll turn to the bank of canada's third area of responsibility β the financial system. financial system as recent events have made clear, a sound financial system is essential to a well - functioning economy. the objective of the bank's work here is to promote the stability and efficiency of the financial system, both domestically and globally. to achieve this objective, we again take the long view. together with other policy - makers in canada and abroad, the bank strives to develop, and contribute to, policy that will help to sustain a stable and efficient financial system over time. this long - term focus aids in creating and maintaining an environment in which risks can be properly assessed and sound investment decisions effectively made. that said, we also have to be nimble,
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the world. the promptpay - paynow connectivity that links domestic payments between thailand and singapore will go live very soon. india β s rupay and singapore β s nets were connected last year to make merchant payments interoperable. but linking payment systems bilaterally is complex and expensive, due to the different technical and data standards as well as legal regimes. we must explore multilateral cross - border payments in a more scalable way. the bank for international settlements ( bis ) innovation hub centre in singapore is exploring how payment systems could be linked together to enable faster and cheaper cross - border payments. there is strong synergy between the bis innovation hub β s work on a cross - border payments bridge with mas β work on foundational digital infrastructures. mas plans to collaborate with the bis innovation hub to explore opportunities to improve cross - border payments by connecting payment systems to digital identities across borders. we are also engaging financial regulators and central banks globally on their digital infrastructure initiatives to explore similar synergies and opportunities to move forward as a global digital community. just as governments collaborate on economic integration to advance prosperity, the time has come for them to do so with digital integration to seize new economic opportunities. this requires establishing foundational digital infrastructures and connecting them, to create truly global digital public goods. upon these platforms, enterprises can build innovative digital services and solutions to seamlessly serve global markets, helping to empower and uplift millions of people. 3 / 3 bis central bankers'speeches
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by cad, an individual behind a company rbi holding pte ltd was charged with multiple counts of forgery and cheating offences for his involvement in fraudulent investment schemes. in a separate case, an individual was charged with cheating offences for promoting schemes that promised investors a 97 % return on their investment. 37 i have mentioned the mas - cad joint investigation. the police has also set up a centralised anti - scam centre in cad to tackle all forms of scams so as to enable them to intervene quickly to disrupt scammers β operations. 38 finally, it is worth reiterating that one should not plunge into an investment just because it promises a high return. avoid buying a product on impulse or herd instinct or name - familiarity. construct a well - diversified investment portfolio that is aligned with your investment objective and risk tolerance. today β s seminar will certainly cover these investing principles in more detail. conclusion 39 let me conclude. all stakeholders in the capital marketplace have a role in good corporate governance and effective market discipline. 40 on mas β end, we will continue our financial education efforts as an integral part of our regulatory and supervisory work. these will encompass heightened surveillance, investigation and enforcement actions with other authorities. 41 it leaves me to reiterate that investors should always seek to understand the issuer and product before investing in them. remember to β ask. check. confirm β. there will be a short halfminute video on this at the end of my remarks. do also visit the pop - up exhibition booth outside the theatre to learn more about the resources available to help you. 42 thank you for your attention. 5 / 5 bis central bankers'speeches
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suggest that e - commerce is depressing inflation in the euro area today β at least to extent that we can measure it. 9 the same is true for β global slack β. 10 in fact, as the global economy recovers, the foreign output gap is moving in the same direction as the euro area output gap. 11 in sum, we are not yet at a point where the recovery of inflation can be self - sustained without our accommodative policy. a key motor of the recovery remains the very favourable financing conditions facing firms and households, which are in turn heavily contingent on our policy measures. an ample degree of monetary stimulus remains necessary for underlying inflation pressures to build up and support headline inflation over the medium term. this is reflected in the monetary policy decisions that we took last month. these aim to signal 3 / 5 bis central bankers'speeches our growing confidence in the euro area economy, while also acknowledging that we must be patient and persistent for inflation to return sustainably to our objective. we decided to reduce the pace of our monthly asset purchases from β¬60 billion to β¬30 billion, while extending the horizon of those purchases until end of september 2018, or beyond, if necessary, and in any case until we see a sustained adjustment in the path of inflation. this recalibration of our asset purchases, supported by the sizeable stock of acquired assets and the forthcoming reinvestments, and by our forward guidance on interest rates, helps to maintain the necessary degree of accommodation and thereby to accompany the economic recovery in an appropriate way. in this sense, the recent decisions follow the same logic as those in december last year when we reduced the pace of purchases from β¬80 billion to β¬60 billion. our monetary policy influences long - term yields through both its main components : by compressing the term premium, and by anchoring the expected path of policy rates in the future. by accumulating a portfolio of long - duration assets, the central bank can compress term premia by extracting duration risk from private investors. via this β duration extraction β effect, the central bank frees up risk bearing capacity in markets, spurs a rebalancing of private portfolios toward the remaining securities, and thus lowers term premia and yields across a range of financial assets. in the past, since the crisis had heightened risk perceptions, the eurosystem had to purchase very sizeable amounts per month to foster a certain impact on the term premium and on longterm yields
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have negative implications on the industry image and the bank, including creating opportunities for β rent seeking β and corrupt practices. this has tended to create a screen between the licensing authority and potential investors in this market. c ) licensing procedures : on licensing of new bureaus, you note that the bank has introduced new licensing procedures that involve a two stage process, which include : i ) ii ) in the first stage, applicants are expected to submit application documents including : β’ certified copy of certificate of incorporation and memorandum and articles of association ; β’ a feasibility study of the proposed forex bureau ; β’ particulars and β fit and proper forms β of proposed shareholders and directors ; β’ declaration and confirmation that no shareholder and / or director has a similar position or role in any other forex bureau in kenya ; and β’ provide evidence of non - interest bearing deposit of us $ 30, 000 and core capital of us $ 30, 000. in the second stage, the central bank will issue a letter of intent to prospective bureaus to enable them commit funds by paying the requisite fees and deposits, and prepare premises for inspection before issuance of licence and approval to commence operations. the central bank has cleaned up the process and i do promise you an efficient licensing procedure. d ) compliance : let me take this opportunity to once again urge the industry to ensure that they have sound and effective internal control and management information systems to enable prompt and accurate submission of returns. 6. in conclusion, ladies and gentlemen, let me take this opportunity to invite the industry association chairman / representative to make some remarks. thereafter, we shall have a short discussion on industry concerns. i also urge you to continue to work together with my staff in development of the industry and in seeking solutions to the various challenges that will arise from time to time. thank you.
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public elementary schools under a joint program of the bangko sentral ng pilipinas and the department of education. as the members of your education committee and other baiphil volunteers can attest, the learnings on personal finance are deeply appreciated by teachers and parents, some of whom are moved to tears when they share what they go through to make both ends meet. bis central bankers β speeches it means a lot to them that baiphil and the bangko sentral spend time with them to help improve their lives. think about it. education secretary brother armin luistro has learned of our joint project and is interested in scaling it up to help teachers get out of debt and handle their finances properly. i remember that this bsp - baiphil financial education program has been in place under four consecutive baiphil presidents. it started with susan uranza - alcala who signed a moa with the bangko sentral in 2009 under the banking on your future program which was launched when we celebrated 60 years of central banking in the philippines. baiphil continued the program under emmanuel barcena, agnes brillante - santos and salvador serrano. i have been informed francis has been joining the group that goes to public schools. i am optimistic therefore that francis and his board will continue this program that is already being requested in elementary schools and by some ngos. ladies and gentlemen of baiphil. you are used to training bankers. now, you are reaching out to the underbanked and the unbanked. truly, i can say that baiphil is aligned with the bangko sentral β s goal of promoting good governance and the development of a financial system that is inclusive and able to sustain inclusive growth. mabuhay ang baiphil! mabuhay ang ating mahal na bansang pilipinas! maraming salamat sa inyong lahat. bis central bankers β speeches
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among others, to those who are more vulnerable, even if it means accruing less to the bottom - line. this is the very essence of why banking is imbued with public interest. in this connection, the bangko sentral is preparing to release a consumer protection framework ( cpf ) that is applicable to its covered institutions. built upon the pillars of consumer empowerment, market conduct and collective responsibility, the governance standards put into practice by each bsp - covered institution will play a central role within the cpf. the introduction of the cpf is a milestone for us. consumer protection is now part of the core practices for which the bsp exercises supervision and regulation. in this initiative, i expect that baiphil will again be one of our key partners. what lies ahead : a challenge to baiphil ladies and gentlemen, we can always talk of governance at length. the challenge, however, is not in extolling the virtues of good corporate governance. rather, it is what happens after that is the key challenge. if a β culture of good governance β is meant to define our set of values, beliefs and practices on governance, then we are clearly along the proper path. this cannot be delineating the shades of grey between β acceptable β and β unacceptable β. when it involves the interests of several stakeholders, we need to be categorical about what is β right β and β wrong β. the challenge is measuring how far we moved forward. i am not referring to specific instances of compliance or breaches. what we want to achieve is having that comfort that values, beliefs and practices are fully in place and updated even when no one is looking. certainly, it is this last part that is at the core of the issue. baiphil has always been the advocate of training and capacity building. the industry benefits from your course offerings and capacity building programs. but baiphil β s mandate cannot and should not stop when the courses end or when we choose to mount a new training. is baiphil up to this critical task? abangan! actually, given your track record, i trust that baiphil will find new and creative solutions to meet these challenges. finally, i thank and commend baiphil for its continuing commitment to support the bangko sentral β s financial education program for parents and teachers in our public schools. this is a parallel program that complements the lessons on saving, money management and entrepreneurship being taught in
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mr meyer β s remarks at the conference of state bank supervisors remarks by mr laurence h meyer, member of the board of governors of the us federal reserve, at the conference of state bank supervisors, williamsburg, virginia on 3 june 1999. moving forward into the 21st century it is a pleasure to be here, when β once again β the industry has enjoyed another year of strong performance. that is not to say bank supervision and regulation today is without its challenges, or that there are few risks to u. s. banks. perhaps to the contrary, as a result of market dynamics, both domestically and abroad, we can expect to see some loan losses and earnings pressures. some weaknesses have already surfaced. for the most part, though, we continue to be spared the crisis events that can be so disruptive. this β lull β in domestic financial problems has come at an opportune time, as u. s. and world financial systems adjust to the profound changes of the last decade. the number of insured commercial banks continues to decline β down 4 percent last year and by roughly one - third since the decade began. meanwhile, the scope and pace of financial innovation continues to expand, making many transactions increasingly difficult to manage and more opaque. risk management and measurement techniques throughout the industry have become much more quantified with greater integration of information systems and financial theory. large banks, in particular, have also become far more diversified, now that they can expand nationwide. these changes and the industry β s transition, in general, should be viewed as a continuous and natural response by banks to evolving market needs and new technologies. that the industry, itself, is changing is not a problem ; banks must adapt to survive. the fact that the industry, rather than the legislative or regulatory process, is leading the change is also appropriate ; the private sector should almost always show the way. the result, though, must be managed with care. during the 1990s, banking organizations have increased tremendously in size as a result of the consolidation process, and the complexity of many bank activities has grown as well. these developments have crucial implications for bank supervisors, including those pertaining to systemic risks. in many respects, they have also made bank supervision more difficult. we have not yet achieved β financial modernization β in terms of legislation, but we certainly have a far different banking and financial industry than existed a decade ago. undoubtedly, more change is on the horizon, as distinctions among financial institutions continue to erode. that fact
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on many of these issues seems not the proper course. they have an obligation to enforce sound reporting and disclosure practices as best they can, and our financial markets have been well served in the process. the u. s. banking industry has its obligations, too, to manage its risks and to tell its story to bank supervisors, the sec, and the general public. if for no other reason than the fact that banks today are so large and complex and have the potential to present such widespread risk, these largest institutions, in particular, should be held to high performance and compliance standards. as bank supervisors, we should welcome the market β s help to identify and assess banking risks and to minimize the risk of moral hazard. one approach the federal reserve is exploring would enhance the role of investors in bank or bank holding company subordinated debt. unlike shareholders, who benefit from any gains from excessive risk, subordinated debt holders have only downside risk. as a result, their incentives are similar to those of supervisors and the bank insurance fund : they lose if the bank defaults but they don β t participate in outsized gains. a difficulty, however, in creating a greater role for subordinated debt is determining how to provide investors with adequate and timely information about a bank β s risks and with sufficient leverage to affect management decisions. from the supervisor β s perspective, another difficulty is separating market β noise β in changing yield spreads from meaningful signals they may provide. we will be collecting and analyzing these data in the months ahead and will be evaluating their potential usefulness, both as a tool for supervision and as a market mechanism for providing feedback to banking organizations. whether or not the exercise proves fruitful, it points in the right direction β providing incentives for greater market discipline and for sound management of banking risks. conclusion in closing, i would remind you that we are beginning to see slippage in important indicators of industry strength. though still low by historical standards, the volume of nonperforming assets increased last year for the first time since 1991, with the deterioration concentrated within commercial and industrial loans. delinquencies in agricultural loans have also risen, as a result of extremely weak markets for many farm products. continued weakness in much of this sector could begin to weigh on some community banks. the next stress - point for any particular bank may come from poor credit quality, from structural and competitive pressures within the industry, or from many other sources. fortunately, the u. s. commercial banking system has demonstrated a
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willem f duisenberg : a new future for europe - welcoming the euro banknotes and coins keynote address by dr willem f duisenberg, president of the european central bank, at an awards ceremony and press conference held on the eve of the introduction of the euro banknotes and coins, frankfurt, 31 december 2001. * * * good morning ladies and gentlemen, children welcome to the final countdown to the euro banknotes and coins. of course, new year's eve is traditionally a time to take stock, to look back and to look forward. this year, however, we are very much looking forward - in more than one sense - to the introduction of the euro banknotes and coins. over 300 million europeans will be using them every day from now on, so our countdown is leading towards a new era for europe. that is why i am particularly pleased to have with us today young people from all twelve nations of the euro area - austria belgium, finland, france, germany, greece, ireland, italy, luxembourg, the netherlands, portugal and spain. they, in a very real sense, represent the future of europe itself. and that is also why i wish to extend a special welcome to the winners of our β be a euro superstar β competition and their families. all of us here congratulate you. by entering the competition you showed an enthusiasm to learn more about the new money. you set us an example because you took the initiative to familiarise yourself with our new money. you were chosen from among the more than 300, 000 young people who learned about the seven new euro banknotes and eight new euro coins in order to participate in the competition. we congratulate them and their teachers as well. a single currency is a dream which europeans have had for decades. but why did europeans have that dream? and why did europe pursue that dream when no one had ever attempted before to replace a dozen currencies simultaneously with a single currency? perhaps i can best explain that to you if i begin by revealing something which you may have trouble believing. it is this : i, too, was once a child. and the europe into which i was born was a very different place from the europe of today. it was part of a world suffering from a terrible economic depression. it was a continent whose nations were about to learn the terrible lessons of war for a second time in less than half a century. out of the folly of dictatorship and the errors of protectionism was born
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globalisation was associated with the blossoming of key contributions to economics such as the quantity theory invented by the school of salamanca, but also, quite alarmingly, the rise of protectionist mercantilism. catalonia was indeed an early victim of protectionism, as only in 1778 it was allowed to trade with the americas by decree of charles iii. 4 setting the stage : globalisation and the euro area as globalisation means different things to different people, there are also many popular measures of globalization. for example, the 2005 issue of foreign policy magazine ranked countries in terms of their degree of globalisation based on a variety of criteria, including international travel and tourism, membership in international organizations, contributions to united nations peacekeeping missions, international telephone traffic, internet hosts and so on. the three most globalised countries turned out to be singapore, ireland and switzerland ; β what an extraordinary episode in the economic progress of man that age was which came to an end in august, 1914! [ β¦ ] the inhabitant of london could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his door - step ; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages ; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. [ β¦ ] but, most important of all, he regarded this state of affairs as normal, certain, and permanent, except in the direction of further improvement, and any deviation from it as aberrant, scandalous, and avoidable. β john maynard keynes, the economic consequences of the peace, new york : harcourt, brace and howe, 1920, pp. 10 β 12 ; quoted by m. wynne ( 2005 ), β globalization and monetary policy, β southwest economy, federal reserve bank of dallas, issue 4, pp. 1 - 8. see berlin declaration of 25 march 2007. papademos, l. ( 2007 ), β the effects of globalisation on inflation, liquidity and monetary policy β, speech delivered at the nber conference on β international dimensions of monetary policy, β girona, 11 june 2007. the united states was fourth. 5 when
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more susceptible to international competition. in canada, however, the relatively high inflation of the 1970s and 1980s had distracted canadian firms : rather than focusing on product design and innovation, cost control, and productivity improvement, many of them had been looking for ways to take advantage of inflation. thus, they had tended to postpone the adjustments needed to respond to a changing world economy. meanwhile, u. s. companies that had earlier found themselves in strong foreign competition, especially against japanese firms, had already begun the process of adjusting to globalization during the mid - to late 1980s. so, by the beginning of the 1990s, they were better placed than most to respond to the intensifying forces of technological change and global competition. by the early 1990s, the realities of the new world economic order were becoming clearer to canadian companies too. only at that time, they were also coping with the fallout from the high - inflation years, especially the sharp drop in the prices of speculative investments and the burden of servicing large debts, as well as with declining world commodity prices. working their way out of these difficulties was disruptive and painful for canadian businesses. defaults, restructurings, and downsizings became the order of the day. with all this, unemployment took a long time to recover from the 1990 β 91 recession and, in many instances, wages and salaries were frozen or reduced. but whatever else one may say, through this period, our businesses responded to the challenge and did a remarkable job of restructuring their operations and adjusting to the new economic realities. canada's other major economic problem in the early 1990s was large budget deficits β federal and provincial. because of these deficits, public debt was accumulating at an unsustainable rate, and foreign and domestic investors were becoming very nervous about holding canadian government bonds. as a result, significant risk premiums were built into our interest rates. by 1994, it had become clear that canada could be facing a potentially very serious debt problem. if there was any doubt about that, it disappeared in early 1995, when canada was sideswiped by the mexican peso crisis. the canadian dollar came under strong downward pressure, and interest rates rose sharply across all maturities as investors demanded even larger risk premiums. just as i believe that the restructuring in our private sector in the 1990s was impressive, i also think that canadian governments ( federal and provincial ) responded forcefully and effectively in the mid1990s to the need to cut fiscal deficits and slow
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gordon thiessen : canada's economic future - what have we learned from the 1990s? remarks by mr gordon thiessen, governor of the bank of canada, to the canadian club of toronto, toronto, ontario, 22 january 2001. * * * it was to the canadian club of toronto that i gave my first speech as governor of the bank of canada seven years ago. it is only fitting that i should be here again today, for my final public presentation before i retire. in early 1994, canada's economic situation was not that favourable β our economy was facing some rather serious problems. today, too, we face some challenges. but our overall economic and financial situation is much stronger now than it was seven years ago. what i intend to do today is to look back at canada's economic performance during the last decade of the twentieth century and, with the benefit of hindsight, look at the factors behind that performance. i would also like to talk about the changes that have taken place in our economy over this period, and what these changes mean as we look ahead. the problems of the 1990s let me take you back to the early 1990s. that is when the gravity of the problems that would dominate the canadian economic landscape for much of the decade became clear. by 1990, the persistent inflation of the 1970s and 1980s had pushed the consumer price index ( cpi ) to a level nearly four times as high as in 1970. inflation had come down through the first part of the 1980s, but, with an inflationary psychology still very much at work, it picked up again towards the late 1980s. during that whole inflationary period, many canadians sought to protect themselves from the effects of inflation through indexed wage contracts and by investing in the housing market. others saw an opportunity to benefit from high inflation by speculating in real estate or other assets. since many of these transactions had been financed by borrowing, debt had risen to high levels. when the bank of canada's anti - inflationary policy actions in the late 1980s finally convinced canadians that inflation would be brought under control, the inflationary excesses that had built up contributed to a severe recession in 1990 β 91. partly because inflationary pressures in canada were greater than in the united states, and the inflation psychology was more deeply entrenched, the recession here was more severe than in the united states. the effects of technological change, including a decline in communications costs, meant that, through the 1980s, national markets had become much
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great deal of strength and resiliency in dealing with challenges of the past, and it still seems as strong and as well positioned overall now to handle stress as it has been in many years. i have no doubt that the u. s. banking system will continue to grow and that it will remain central to the nation β s financial system. to do that, though, requires that we all to adapt to changing times and that banks manage risk carefully in both good times and bad.
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β free banking β laws of the nineteenth century. the dual banking system not only fosters and preserves innovation but also constitutes our main protection against overly zealous and rigid federal regulation and supervision. a bank must have a choice of more than one federal regulator, must be permitted to change charters, to protect itself against arbitrary and capricious regulatory behavior. naturally, some observers are concerned that two or more federal agencies will engage in a β competition in laxity β, and we must guard against that ; but the greater danger, i believe, is that a single federal regulator would become rigid and insensitive to the needs of the marketplace. thus, so long as we have a federal guarantee of deposits, federal reserve guarantee of intraday payments over fedwire, and other elements of the safety net - - and, therefore, so long as there is a need for federal regulation of banks - - such regulation should entail a choice of that regulator at the federal level. as you are well aware, the federal reserve has long been a strong supporter of the dual banking system in the context of efficient supervision. that is why we, along with the fdic, have sought examination partnerships with the state banking regulators. currently, the fed has cooperative agreements with about three dozen states, calling for either joint examinations or alternate year exams. overall, our experience with these programs has been quite positive, in part because of the quality of state supervision in the states with the cooperative agreements. indeed, the evidence suggests that safety and soundness of state banks compare quite favorably with national banks, possibly reflecting the benefits of having both state and federal supervision. for example, during the banking crisis of the late 1980s, when the failure rate by any measure breached the prudent threshold i mentioned earlier, the national bank failure rate was considerably greater than for state banks. while bank failure is determined by more than just the supervision process, these data nevertheless speak well of the quality of the state supervisory process and the ability of the state and federal regulators to function together efficiently. the dual banking system, however, despite its advantages and achievements, is under attack. this attack is neither particularly intentional nor particularly coordinated, but rather consists of the unintended consequences of statutory and regulatory changes aimed at achieving broader policy objectives. i am referring primarily to the consequences of the 1994 interstate branching legislation, coupled with the occ β s recent liberalization of regulatory procedures for operating subsidiaries of national banks. these events may have served to tip the balance
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me be credible as β crypto - currencies β, but could be used as settlement means β think of stablecoins for instance ; ( iii ) lastly, the emergence of decentralised market infrastructures : new technologies tend to reduce the use of proven centralised settlement systems. these revolutions offer the potential for increased market efficiency while reducing costs and time. but they entail several risks, and they could lead to significant concentration effects among a few dominant private networks : these would in practice β re - intermediate β, but without the trust and regulation associated with the architecture of the monetary and financial edifice that we β public and private players β have built together over a period of decades. in the face of this major challenge, we need to both innovate and regulate. for some, the conjunction between the two should be an β or β, considering them mutually exclusive : innovation in the form of a central bank digital currency would be an alternative, indeed the only alternative, to the unchecked development of decentralised finance. for me, the conjunction is β and β : the two pillars clearly work together to foster sustainable innovation ; this is why the eu should at once ( i ) adopt the mica regulation on crypto assets in the first half of this year, ( ii ) prepare for a central bank digital currency, a e - euro, by 2026. but the worst conjunction would be β neither, nor β : revolutions always happen quickly, and we are at risk of neither innovating nor regulating in time. in that case we would have failed in our historical mission and jeopardised centuries of work building up confidence in our money. page 8 sur 9 2 / let me now turn to the second major transformation underway, the ecological transition, which is an absolute necessity at the global level even if europe here lies ahead. climate change is accelerating. beyond the cop26 held in glasgow a few months ago, globally coordinated governmental policies are therefore necessary to anchor concrete and credible commitments, such as the one taken by the european union in its fit for 55 programme. and yes, policies to fight climate change should imperatively include an appropriate carbon price. rest assured that central banks will do everything they can do. the ecb monetary policy strategy review, concluded last summer under president lagarde β s leadership, sets out an ambitious action plan leading up to 2024. but central banks and financial intermediaries cannot solve everything, and substitute for adequate β and sometimes
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warwick economics summit β 4 february 2022 twenty years later β¦ and twenty years ahead speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ) page 1 sur 9 ladies and gentlemen, i am delighted to be with you today, though i would have preferred to actually come to warwick and your world - renowned university. and i am deeply honoured to offer today, with this speech, the very first of the persaud lectures, launched this year by professor avinash persaud β none other than the son of professor the honourable bishdonat persaud. i borrowed my title from the famous french writer alexandre dumas : twenty years later was his sequel to the three musketeers. january 1st marked 20 years since the introduction of the euro as cash. and if central banking isn β t quite as much fun as the tales of d β artagnan and his friends, our young currency has had a few adventures and it is worth drawing some lessons from them. i will then turn to the next twenty years and the two main transformations facing europe. before i plunge into this longer view, allow me to say a few words about the european central bank β s latest monetary policy decision as set out by ecb president christine lagarde. yesterday, in the face of increasing uncertainty on inflation, our key word was Β« more than ever Β» optionality. we take it seriously : we retain our full optionality on the decisions we will make from march and in the following quarters, informed then by the latest data, forecasts and geopolitical developments. and as we clearly stick to our sequencing β starting with first tapering and second lift off - we will also retain our full optionality about the pace of this sequence, and timing of moving from one stage to the other. hence, while the direction of the journey is clear, one shouldn β t rush to conclusions about its calendar : it will remain gradual, state dependent, and open in each of its steps. * i. the outstanding success of the euro so β back to the tale of the euro. you students are perhaps too young to remember the politics of the 1990s, but it β s worth reminding ourselves of how far we have come. when we recall that the european union had only 12 members when the maastricht treaty was signed in 1992, we realize how much page 2 sur 9
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families, and provides the means for small businesses to start and to thrive, which is so important to the health of communities. this is not an abstract notion for me. as a community banker, i have seen how access to credit and support from a financial institution with deep roots in a community can make a direct and immediate difference in people β s lives. i continued to feel that way when i did the job you do, as a state banking commissioner, helping ensure that families and communities have access to financial services that are so important to their success. i enjoyed being a community banker, and i hope you know i β ve enjoyed working closely with all of you as a banking commissioner, and i now look forward to building a stronger partnership between all of you and the federal reserve board. thank you for the opportunity to speak to you today. i hope to see you soon in your states, and i wish you a productive and enjoyable visit to washington. 1 my views are my own and do not represent the view of the board of governors or its other members. 2 federal reserve system, conference of state bank supervisors, and the federal deposit insurance corp., 2018 community banking in the 21st century ( pdf ) ( research and policy conference, october 3 - 4, 2018 ). 3 pub. l. no. 115 β 174, 132 stat. 1296 ( 2018 ). 4 u. s. small business administration, office of advocacy, frequently asked questions about small business ( pdf ) ( august 2018 ). 4 / 4 bis central bankers'speeches
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work during the past three years can accurately claim to have been made worse off by international competition. job loss in particular causes significant hardships for affected workers. for example, an analysis by henry farber ( 2003 ), using bls data on workers displaced for any reason, suggests that only about two - thirds of displaced workers found re - employment within three years, with some settling for part - time work. even when successful in finding full - time work, displaced workers experience on average a decline in earnings on the new job of about 8 percent. focusing on workers displaced by trade in particular, kletzer ( 2001 ) found that job losers in industries facing high levels of import competition were slightly less likely to be re - employed and experienced greater earnings losses, at about 13 percent on average, than workers displaced from industries facing less import competition. what can be done to help workers who lose their jobs because of competition from imports? attempts to restrict trade through the imposition of tariffs, quotas, or other trade barriers are not a good solution. such actions may temporarily slow job loss in affected industries. but they do so by imposing on the overall economy costs that typically are many times greater than the benefits. in the short run, the costs of trade barriers include higher prices for consumers and higher costs ( and thus reduced competitiveness ) for u. s. firms. trade barriers typically provoke retaliation from trading partners as well, with potentially large costs for exporters. and history shows that in the longer run, economic isolationism and retreat from international competition lead to bloated, inefficient industries, lower productivity, and lower living standards. the better policy approach is two - pronged. first, at the macro level, policy should be directed at helping to ensure that jobs become available for those who have been displaced. in particular, over time, appropriate monetary policies can help the economy achieve maximum employment with low inflation, irrespective of the trade situation. the nation β s trade policies, rather than attempting to restrict trade, should be used to push for even more trade. by opening markets abroad, trade policy provides greater opportunities for u. s. firms and workers. the second piece of a constructive policy toward trade is to help displaced workers train for and find new work. some steps in this direction have been taken. currently, the government β s principal program for helping workers displaced by trade is the trade adjustment assistance program, or taa. the congress has recently extended the
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income for them. enabling them to lift themselves and their children out of poverty. i am convinced that over the next decade, we can together take substantial steps towards making these sustainable development goals a reality. financial authorities contribute to financial inclusion every single organization, whether in the public sector, or the private sector, should look at how it can contribute to these sdgs with their own activities. this is also what central banks do. it is the mission of de nederlandsche bank to safeguard a stable financial system, solid financial institutions and smoothly functioning payments. as a result of our mission, we contribute to sdgs such as decent work, economic growth and good infrastructure. earlier this year we reviewed our strategy and priorities. we have now set out the way forward for the next five years. i'm sure you do the same at your organisation too. our new strategy is called dnb2025. in it, we set out how we will fully integrate corporate social responsibility, or csr, in all areas of our work. and today β s subject, financial inclusion, is of course a big part of csr. our new strategy means we will systematically consider the csr impact of all our activities from now on. a holistic approach is needed to effectively stimulate financial inclusion we all know how financial inclusion can empower people so they can play a fuller role in society. when we talk about financial inclusion, we apply a broad and internationally - accepted definition. financial inclusion is not just about having good access to the financial system, it is also about having knowledge of financial products, and improving financial resilience of people and businesses. we need all three of these dimensions to make the most of financial products and services. only then can we β can you β make a fairer and more inclusive world. which also strengthens financial stability on the macroeconomic level. this holistic approach is not one - size - fits - all. it varies depending on the country, culture, regions and target groups. but again, it can only be effective when all three dimensions are covered. to stress this, i β d like to quote the wise words of two pioneers of financial inclusion : to begin with, sri mulyani indrawati, indonesia β s minister of finance and former head of the world bank group : β financial inclusion matters not only because it promotes growth. but also because it helps ensure prosperity is widely - shared. access to financial services plays a critical role in lifting people out
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β no one left behind : a holistic approach to financial inclusion β speech nicole stolk at the seminar financial inclusion integrates the world 4 october 2019 twenty - two central banks and other financial supervisors discussed the need for a holistic approach to financial inclusion at the β financial inclusion integrates the world β conference in amsterdam. on the second day of the programme, dnb governing board member nicole stolk delivered a speech in which she argued that wide access, good understanding and financial resilience are the basis for turning knowledge into smart behaviour and responsible use of financial products and services. in particular, consumers must be able to cope in an increasingly digital world. while digitisation is an excellent way to connect people, there is always the danger that people with low digital literacy cannot keep up. sdgs : guiding principles for financial inclusion today is already the last day of our seminar on financial inclusion. so now i want to share some observations with you about the progress we have made on this subject. i would like to discuss this from an international perspective. but also with a focus on the netherlands. imagine it β s the year 2030 : the seventeen un sustainable development goals have been achieved. all seventeen of them. imagine how our world would be then. no poverty. zero hunger. all people equal. no more climate crisis. and the 1. 7 billion adults, who in 2017 had no access to financial services. they now all enjoy the benefits of a bank account. they can get microcredit for their businesses. they have peace of mind with insurance. it is a better world for everyone. and a much better world for central banks and other financial authorities. because supervision and macroeconomic stability should not be our only focus. we also need to turn our attention to the other major challenges of the day : the digital revolution, safeguarding data privacy, the changing climate. everything we can do to help make our world a more sustainable place. for central bankers β but for everyone else here too β the sdgs are an excellent blueprint for achieving this sustainable world. financial inclusion is featured as a target of eight of the seventeen sustainable development goals. for example, quality education, robust infrastructure and decent work for everyone. financial inclusion has a big role to play in achieving the sdgs. it helps the poorest of the poor. for example, digital financial inclusion has given many women in remote rural indian communities access to a bank account and microcredit. it unlocks new sources of
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presented in september 2020 β even though there is still room for progress on these texts in order to reconcile pragmatism and flexibility with the necessary requirements in terms of risk control and the prevention of regulatory arbitrage. moreover, other regulatory changes will have to be introduced which are also very important. i β m referring in particular to the supervision of the development of decentralised finance, where the usual regulatory frameworks are constrained by the fact that issuers and service providers are not easily identifiable in an environment where protocols are automatically executed without intermediaries, and there is no fixed jurisdiction for the services offered. lastly, in order to be effective, regulation must be multidimensional and coordinated at national and international level. at the banque de france, we are very attached to coordination with other national and european regulators, which seems all the more essential given the increasingly cross - cutting nature of the issues. this is also a priority for us, to limit regulatory arbitrage or indeed prevent it altogether. for this reason, we are closely involved in the work of multilateral fora ( g7, g20, fsb, cpmi ), especially on crypto - assets and the improvement of cross - border payments. another action we see as a short - term priority is to facilitate and accompany initiatives by regulated players, which can help to foster a diverse and competitive market for efficient solutions, tailored to user needs. our institutions β such as the banque de france β s lab, its infrastructure, innovation and payments directorate ( diip ), the acpr β s fintech - innovation unit, with its acpr - amf fintech forum β are fully mobilised to facilitate these initiatives and help them grow. among these initiatives, three in particular are worth highlighting. first, those in the field of instant payments, which open a new chapter in the payments industry. second, the continuing development of open banking, thanks to the european financial sector β s work on apis. and last but not least, the european payments initiative ( epi ). some major decisions on the effective launch of epi are due to be taken in the next few weeks. but i would just like to remind you here that the banque de france fully supports this initiative, as do the other eurosystem national central banks and the european commission, and currently seven eu member states, including france, that publicly announced their support for the initiative in a statement published on 9 november. 2.
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the preparation of consolidated financial statements β while the sharing of information between jurisdictions will be essential to understanding their overall organisation as well as interdependencies between entities. the second deficiency concerns the ecosystem of what is often erroneously referred to as " decentralised " finance ( defi ) β what we prefer to call " disintermediated β finance. the acpr is pioneering thinking in this area with the publication in april of a document that outlines possible regulatory frameworks for defi. the very successful public consultation process ended at the beginning of june. it was widely reported upon and generated almost 40 responses of high technical quality from both french and international players, including " established " players and new entrants. we will be publishing a summary of these responses in the autumn. overall, these contributions confirm our understanding of this topic and the regulatory avenues taking shape on each of the three defi'floors': ( 1 ) ensuring the resilience of the blockchain infrastructure β albeit a public one β through security standards ( 2 ) certifying smart contracts, even if this raises a number of operational issues, and ( 3 ) regulating defi entry points to protect users. so yes to the innovation brought by digital assets and defi - which is, let me repeat, very welcome in paris - but not at the cost of less regulation, which would - as we have seen elsewhere - work against the interests of the players themselves. ii. digitalisation of currency and payments : illustration of innovation partnership approach this brings me to the more forward - looking recipe, which provides a second insight into the dynamic interdependence between regulation and innovation, and between the public and private sector. private innovation is both crucial and irreplaceable but central banks also have creative dna, and many innovations page 4 of 6 are deployed within a partnership framework. money is a perfect illustration. for centuries, the coexistence of central bank and commercial bank money has structured the retail payment landscape. we can all physically pay with central bank money, using cash, or with commercial bank money, using non - cash payment instruments such as cards. however, the rapid digitalisation of payments is leading to a rethink : as we become fully digital societies, should central bank currency be the only thing to remain in paper format? i imagine that two centuries ago, certain people had major doubts about issuing banknotes - a major innovation at the time - alongside gold and silver coins. essentially
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the foreseeable future. nor am i convinced that central banks should begin issuing digital central bank money in the future. after all, such a step could have very far - reaching implications for the financial sector and thus also for monetary policy. nonetheless, current developments in this field are fascinating and are being discussed in depth in central bank circles and by the general public. in my welcome speech, i would therefore like to address the question of whether digital money could potentially supplant money as we know it today. 1 / 5 bis central bankers'speeches 2. virtual currencies for many people, the concept of money is still strongly characterised by their visual perception of banknotes and coins. it is thus no coincidence that the best - known virtual currency is called bitcoin. the word coin evokes an association with physical money. in recent times, we have experienced a real bitcoin hype, yet ultimately, the terms money and currency can only be applied to bitcoin and the other approximately 1, 500 " cryptocurrencies β to a very limited extent. " money is as money does β or, more specifically, β money is a matter of functions ". these are common descriptions of how money can be categorised. there is broad consensus, however, is that money plays the role of a means of payment, a store of value and a unit of account. cryptocurrencies only fulfil these functions to a limited extent β with that in mind, the term crypto token is a better choice of word, which i will use from here on. to date, bitcoin and co have rarely been used as a means of payment. the network effect, which comes to bear in the case of cash, for instance, does not exist for crypto tokens. this is due, not least, to the fact that using them to make a payment is a relatively arduous task as it takes several minutes to make a transaction. this may still be acceptable when buying a car, say, but not when paying for goods at the point of sale. an important prerequisite for a monetary system to work is that its users have trust in its intrinsic value. in the case of banknotes, a central bank is the issuer of the notes, and this creates confidence. in the case of bitcoin, an attempt has been made to artificially build trust in the currency by setting an upper limit on total
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jens weidmann : opening remarks β " fourth cash symposium of the deutsche bundesbank " opening remarks by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the fourth cash symposium of the deutsche bundesbank, frankfurt am main, 14 february 2018. * * * 1. introduction ladies and gentlemen good morning and welcome to the deutsche bundesbank β s fourth cash symposium. i am delighted that this year, too, our cash symposium has met with such keen interest. admittedly, we have once again put together a very attractive programme for you, and for that i would like to thank you, mr thiele, and, of course, all of my colleagues from directorate general cash management who have helped to organise this event, not to mention all of our guest speakers. my former colleague from the bank of england, mervyn king, mockingly wrote in his book the end of alchemy that, β god may have created the universe, but we mortals created paper money. " and like everything we mortals invent, one could add that paper money also has its advantages and disadvantages. nowadays, paper money, and cash in general, has to compete with other means of payment. technological advances have made cashless payments more convenient and efficient. nevertheless, cash still has an important role to play in today β s payments landscape β of that i am absolutely certain. the euro as a physical currency is an attractive and widely used means of payment, and that will continue to be the case in future. in germany, approximately three out of every four payments are still settled in cash at the point of sale. yet despite its affinity to cash, germany is by no means the spearhead in terms of cash usage in the euro area. in austria and the southern european countries, the share of cash payments is higher still. it is for this reason that the governing council of the ecb has also expressed a clear commitment to cash. but i am also convinced that the use of cash will change over time β in germany, too. other forms of payment, such as cashless payments, will tend to gain in importance. however, these changes are likely to be gradual and they won β t happen overnight. incidentally, i do not share the fear expressed by some that digital money, which is currently a subject of growing debate, is set to become a serious competitor for cash or bank deposits in
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status of the underlying assets. we are incorporating these items into our supervisory monitoring screens, and we assume market analysts are also making use of these public data for their own analysis of banking risk. clearly, more can and should be done by banking organizations to demystify and clarify the risks they are taking. other areas being discussed include disclosures on the risk profile of bank credit portfolios by internal risk ratings. the first three elements of risk management that i have discussed are fundamental to bank safety and soundness, but without the fourth element - - internal controls - - none of the other elements can be effective. for that reason, an evaluation of internal controls has always been a fundamental part of bank supervision. it is a key to improving the odds that problems are found early and addressed before the bank insurance fund or taxpayer dollars are at risk. in response to a rising trend of unexpected weaknesses in control found at banks, supervisors are seeking to ensure that risk - focused supervision is striking the right balance between reviewing riskmanagement processes and performing procedures to validate whether the procedures are working as advertised. supervisors need to place more emphasis on determining whether the strength and effectiveness of those controls are tested by an independent third party other than supervisors and if they are, how frequently. in particular, as part of our risk - focused supervision, we have endeavored to use the work of internal auditors when it is deemed to be reliable. however, it is becoming clearer that we must bring a new level of skepticism to bear in this area for some institutions. in that regard, supervisors must return to the fundamentals of risk - focused supervision and require substantive verification procedures to confirm the effectiveness and reliability of internal audit, before placing substantial reliance on its findings. in the past, supervisors have taken some comfort in the fact that external accountants have also been looking at an institution's internal controls. as you know, for many banks the federal deposit insurance corporation improvement act ( fdicia ), section 112, requires that the external auditor attest to management's assertions regarding the adequacy of internal controls over financial reporting. recent events among certain banks that have had material financial consequences have caused us to question the usefulness of these attestations. in certain instances, we have been asking external accountants for their fdicia 112 work papers for banking organizations that we have found to have had significant control weaknesses. we are looking into that work to formulate some views on whether this area needs improvements and what actions
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mark w olson : risk management in a changing economic environment remarks by mr mark w olson, member of the board of governors of the us federal reserve system, before the bank administration institute, phoenix, arizona, 30 april 2002. * * * it is a pleasure to appear at this year's bank administration institute's audit, compliance, and electronic security conference. the bai has historically been the repository for thoughtful leadership on a wide range of management, operations, and system - related issues. this is an appropriate forum for sharing the fed's perspective on certain risk - management issues as they are being addressed by the financial services industries. to put my comments in perspective, let me first identify four key environmental factors that have changed in the financial services industry and have required the industry to improve both its monitoring and its management of risk exposures. the four major environmental factors affecting financial services are the following : β’ industry consolidation, β’ increased competition, β’ technological changes, and β’ management focus on shareholder value. these factors, of course, are not the only ones affecting your industry, but their combined influence has clearly altered your management challenges. all of you are familiar with these factors so we have no need for elaborate description, but let me touch on a few ways in which these factors have affected risk management - - starting with consolidation. twenty years ago, america's largest bank was citicorp, with assets of around $ 120 billion. though citicorp had a major international banking presence, its domestic banking operation was contained largely in the state of new york. its major national credit card operation was its most significant departure from traditional banking lines. in contrast, today's citigroup has $ 1 trillion in assets and is a highly diversified financial services provider operating not only throughout the united states but also internationally. citigroup's expanded scope is by no means unique. rather, it is typical of the bank and nonbank consolidation that has taken place. today, thirteen financial holding companies hold more than $ 100 billion in assets. though we still have more than 6, 000 separate banking organizations in this country, our largest organizations now have nationwide presence and offer a broad array of financial products. let's move on to competition. despite the consolidation that has taken place, the financial services industry remains highly competitive. not only do banks face intra - industry competition, but they also face competition from nonbank financial service providers. as of all of you know, virtually every financial product offered by
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christian noyer : re - examining central bank orthodoxy for un - orthodox times speech by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at the conference of the global interdependence center / bank of france, paris, 26 march 2012. * * * the unconventional policies implemented during the crisis have transformed the face of central banking. but will these changes prove permanent and will β the unconventional become the new normal? β there is not yet definitive answer to this question. we may not, as easily as we would like, be able to revert exactly to the status quo ante. however, i strongly believe we must make sure that the gains from the pre - crisis period, in terms of monetary and price stability, are not compromised in the process. prior to the crisis, a description of central banks would have centred on four characteristics : they were focused with price stability being their primary or key objective, and no responsibility was sought or given for financial stability ; they were of limited size with very small balance sheets and interest rates as their only policy instrument ; they were independent, a condition recognised as necessary to anchor inflation expectations, and embodied in very strong institutional frameworks ; and they were successful : the β great moderation β, a period of exceptional low volatility in output and inflation, was widely seen as a product of efficient and wise monetary policies. there was a happy feeling that, at last, a perennial monetary regime had been found, well - tailored to the characteristics of a modern market economy. financial markets were efficient and the zero lower bound and liquidity trap appeared to be no more than historical curiosities. with hindsight, of course, we can see now that this β ideal β economy may never have existed. the great moderation was as much a product of β good luck β ( brought by disinflationary effects of globalisation ) than good policy. monetary stability is a necessary but not a sufficient condition of financial stability, because capital markets are not always and necessarily efficient. and downward financial spirals may quickly bring our economies to the point where interest rates can no longer be used as effective tools. therefore, as the crisis unfolded, central banks responded by taking unprecedented measures and, in the process, underwent three major changes a diversification of their interventions. in order to both : unclog financial markets ( both private and public ). this involved exceptional liquidity provision to
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the euro area with persistently high unemployment, which curbs wage rises and weakens demand and price growth. moreover, structural factors, such as the ageing population, are also likely to exert downward pressure on the β natural β β or β wicksellian β β interest rate. this rate can be defined as the interest rate consistent with the full employment of the factors of production. in this case, in order to achieve the right balance between savings and investment, markets rates must come down too. in normal times, central banks cut their key rates, and this passes through to the yield curve. however, in order to deal with the financial crisis, the ecb like other central banks have brought their key interest rates to very low levels, around zero. this means that our traditional monetary policy tools had to be supplemented by other instruments, known as non - standard instruments, in order to reach our prices stability objective. i will return to this point later. b ) what is more with regard to the challenges we currently face, these deflationary pressures create the risk of an unanchoring of expectations, which would make it harder for us to achieve our 2 % target again. indeed, if inflation stayed too low for too long, economic agents may revise downwards their inflation expectations, which would create second round effects. lower inflation expectations influence economic agents β price - and wage - setting behaviour, which in turn keeps inflation low. it can even raise the risk of deflation, defined as a cumulative process of falling prices, including those of assets, or even wages and production, as the world economy experienced in the 1930s or japan partially underwent in the 1990s. such deflationary dynamics are not at play today. but this risk is the bis central bankers β speeches reason why our inflation target is symmetrical. we consider too low inflation to be just as costly as too high inflation. and, therefore, it is more risky for central banks to act too late than too early. since the start of the year, we have observed that market - based measures of inflation expectations have fallen. nevertheless, the latest forecasts provided by the ecb continue to point to a gradual rise in inflation over the coming years : 0. 1 % in 2016, 1. 3 % in 2017 and 1. 6 % in 2018. c ) some argue that these challenges mean that the eurosystem can no longer achieve its price stability mandate. i don β t think so. current challenges do not call
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. and yang, j. ( 2013 ), β optimal bank capital β, economic journal, vol. 123 ( 567 ), pp. 1 β 37. see bis / fsb ( 2010 ) assessing the macroeconomic impact of the transition to stronger capital and liquidity requirements ; bis ( 2013 ), macroeconomic impact assessment of otc derivatives regulatory reforms. european commission, economic review of the financial regulation agenda, may 2014. see dg ecfin ( 2007 ) impact assessment : possible macroeconomic and financial effects of solvency ii and eba ( 2014 ) second report on impact assessment for liquidity measures under article 509 ( 1 ) of the crr. β the global economy in 2030 : trends and strategies for europe β, european strategy and policy analysis system and centre for policy studies, april 2014. gordon, r. ( 2012 ), β is us economic growth over? faltering innovation confronts the six headwinds β, nber working paper 18315. bis central bankers β speeches another related consequence of secular stagnation may be that the natural real interest rate ( the real interest rate consistent with full employment and stable inflation ) has fallen. population ageing has shifted the balance between older households who are likely to save and younger households who are likely to borrow. as a result, real interest rates have declined substantially in the last two decades. 23 nominal interest rates have also fallen in line with the real, leaving the β normal β central bank policy rate much closer to the zero bound, thus increasing the likelihood of hitting it during deep recessions. without getting into a discussion about the merits and risks of unconventional monetary policy, it is probably fair to say that the zero lower bound on nominal interest rates complicates the task of monetary policy in trying to stabilise large shocks. financial crises are some of the largest peace - time negative shocks to hit market economies and our ability to use monetary policy in order to deal with them β ex - post β would be impaired in a secular stagnation world. this makes the role of regulation in avoiding financial crises more important than ever. when it comes to dealing with financial crises, prevention is always better than cure but especially so when β mopping - up after the crash β is complicated by the inability to cut short - term interest rates sufficiently far below zero. 24 what has been achieved and what is in the pipeline? we have seen that, far from damaging growth, a strong regulatory framework is essential in ensuring
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agricultural policy is welcomed, as are the efforts to limit upward pressure on agricultural prices through biofuels policies. a successful conclusion of the doha round of world trade negotiations should also help to improve the functioning of global trade in general and of agricultural markets in europe and worldwide in particular. tax policies are not an appropriate means to counter commodity price increases, be it oil or nonoil commodities, as this would send wrong signals to producers and consumers alike and would distort markets. we are now at your disposal for questions.
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of an efficient and trusted carbon market. but there is a significant gap between data needs and data availability. the esg data acquisition process is often manual, tedious and costly. data verification is at a nascent stage. to build a credible esg data ecosystem, mas has launched a collaborative effort with the financial industry called project greenprint. project greenprint seeks to streamline the collection, access, and use of climate and sustainability data through four digital utilities : 3 / 4 bis - central bankers'speeches an esg registry of certifications an esg disclosure platform to facilitate reporting a digital marketplace to connect data users with esg solution providers a data orchestrator to aggregate esg data from multiple data sources globally, gfanz has formed the net zero data public utility to address issues such as data gaps, data accessibility, and data inconsistencies. it will complement existing climate data initiatives, promote the effective management of climate - related financial risks, facilitate robust sustainability reporting, and accelerate the formulation of credible transition plans. i have provided a quick overview of singapore's efforts in three key areas of transition financing - blended finance, carbon markets, and good - quality data. this afternoon, i will share some of the interesting and impactful work being done by the ngfs in the areas of blended finance, data, and capacity building. in all our efforts, i cannot emphasise enough the importance of collaboration and collective action. we have a common mission : to reduce global greenhouse gas emissions to net zero by 2050. but time is running out. we must act now, act fast, and act together. there has never been a greater opportunity for us to find common purpose, build solidarity, and ensure the sustainability of our planet and better lives for communities everywhere. thank you. 4 / 4 bis - central bankers'speeches
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ravi menon : mas marks 50 years serving singapore welcome remarks by mr ravi menon, managing director of the monetary authority of singapore, at mas 50th anniversary partners appreciation evening, 7 october 2021. * * * prime minister lee hsien loong, chairman and board members of mas, esm goh chok tong, friends and family of mas welcome to the mas β 50th anniversary partners appreciation evening β the first in a series of events to commemorate our golden jubilee. this evening is a time for thanksgiving. there are about 50 of us here at the mas building and about 800 friends and family joining us virtually. this includes our friends from the financial industry, consumer and governance groups, tripartite partners, academic institutions, and international organisations. and of course, our family β past and present staff and leaders of mas and our colleagues in the broader public service. this is a special occasion for me personally. i joined mas in 1987 and have spent most of my professional career here. so much of what i have learnt and how i have evolved, i owe it to the many bosses and colleagues i worked with in mas over the years. mas was already a highly competent organisation in 1987, and i have seen it grow over the decades to become what it is today β a central bank and financial regulator highly regarded among its international peers and the global financial industry. mas has played a critical role in singapore β s economic development β keeping inflation low, managing singapore β s official foreign reserves, preserving financial stability, and promoting singapore β s development as an international financial centre. what mas has achieved reflects the strategic vision of its past leaders β its chairmen and managing directors β and deep professionalism of generations of mas officers. they worked hard, to keep our exchange rate strong, our reserves healthy, and our financial sector safe yet dynamic. mas was fortunate in the outstanding leaders it has had. this evening, we are honoured to have one of them, pm lee address us. pm has a long history with mas. this is the third time he is speaking at a mas anniversary ; he spoke to us when we were 30 years old, then 40 years, and now when we β re 50. and of course, pm was chairman of mas from 1998 to 2004, when he spearheaded a series of bold reforms to liberalise the financial sector. but mas could not have done it alone β even with its exceptional staff and outstanding leaders. 1 / 3 bis central bankers'speeches mas has succeeded because singapore has succeeded. if
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of emu. despite a large number of unprecedented adverse macroeconomic and geopolitical shocks during this period, inflation expectations have been firmly anchored, which testifies to the success of the ecb β s stabilityorientated monetary policy, and vindicates the public β s initial confidence in the stability of the euro. the high credibility and success of the single monetary policy in the euro area rests on two cornerstones : the institutional framework of the ecb enshrined in the treaty establishing the european community, and the ecb β s stability - orientated monetary policy strategy. the constituent features of the ecb β s institutional architecture are a clear mandate to safeguard price stability in the euro area, and full independence in the pursuit of this mandate. these institutional provisions reflect the key insights gained by academic research and policy experience over the past decades that price stability is a necessary condition for sustainable growth and job creation and that monetary policy decisions are best placed in the hands of an independent central bank. central bank independence is key for monetary policy to be credibly and effectively geared to price stability. the credibility of the single monetary policy, and the continued success of the euro, are therefore fully based upon the ecb β s independence, guaranteed by the treaty. the ecb β s monetary policy strategy, which comprises a quantitative definition of price stability and a two - pillar framework involving economic and monetary analysis for the assessment of the risks to price stability, provides a comprehensive and consistent framework for conducting our monetary policy, and for communicating with the public. our strategy ensures that we take all information relevant to price stability in the euro area duly into account and pursue our mandate in a steady and forward - looking manner, thereby helping us to take sound and timely policy decisions. in being fully transparent about the ultimate goal of our monetary policy and how we go about achieving it, our monetary policy strategy also makes an important contribution to the credibility and predictability of our policy. this ultimately facilitates the fulfilment of our mandate, as it enhances our ability to guide price and wage setters and financial markets in a way that is consistent with our price stability objective. the beneficial effects of the euro are reflected in the much - improved performance of the euro area economies over the last nine years. i have already mentioned the stabilisation of inflation expectations in the euro area at unprecedentedly low levels, in line with our definition of price stability. a particularly noteworthy development is the marked improvement in the performance of the
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. in addition, significant modifications to products, services, and activities or their pricing warrant review as a new product. even small changes in the terms of products or the scope of services or activities can greatly alter their risk profiles and justify review as a new product. when in doubt about whether a product, service, or activity warrants review as a new product, financial firms should err on the side of conservatism and route the proposal through the new - product approval process. cutting short a new - product review because of a rush to deliver a new product to market, or because of performance pressures, increases the potential for serious legal and reputational risk. the determination of whether a new or modified activity requires additional compliance processes, procedures, or controls is clearly the province of the compliance staff. it involves the interaction of business - line compliance staff with personnel responsible for enterprise - wide risk management. once these processes, procedures, or controls are designed, compliance personnel should help ensure that those controls are implemented effectively and are a comprehensive response to the legal and reputational risks posed. the role of internal audit just as the compliance area performs an independent review of the firm β s activities and business lines, the compliance program also needs to be reviewed independently. internal audit has the responsibility to review the enterprise - wide compliance program to determine if it is accomplishing the firm β s stated objectives, and if it is adequately and appropriately staffed, in light of growth, changes in the firm β s business mix, new customers, strategic initiatives, reorganizations, and process changes. internal audit should evaluate the firm β s adherence to its own compliance and control processes and assess the adequacy of those processes in light of the complexity and legal and reputational risk profile of the organization. it should be obvious that internal audit, like the compliance program, needs to be staffed with personnel who have the necessary skills and experience to report on compliance with financial institution policies and procedures. internal audit should test transactions to validate that business lines are complying with the firm β s standards and report the results of that testing to the board or audit committee, as appropriate. structured transactions there are β lessons learned β from the legal and reputational risks that some financial firms faced in structuring transactions for enron and worldcom, among others. those legal and reputational risks require a focus on appropriateness assessments, the enforceability of netting and collateral agreements, undocumented customer assurances, insurance considerations, and potential irs
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career prospects, or similar bad outcomes. in considering what the proper public role should be, it β s useful to think about an extreme case. in europe, higher education has traditionally been essentially 100 percent publicly funded. this result is big subsidies for people β mostly wealthy people β who would have gladly paid for college if they had to. making college free also means that there will likely be excess demand for the fixed number of seats at high quality institutions. either this demand has to be rationed, or quality will have to fall. neither choice is particularly attractive. in fact, excess demand and growing costs have put severe pressure on the european model for financing higher education, and european countries are now gradually moving away from the old system, introducing income - based tuition fees and loans to help restrain rising costs and expand access to higher education to more social groups. in the us, we β ve used a more complicated system that has several major elements. first, we have public universities whose tuitions are less than the full cost of providing the education, with the difference made up by state taxpayers. this can align the public and private benefits in the long run, but won β t by itself mitigate the liquidity constraints that families face. also, as i will discuss in more detail later, it puts public universities at the mercy of the business cycle. second, we offer pell grants to families with limited means to pay for college. we also use the income tax system to reduce the cost of attending up to four years of college for people with incomes below a certain threshold. these subsidies, which operate like vouchers since they can be used at lots of different colleges and universities, serve to align private and social returns and relieve liquidity constraints. because they are related to income, they also potentially have the additional important benefit of reducing inequality. the final major element of our system is loans. these relieve the liquidity constraint, but they don β t necessarily contribute to aligning the private and social returns to higher education. since student loans are currently receiving a huge amount of attention, and since the new york fed has been a leader in providing information about the sector, i β d like to spend the rest of my time discussing what i see as the main issues with student debt and what to do about them. bis central bankers β speeches issues with student debt student loans seem like a good part of the solution, but over the past decade our reliance on loans for funding higher education has increased and we are
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severe revenue declines at the federal and state levels. being highly credit constrained, with university subsidies being part of operating budgets which must be funded with current tax revenues, many states cut planned education funding while allowing public universities to increase tuition levels. this in turn contributed to a significant shift of education cost to students and parents. in research conducted at the new york fed, we found that since 2007 those states with the largest funding cuts also had the highest tuition increases, with an average annual tuition growth rate of 3. 4 percent. as shown in chart 2, this compares to an annual average tuition growth rate of 1. 7 percent during the 2007 β 2010 period for all other states combined. that is, we observe an economically meaningful relationship between public funding and public institution tuition changes since 2007. higher tuition has forced many students to take on larger student loans. student debt and tuition increases were not limited to public institutions. research conducted at the nyfed found that over the same period there was even larger tuition and student loan growth at forprofit institutions. [ chart 3 ] despite larger average support through pell grants, with tuition national center for educational statistics, 2012. β digest of education statistics β. college board, 2013. trends in college pricing, last accessed february 5, 2015. bis central bankers β speeches levels more than double those at public institutions, average net tuition and average loan sizes were considerably higher at for - profit educational institutions. in addition, a much larger proportion of students at for - profits took out subsidized direct loans. [ chart 4 ] returning now to the surge in aggregate student debt, an increase in borrowing for college is not by itself a concern, given the high average lifetime payoff to college. in fact, in part the increase in debt reflects an arguably sensible increase in educational investment during a period of weak labor market opportunities. however, the growth in debt has important implications for the overall economy, and there are several worrisome aspects of the increase in student debt. many of these problems have to do with the high rates of delinquency and default on student debt, and the generally low repayment rates on these loans. over the past eight years there has been a considerable increase in payment difficulties for student loan borrowers. the most common measure of inability to meet the debt obligation is the proportion of borrowers 90 days or more past due on their payments. we refer to this as the β measured delinquency rate. β as of the fourth
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remained around 10 per cent. the objective of the policy should be to keep the inflation rate around six per cent. this itself is much higher than what the industrial countries are aiming at and therefore will have some implications for the exchange rate of the rupee. monetary growth should be so moderated that while meeting the objective of growth it does not push the inflation rate beyond six per cent. 21. a question that arises in this context is whether monetary policy by itself is able to contain inflationary pressures particularly in developing economies like ours. it is true that developing economies like india are subject to greater supply shocks than developed economies. fluctuations in agricultural output have an important bearing on the price situation. nevertheless, continuous increase in prices which is what inflation is about cannot occur unless it is sustained by a continuing increase in money supply. control of the money supply has thus to play an important role in any scheme aimed at controlling inflation. 21. the controversy over the objective of monetary policy has reached such a pitch that some have described central bankism as a religion with hard money as supreme god and inflation as devil. let me however say that the commitment to a reasonable degree of price stability is not a dogma. it is good economics.
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reforms. first, we need to continue to adapt imf surveillance and facilities and other parts of the gfsn to modern realities. second, we need to further reduce financial regulatory flaws and gaps at the regional and global level regarding capital flows and cross - border banking. third, we need to try to find ways to make central bank swaps a more transparent and reliable part of the gfsn. finally, international organisations and treaties need to accommodate but monitor sofies β use of macroprudential and capital flow management tools. with time, we might develop a new consensus on the rules of the game. for more information on the special reserve requirement on certain capital inflows in iceland, see central bank of iceland ( 2017 ). references : central bank of iceland ( 2017 ). special reserve requirement on capital inflows. monetary bulletin 2017 / 4. available at www. cb. is. gudmundsson, mar ( 2008 ). financial globalisation : key trends and implications for the transmission mechanism of monetary policy. bis papers no 39. available at www. bis. org. gudmundsson, mar ( 2016 ). global financial integration and central bank policies in small, open economies, singapore economic review. obstfeld, maurice ( 2015 ). trilemmas and trade - offs : living with financial globalisation. bis working papers 480. available at www. bis. org. rey, helene ( 2013 ). dilemma not trilemma : the global financial cycle and monetary policy independence. available at www. kansascityfed. org / publicat / sympos / 2013 / 2013rey. pdf.
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jens weidmann : lessons learned from the crisis and economic policy challenges speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the deutsche bundesbank's capital city reception, berlin, 17 october 2018. * * * 1 welcome esteemed ladies and gentlemen, colleagues, rocks can wander. straight, curved and zigzag furrows inscribed in the dry loam soil of the californian mojave desert are proof that even heavy boulders really can move out there. tracks stretching as far as one hundred metres have been discovered. 1 in the land of opportunity, this mysterious place is known as racetrack playa. for a long time, it was not known whether this was the work of pranksters or a natural phenomenon. that was until several years ago, when a team of researchers solved the mystery with the help of cameras, gps technology and weather data. after it rains at night during the winter months, a thin ice layer forms. when this ice begins to melt in the morning sun, it breaks up and β sails β along the meltwater. lights winds are then all that is needed to make these panels of ice slowly push rocks across the desert floor. the furrows become visible once they have been dried out by the wind and sun. 2 but what does this fascinating natural phenomenon have to do with the topics we are addressing today? heavy objects can be moved given the right combination of forces. the same is true of politics : it β s all about the interplay of forces. i would like to use my speech today to talk to you about the way in which political and economic forces work β looking back at the bank bailout during the financial crisis, and looking ahead to the challenges facing monetary policymakers in the euro area and economic policymakers in germany. exactly ten years ago today, the bundestag and bundesrat passed the financial market stabilisation act ( finanzmarktstabilisierungsgesetz ). one month after the collapse of lehman brothers, the then finance minister peer steinbruck explained that there had not been a financial crisis of such a magnitude in 80 years. to β avert the danger β 3 ] an extensive rescue package was put together, comprising up to β¬400 billion in government guarantees for financial institutions. ten years on from this herculean effort, many citizens are quite rightly asking how much it cost to
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energy and food, is therefore likely to rise from 1. 1 % this year to 1. 8 % in 2020. and the headline inflation rate will probably persist at a level of 1. 7 % this year as well as in the next two years. from my point of view, this is certainly largely compatible with our medium - term notion of price stability. as a result, it is now time to set about exiting the very expansionary monetary policy. the governing council of the ecb didn β t set the boulder in motion in june, but you could say it got the ball rolling by indicating that it wanted to end the net purchases of government bonds and other securities at the end of the year. how the rest of the return to normal monetary policy pans out will of course depend on economic developments, especially the path of inflation. but the financial crisis has taught us not to ignore the impact of long - term risks on price stability, either. economists at the bank for international settlements underline that economic developments are affected not just by business cycles but also by financial cycles, which last for longer and fluctuate more strongly. 7 financial imbalances can ultimately be associated with deeper recessions and lasting damage to the real economy. because monetary policy can have an impact on the financial cycle, the bis researchers suggest extending the time horizon for monetary policy. this would allow longer - term risks to price stability from turbulence in the financial system to be factored into monetary policy decisions to a greater degree. given this long - term connection, it may be advisable, even for a monetary policy that focuses exclusively on the objective of price stability, to heed developments in financial markets. 3 economic policy challenges ladies and gentlemen, i fully understand that the current period of low interest rates is a testing time for savers. although households have for many years been able to offset their low levels of interest income β from savings, for instance β thanks to the good performance of other asset types, the real return on german households β financial assets entered negative territory at the beginning of the year. in part, this was because equity market prices lost some of their earlier dynamism. but it β s fair to say that citizens are not just savers β they are also employees, property owners and taxpayers. and as such, they benefit from the low interest rates. of course, interest rates will also gradually pick up as monetary policy returns to normal. but what level they will ultimately reach depends on conditions that
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such a strategy may well be unable to shield the economy from the costs deriving from the bursting of the bubble, costs which in many cases may simply be staggering. also, the sheer size of the macroeconomic shock associated with the bursting of the bubble may be sufficient to plunge the economy to the zero lower bound. this is the bad news. the good news, however, is that, first, many of the principles underlying pre - crisis monetary policy frameworks are still perfectly valid, so that, in a sense, we do not have to β reinvent the wheel β. second, the adoption of macro - prudential policies aimed at taking care of the buildup of disequilibria in asset markets, or within specific segments of such markets, offers the possibility of effectively tackling the problems which led us to the current predicament. thank you for your attention. references altunbas, y., gambacorta, l., and marques - ibanez, d. ( 2010 ), β does monetary policy affect bank risk - taking? β, ecb working paper n. 1166, march 2010. bis central bankers β speeches borio, c., and white, w. ( 2003 ), β wither monetary and financial stability? the implications of evolving policy regimes β, presented at : monetary policy and uncertainty : adapting to a changing economy, a symposium sponsored by the federal reserve bank of kansas city, jackson hole, wyoming, august 28 β 30, 2003. claudio borio and haibin zhu ( 2008 ), β capital regulation, risk - taking, and monetary policy : a missing link in the transmission mechanism? β, bis working paper n. 2588, december 2008. ciccarelli, m., maddaloni, a., and peydro, j. - l. ( 2009 ), β trusting the bankers : another look at the credit channel of monetary policy β, ecb, mimeo. dubecq, s., mojon, b., and ragot, x. ( 2010 ), β fuzzy capital requirements, risk shifting and the risk taking channel of monetary policy β, banque de france, mimeo. friedman, m. ( 1968 ), β the role of monetary policy β, american economic review, 58 ( 1 ), 1 β 17. international monetary fund ( 2011 ), imf performance in the run - up to the financial and economic crisis : im
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christian noyer : monetary policy β lessons from the crisis speech by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at the bank of france / deutsche bundesbank spring conference on β fiscal and monetary policy challenges in the short and long run β, hamburg, 19 may 2011. * * * ladies and gentlemen, it is a great pleasure for me to be here today at this conference, which has provided a lot of stimulating ideas on monetary and fiscal policy frameworks. in my address i will start by briefly discussing some general principles underlying the conduct of monetary policy which have not been altered by the financial crisis, in particular the absence of a long - run trade - off between inflation and unemployment, the benefits of low and stable inflation for economic activity. central banks, who bear the ultimate responsibility for inflation because of its monetary nature, ought to encode all of these principles into the fabric of monetary policy frameworks. i will then talk about some of the crucial lessons from the crisis : that macroeconomic stability by itself does not guarantee financial stability and that the very same monetary policy, which successfully delivers inflation and output stability in the short - run, may sow the seeds of future disruption at longer horizons. a key lesson of the crisis is that inflation forecasts at ( say ) the two - year horizon are not a sufficient statistic for monetary policy, and that a thorough and broad - based analysis of underlying trends in monetary and credit aggregates may help in identifying longer - term risks to price stability. the second lesson of the crisis that i will stress today is that, contrary to the widespread view of the years leading up to the crisis, the zero lower bound of interest rates is not an issue of purely historical interest, and is rather relevant for contemporary policy - making. i. general principles of monetary policy not altered by the crisis the financial crisis has not invalidated the general principles underlying the design of monetary policy strategies during the previous two decades. first and foremost among them is the absence of a long - run trade - off between inflation and unemployment, also known as the β natural rate hypothesis β. 1 underlying the natural rate hypothesis is the key concept of monetary neutrality : in the long run, the phillips curve is perfectly vertical, which is another way of expressing robert lucas β s famous dictum that β you can β t buy a permanent economic high just by printing money β. a second key principle of monetary policy,
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. the european resolution fund should have access to a temporary emergency facility that is fiscally neutral in the medium term, meaning that any temporary public support will be recouped by ex post levies on the industry. bis central bankers β speeches restoring financial integration will unburden monetary policy from a monetary policy standpoint, the banking union will alter neither our policy objective nor our policy strategy. the pursuit of price stability as our prime objective is set out in the eu treaty. we have delivered on our mandate. however, the banking union will change the environment in which we conduct our policy for the better. a banking union has the potential to unburden monetary policy in two important dimensions. first, the banking union has important implications for the ecb as liquidity provider to the banking system. sound supervisory assessments and access to a powerful resolution framework is paramount for ensuring liquidity provisions to sound and solvent counterparties. in its role as supervisor, the ecb will have strong incentives to make sure its supervision is rigorous in order to protect our balance sheet and to ensure tight control over the risks we assume. this will safeguard our independence and credibility as monetary policy maker and will ensure that monetary policy is not affected by considerations outside of the realm of monetary policy, for example the state of the banking sector. this is particularly important in the context of our emergency liquidity assistance ( ela ), the provision of which is based on a sound and reliable solvency assessment. in the future, we will have these assessments at hand β in house β. moreover, a strong resolution framework, with effective tools for orderly resolution, will in turn help to remove the pressure on the central bank to unduly prolong the life of banks through liquidity provision. second, the banking union will help to unwind the reliance of the euro area banking sector on central bank intermediation. as mentioned, during this crisis we have activated a set of nonstandard monetary policy tools that β by nature β were intended to alleviate impaired monetary policy transmission and ultimately serve our primary objective to maintain price stability in the euro area. by alleviating funding pressures and undue risks in securities markets, our measures have provided temporary relief for the banking sector and complemented policy efforts on the financial stability front. however, our measures cannot and should not solve the underlying structural problems. this is a task for governments and the banking industry. in this regard, the banking union with effective supervision and bank resolution can foster the necessary restructuring in
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increasing geographic scope of some banking activities, and the increased importance of nonbank providers of financial services are some of the factors altering the financial marketplace. while many of these changes may have increased financial system efficiency and lowered costs for consumers, they also present new and sometimes difficult challenges for community banks. these changes have coincided with a significant consolidation of the banking industry and a pronounced decline in the number of community banks. if we define a community bank as any bank or thrift organization that has total real assets of less than $ 1 billion, in 2002 dollars, the number of community banks has declined about a third over the past decade. most of this consolidation has been due to mergers. a federal reserve board staff study reports that between 1994 and 2003 there were more than 3, 500 bank and thrift mergers ( pilloff, 2004 ). in more than 90 percent of these mergers, the target institution had less than $ 1 billion in total assets, and in about half of those cases the acquiring organization also had assets of less than $ 1 billion. acquiring organizations were typically larger than their targets ; about 50 percent of the transactions involved an acquirer that was at least ten times as large as the target institution. although merger activity has slowed since the 1990s, there were still at least 200 mergers each year between 2000 and 2006. despite these changes, community banks continue to fill an important niche in banking, providing relationship loans in specific business and economic sectors ( most notably small - business and agricultural lending ), personalized service, and a local presence. indeed, we have a considerable body of evidence that points to the value and viability of these institutions. for example, despite the decline in numbers that i just mentioned, there are still more than 7, 000 community banking organizations, accounting for about 95 percent of all banks and thrifts in the united states today. furthermore, new community banks continue to be formed. during the period 2000 through 2005, about 120 new community banks were chartered, on average, each year. and during the first three quarters of 2006, 137 new community banks were chartered. these figures suggest that many people continue to believe that community banks have an important niche to fill and, as a result, are willing to invest in the future of community banking. a variety of indicators suggest that as a whole, today β s community banks are doing well. the average return on equity ( roe ) at community banks, for instance, is quite solid and has improved over the past few years. net
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government finances are in good condition. for several years now the public sector β unlike earlier periods of large american current account deficits β has shown a surplus in savings. all in all, there are thus many factors indicating that confidence in the american economy can quickly be recovered. if this is true, the economic decline will not last very long. the most likely situation is therefore that although the high level of indebtedness, the large deficit in savings in both the household and corporate sectors, combined with over - investment in certain sectors, will subdue growth for a time, there will be no dramatic or prolonged economic recession. however, in order to increase saving in the economy and thus correct the constant deficit on the current account, it is necessary that growth is not primarily driven by increases in consumption. net export and investment should instead be the motors behind growth to a larger extent than before. bringing about this state of affairs requires a weaker dollar exchange rate. one can therefore look with scepticism on the idea that tax cuts will bring the american economy out of its decline. how will sweden be affected? the american economy affects developments in the rest of the world through many different channels, with exports to the usa as the most direct channel and the one where the effects are easiest measured. however, exports to the usa are only responsible for a couple of per cent of gdp in sweden and have a similar significance for the euro area. spread effects via the expectations that largely govern consumption, investments and the stock market are probably much greater, although more difficult to measure. nevertheless, there are numerous indications that the swedish economy is more sensitive to developments in the usa than the economies in the euro area. for instance, shareholding is more widespread among swedish households and many of the major " swedish " multinationals β in which swedes have invested a substantial part of their shareholdings β are very dependent, directly or indirectly, on developments in the usa. developments in the swedish economy in recent years have shown many similarities to developments in the usa. rapidly rising share prices, a strong gdp growth driven by both investment and consumption and an increase in indebtedness is a description that fits both the swedish and american economies in recent years. however, the increase in economic activity began later in sweden and has not really had the same speed as that in the usa. moreover, the rise in sweden was preceded by a period where adjustments following the crisis at the beginning of the 1990s had forced down investment and consumption considerably
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/ lending one β s money. compare, for instance, with the situation in sweden during parts of the 1980s ( after deregulation ) when the system of tax relief on interest, combined with inflation shocks, meant that in principle one could earn money by borrowing while it cost money to save! the conditions for making wise economic decisions will thus become better when the price stability target has been met. the same reasoning can be applied to wage - setting. during the 1970s and 1980s wage - earners were repeatedly forced to make large demands for nominal wage increases as inflation was β eating up β their purchasing power. real wage increases were almost non - existent, while nominal wage increases pushed up prices, resulting in recurring cost crises. a low, stable inflation rate provides entirely different conditions for more stable and better developments in real wages. monetary policy and the stock market as i have the privilege of speaking to a group of shareholders, i would like to take the opportunity to make a small digression into the connection between monetary policy and the stock market. i have already mentioned that a low, stable inflation rate creates good conditions for favourable economic growth and long - term developments in the stock market. however, the reverse can also apply : stock market developments also have some significance for the shaping of monetary policy. the price of 2 / 7 various assets, such as shares, is important in itself for the dynamics of a country β s growth and inflation trends. if, for instance, share prices rise, this stimulates household consumption and corporate investment, and vice versa. this in turn affects price trends. thus, the stock market, like the housing market, can affect the riksbank β s monetary policy decisions. since the 1960s and 1970s, swedes have been saving more and more in shares, both directly and via mutual funds and insurance, and the market has developed considerably during this period. the return on shares has been very good, seen over the past 30 years, but it has also been something of a roller coaster ride. here i am thinking of periods of overvaluation, which have been followed by sharp price falls, for instance in connection with the financial crisis and the later it bubble. despite these periods of falling share prices, the percentage of shares in household wealth has increased, and stock market developments have thus become increasingly important for households β consumption decisions and for inflation. another reason to be interested in the stock market is its significance for efficiency and thereby for growth. an efficient securities market fulfils
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from ethiopia, russia, ukraine, belarus, lithuania, moldova, bulgaria, kazakhstan, turkmenistan, azerbaijan, uzbekistan, iran, australia, the uk, germany, france, the u. s., argentina, uruguay, and brazil. i, too, am an β oleh. it makes me proud, as an israeli and as a recent immigrant, to see the young immigrants integrating beautifully in israel and doing well in their fields of study. the more able israel is to grow over time, and the better its education system, the more successful we will be in attracting immigration that attracts immigration β because of zionism, yes, but also because it β s a country that is worth living in. thus far, i β ve spoken about the social and national levels. but this event is above all an important one at the personal level. each of you has reached at a critical phase in your lives. the path you choose to follow in the coming years will affect your future. it sounds very important, and indeed it is. but student life may also be very enjoyable. it is my wish that each of you should seize firmly the opportunities that lie ahead. enjoy yourselves, and, the main thing, be successful! thank you. may you succeed.
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the inflation objective. concluding remarks ladies and gentlemen, the philippine economy β s current fundamentals are at the strongest they have been over the past two β three decades, providing us reasons to be optimistic about the future. but there are headwinds, mainly coming from external developments. this time around, we believe that the philippines is better able to withstand the shocks due to the following reasons β¦ β buffers β as i would like to refer to these : the underlying growth momentum due to improving fundamentals ; we have a stronger external liquidity position ; we have gained dividends from our structural reforms in the areas of fiscal policy, power, banking, and capital market ; and we have better information disclosure, which encourages markets to look at philippine - specific risks and not be prone to herding behavior. but we cannot afford to be complacent. even as we have built up β buffers β, we must continue to be mindful of the potential risks, particularly the possibility of unforeseen ones that could impede our path to further progress. the primary task ahead of us is to focus on strengthening the economy while also preserving the momentum for economic reforms to ensure sustained growth in the long run. the implementation of appropriate reforms by the government and active participation of the private sector, in promoting economic development will be powerful forces in the fulfillment of this challenging task. in this endeavor, the bsp looks forward to fmap β s continued support. maraming salamat at magandang hapon sa inyong lahat!
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alan greenspan : policy coordination speech by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the opening of the new hm treasury building, london, uk, 25 september 2002. * * * dedication speeches are by their nature forward looking, but lest we believe that in opening this building we should focus solely on future challenges, i feel the necessity of reminding us all that the future is not always new. i myself was reminded of this by an item on the web site of her majesty β s treasury. β in 1711, β the item notes, β the treasury unveiled a scheme to secure government debt by authorising its subscription into the capital of the south sea company - - government creditors received stock in the company. when the south sea bubble burst in 1720, however, thousands of investors were affected and the chancellor of the exchequer was sent to the tower of london. β although the web site does not elaborate, that eighteenth century chancellor was guilty of dubious practices that appear eerily contemporary. fortunately, modern chancellors, including the eminent incumbent, appear at the tower these days in a more benign context. in a more serious vein, i am daily reminded of the special relationship the federal reserve has had over the decades with decisionmakers from the british government. literally twenty feet from my desk are plaques commemorating the numerous world war ii meetings in our board room between the combined military chiefs of the united states and great britain that in the words on one plaque, β... set the pattern for allied collaboration and the successful prosecution of world war ii. β but the federal reserve β s association with britain β s monetary authorities goes back even further. the tie between the bank of england and the federal reserve was cemented during the 1920s in that extraordinary relationship between benjamin strong, the president of the new york federal reserve bank, and montague norman, the governor of the bank of england. their correspondence yields quite fascinating insight into the way they interpreted events that are now important history. the ties developed then between the federal reserve and british monetary authorities endure to this day. the mutual trust reached a point that in 1999 the bank of england asked donald kohn, then head of our monetary affairs division, and now a governor, to review key aspects of the bank of england β s monetary policy procedures and make recommendations for improvement. we were duly impressed because, to us at the federal reserve, the bank of england projects a nearly mythical presence as the developer of much of the central banking
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lisa d cook : global linkages - supply, spillovers, and common challenge speech by ms lisa d cook, member of the board of governors of the federal reserve system, at " global linkages in a post - pandemic world " 2023 asia economic policy conference, sponsored by the federal reserve bank of san francisco center for pacific basin studies, san francisco, california, 16 november 2023. * * * thank you, sylvain, and thank you for the opportunity to speak to you today. 1 it is fitting and timely that today we are gathered here to talk about global linkages. it is fitting not only because we are beside the golden gate - where, just a few blocks away, one can marvel at the massive cargo ships making their way to port - but also because this conference has once again brought together scholars and friends from as far away as shanghai, atlanta, and fontainebleau. and it is timely because the discussion of the ties that bind us is as important as ever. to start off this conference on global linkages, i am going to discuss supply shocks, policy spillovers, and common challenges faced by monetary policymakers in recent years and going forward. when the global pandemic hit in the spring of 2020, economies around the world shut down or sharply limited activity, especially for inperson services. also, it quickly became apparent that shutdowns in any one economy were exacerbated by reduced availability of supplies from other economies. policymakers around the world faced the common challenge of supporting incomes and limiting the scarring from temporary shutdowns in activity. the response was similar across countries : fiscal support, particularly to help those most in need, although the magnitude differed, in part because of differences in fiscal space. initially aimed at preventing sharp financial and economic deterioration, monetary policy easing was later extended to support the nascent economic recovery. policy rates were cut to or held near zero in both advanced and emerging market economies. a wide range of central banks also bought assets to support market functioning and provide stimulus once overnight policy rates hit their effective lower bounds. as economies gradually reopened, demand surged, especially for goods. but supply chains were slower to recover, leading to a global surge in inflation. that surge was followed by a further upswing in inflation after february 2022, when russia's invasion of ukraine caused a shock to global supplies of commodities, including oil and natural gas, food and fertilizers, and numerous manufacturing inputs.
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30 november 2017 speech on the 60th anniversary of the national association of specialised lending institutions ( asnef ) luis m. linde governor good evening everyone. it is a pleasure for me to take part in this celebration of the 60th anniversary of the national association of specialised lending institutions. as your president, fernando casero, has just mentioned, throughout its history your association has played a very important role in promoting and enhancing consumer lending, which is a key factor in driving economic growth. indeed, consumer lending has a series of characteristics that make it especially relevant both for the financial system and economic activity. on the one hand, it is highly cyclical and is, therefore, a leading indicator of confidence among both consumers and financial institutions. on the other, it generally leads the way in terms of adaptation to innovation. as is well known, in the past consumer lending played an important part in the expansion of credit cards, and more recently it has been at the forefront of the incorporation of new technologies. in the expansionary phase that began after 2000, consumer lending grew rapidly in spain, reaching a balance outstanding of β¬106 billion in mid - 2008. the financial crisis reduced these figures, down to almost half that amount by early 2015. since then, in keeping with the economic recovery, consumer lending has been very dynamic. spain stands out as the euro area country where consumer lending has grown most in recent years, with year - on - year growth rates since april 2016 of between 10 % and 16 %, well above the euro area average of 5 %. this growth is making an important contribution to economic recovery in spain. in september, the balance outstanding of consumer lending was β¬76 billion, 6. 7 % of gdp. in addition, this growth in consumer lending is being achieved in a more competitive environment, with lower interest rates, accommodative conditions and narrowing margins on average loans. moreover, default rates are below the average for lending as a whole in spain. another feature of this expansion is its adaptation to the new environment resulting from the entry into the financial system of firms that make intensive use of new technologies, with a particular impact on the financial sector. your association has attached particular importance to analysis of the challenges that these firms pose, through seminars, the work of various committees and the preparation, last year, of a comprehensive report on consumer lending and the digital society, initiatives that the banco de espana naturally applauds. financial institutions must take up the challenge of responding to
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the new digital reality, with e - commerce ( which is growing at rates of over 20 % and amounted, in 2016, to β¬24 billion ) now being used by more than one - third of consumers for their purchases. clearly, these new firms with their strong technological capabilities pose a challenge and also an opportunity for established firms. the new technologies are making lending more efficient, for example by enhancing the way in which information on consumer behaviour 3 / 4 and requirements is managed, facilitating new data management processes, or by applying automation processes to loan origination, thus speeding up its management. as these new firms make their entry, a new map will be drawn for this financial sector. the most recent trends highlight the importance of collaboration and strategic agreements between new and established firms, to harness the competitive advantages of each : the new technologies of the new firms and the sector experience and knowledge of the established ones. and here i conclude. it is now time for a toast to celebrate your 60th anniversary, in the hope that the national association of specialised lending institutions will continue its fruitful work for many years to come. i now pass the floor back to your president, who has the pleasurable task of proposing the toast. 4 / 4
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remarks by lynn patterson deputy governor of the bank of canada investment industry association of canada and institute of international finance toronto, ontario june 18, 2018 rebooting reference rates introduction thank you and good afternoon. my topic today is interest - rate benchmarks or reference rates and the work under way here in canada and globally to strengthen them. before i plunge in, let me take you back to the 1980s. aside from the monstrous shoulder pads in my suit jackets, the decade gave us several important innovations. one of the most widely used was windows. not the kind you put in your house, but the operating system for your computer. microsoft released windows 1. 0 in 1985. most of us are now using windows 10. each new version improved functionality and reliability. the most widely used benchmark β the london interbank offered rate ( libor ) β was first published in 1986, a year after microsoft released windows. it has undergone only one material change in the past 30 years and was certainly never originally designed to support what has become a us $ 350 trillion market. now, it is difficult to imagine modern financial markets without derivatives enabled by benchmarks. 1 however, just as windows 1. 0 isn β t versatile enough to support new computer programs that have been introduced over the past 30 years, many benchmarks are no longer suitable for the wide array of derivatives markets they support. in addition, the scandals and mistrust related to the 1 originally developed to facilitate cross - border lending between banks, libor and other benchmarks offer measures of prevailing interest rates on which standardized contracts can be based. for example, an individual or firm may borrow money today and pay the lender interest based on market interest rates, as measured by a financial benchmark, over the course of the loan. i would like to thank paul chilcott, harri vikstedt, scott kinnear and sheryl king for their help in preparing this speech. not for publication before 18 june 2018 12 : 45 eastern time manipulation of benchmark rates for the financial benefit of individuals and institutions have made their future use unpalatable. not surprisingly, then, these problems with benchmarks have undermined confidence in their reliability and robustness. in response, global authorities are working closely with the private sector to address them. for many of you in this room, benchmark reform is probably a familiar topic, and you understand the significant role these rates play in the functioning of markets. but benchmarks, like windows,
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loan losses during a slowdown. if all banks do the same, their actions will exacerbate the downturn and increase their eventual losses. it is well - known that timely and properly calibrated monetary and fiscal policy can address the first issue. it is less widely recognized that macroprudential regulation can address the second. in many ways, the central bank is ideally suited to bring a macroprudential approach to financial stability. our mandate demands that we take an economy - wide perspective. further, we have a strong motivation to maintain a stable, efficient financial system because we rely on it to transmit our monetary policy actions. however, we do not have many of the tools necessary to secure financial stability. monetary policy is a blunt instrument, poorly suited to addressing financial imbalances. instead, macrofinancial stability should be one of the core objectives of financial regulation. until it is, under the current framework, the bank can promote financial stability through two tools : liquidity and advocacy. the bank is the ultimate source of liquidity within the economy. we have used our recently enhanced powers under the bank of canada act extensively throughout the crisis, with measures that now total more than $ 36 billion of term liquidity. there are four important points of context. first, we are not supplying net liquidity to the system β there is no new central bank money. rather, we are redistributing liquidity by exchanging liquid assets for high - quality, though less - liquid ones. second, we are substantially over - collateralized to protect our balance sheet. 3 third, consistent with canada's relatively strong banking system, our liquidity provision has not been as large as elsewhere. for example, the bank of canada is currently providing liquidity equivalent to around 1 per cent of total domestic banking assets. the comparable figures are 4 per cent in europe, 5 per cent in the united kingdom and 6 per cent in the united states. finally, while the provision of extraordinary liquidity by central banks is limiting the damage from the crisis, it has long been apparent that official liquidity, irrespective of size, cannot re - open markets on its own. the bank's second tool β advocacy β has not received the same profile as the first β a fact i hope to begin to change today. the bank can promote financial stability by influencing public sector policies and private sector behaviour. we do this in two ways ; by leveraging our for example, at
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for the first time the possibility of the permanent cessation of libor at the end of 2021. the speech shifted the nature of the interest rate benchmark reform dramatically, from the pursuit of libor enhancement based on the assumption that its publication would be continued to initiatives for the transition to new interest rate benchmarks on the assumption that libor would be permanently ceased. then, as i mentioned in the beginning, the third and final stage of the libor transition started in march 2021 against a background of the formal announcement with regard to the permanent cessation of libor for all currencies in the future. let me turn to the initiatives taken in japan corresponding to each of these three stages ( chart 1 ). in the first stage, where the continuation of libor publication remained intact, various efforts were made to enhance the robustness of the tokyo interbank offered rate ( tibor ), a financial benchmark based on interbank rates in the tokyo market, within the framework of the interest rate benchmark reform in conjunction with yen libor. in july 2017, such efforts came to fruition and important improvements were made, including increased transparency of the calculation and determination processes of submission rates for tibor. moreover, the identification of a japanese yen risk - free rate based on the rates of actual overnight transactions as a new interest rate benchmark was also considered. consequently, in december 2016, the uncollateralized overnight call rate calculated and published by the bank of japan was identified as the yen risk - free rate in japan. thereafter, in the second stage, where the preparations for the possible permanent cessation of libor became a critical issue, the cross - industry committee on japanese yen interest rate benchmarks ( hereafter the " committee " ) was established in august 2018. the committee, of which the bank of japan serves as its secretariat, consists of a wide range of market participants from various businesses, including financial institutions and non - financial corporates. it conducted necessary deliberations from various viewpoints to help benchmark users to appropriately choose and use japanese yen interest rate benchmarks as alternatives to yen libor. in the current third and final stage, which determines the success of the yen libor transition, the focus has shifted to the actual implementation of the yen libor transition activity by each individual market participant, as necessary tools to facilitate each transition activity are already set ready for use in general, reflecting further progress made in deliberations by relevant bodies,
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if they outweigh the positive effects of any financial regulations. when designing global financial regulation and supervision, the following four - step cycle must be repeated : first, designing systems from a forward - looking perspective ; second, steady implementation ; third, evaluation of the positive effects and negative side effects, taking into account new technologies and changes in financial environment ; and fourth, addressing any problems when necessary, such as when the negative side effects exceed the positive effects. ten years have passed since the review of global financial regulations and supervision began in earnest after the global financial crisis. in what follows, i will first assess the regulatory development work done during this period, particularly at the financial stability board ( fsb ) and the basel committee. then, among the work currently underway, i would like to highlight the importance of work on the evaluation of financial regulations. finally, i will mention climate - related risk as one of the challenges for future financial stability. 1 / 4 bis central bankers'speeches ii. past achievements : evaluation of discussions over the last 10 years after the global financial crisis, work on reforming financial regulations started with a review of past crises, including the causes of each crisis. it revealed that before each financial crisis, there had always been a build - up of debt at financial institutions and in the non - financial sectors β socalled leverage build - up. financial regulations were therefore strengthened in a forward - looking manner. for example, attention was focused on the credit - to - gdp ratio, which has implications as a leading indicator of potential problems. there has been much valuable progress in international financial regulation and supervision over the past 10 years, including basel iii. for example, an expansion of the basel iii framework was made in each of its three pillars : the first pillar being minimum requirement ; the second pillar, supervisory review process ; and the third pillar, market discipline through disclosure. in terms of content, policy tools such as liquidity regulations were expanded, in addition to the previous riskbased capital regulation. also important was the introduction of a macroprudential perspective at the international level. specifically, first, a countercyclical capital buffer ( ccyb ) was introduced in response to the issue of procyclicality over time ; and second, the structural issue of the β too - bigto - fail β problem has been addressed by the introduction of a new framework for identifying global systemically important banks ( g - sibs ) and a total loss - absorbing capacity ( t
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in the medium - term due to the regulatory evolutions it implies. as a first pragmatic step, for host supervisors, it is necessary to establish an intermediate holding that consolidates all financial activities, in order to submit systemically important players to requirements. agustin carstens elaborated yesterday on the " segregation " and " inclusion " approaches. in addition, regulation of big techs in finance should go beyond traditional regulation of finance. let me explain : big techs pose at least three new challenges. that of competition - as they are already much more concentrated than existing financial institutions, and the network economy tends to establish " the winner takes most " rule. that of data protection and privacy, of course. and finally, that of operational risk and cybersecurity. however, in each of these three fields - competition, data protection and cybersecurity - there is no international body, unlike in finance. and the national - or european - authorities that do exist are still hardly used to cooperating with each other. to develop cross - border and cross - domain cooperation, the scope is wide but essential : the oecd, the bis and the fsb can and must be sandboxes. as a beacon of hope, europe is showing the way on all these common challenges. europe now stands out as a spearhead on key issues, thanks to : its regulation on digital operational resilience ( dora ), which will submit critical service providers to direct oversight, and will enhance our financial system's cyber resilience and financial data protection ; its regulation on markets in crypto assets ( mica ), which is tailored to new players and assets and needs to be implemented as quickly as possible, that means quicker than the presently planned november 2024 ; last but not least, the digital markets act ( dma ) will cover competition issues, and the digital services act ( dsa ) will regulate online contents. in their own way, each one of these two new regulations enshrines a principle full of common sense, i. e. what is forbidden in " real life " is also forbidden for companies that operate online. with this new legislation, europe is creating a climate that is more conducive to the emergence of european players in the technological field. we can only hope, in the interest of global competition, that they will be able to grow and reach critical size. 3 / 5 bis - central bankers'speeches the eurosystem is also taking part
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francois villeroy de galhau : big techs in finance - a bildungsroman that is far from over speech by mr francois villeroy de galhau, governor of the bank of france, at the highlevel bis conference " big techs in finance β implications for public policy ", basel, 9 february 2023. * * * ladies and gentlemen, it is a pleasure for me to introduce the second day of this bis high - level conference on big techs in finance. while it is a pity to do so from a distance, perhaps that is fitting for a conference on the changes in our working lives brought by digital innovation. very early on, big techs saw finance as a natural complement β and booster β to their core businesses, launching a technological revolution that might bring many benefits to consumers, across different fields such as payments and stablecoin issuance. big techs have met with success on some of these roads, and less so on others. interestingly, some of these developments do not exactly match what we could have expected even four years ago. we can therefore consider big techs'entry into finance as a bildungsroman β a sort of coming of age story β with promising early years and somewhat disappointing learning years partly behind usi. building on this already significant experience, the maturity years may be ahead of us β but that will only be possible under consistent conditionsii. i. big techs and finance : a bildungsroman unfolding under our eyes a. promising early years from the onset big techs were " data rich " and benefited from a global customer base and strong brand recognition. in order to keep their lead in innovation, big techs acquired a large number of start - ups and fin techs. in the end, their huge financial means enabled them to set up, and then consolidate, powerful oligopolies. in the wake of us gafams, chinese batx emerged to serve their domestic market, and expanded into asia. all big techs started diversifying their activities, among others in the financial sector where they first launched innovative digital means of payments, for instance google pay in 2011 and apple pay in 2014. this chapter of the book is crystal - clear : big techs were highly successful in this area. digital / mobile wallet payments represent around 27 % of e - commerce payments in europe, 36 % in india and 69 % in asiai. not only do payments feed into
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banking account to all those desirous of opening a bank account. several other aspects such as simplified kyc, ots for loans upto rs 25000, offering a gcc / simplified overdrafts etc were also covered. a decentralized approach was advocated through targeting 100 % financial inclusion district by district involving the dcc and bank and government officials to facilitate enrolment and identification. another very important policy measure in january 2006 was to allow banks to adopt the agency model or what is known as the business facilitator / business correspondent model for achieving greater outreach through intermediaries / agents. the results have been extremely impressive. in just two years the number of no frills accounts opened by banks has increased from around half a million accounts in march 2006 to 15 million in 2008. going by the data from service providers offering smart card solutions, it may be assumed that smart card accounts probably account for 2 to 3 million of these no frills accounts. evaluation by external agencies appointed by rbi has shown that while the first stage of opening no frills accounts has been quite impressive, due to inadequate f follow up, cost of transaction and access constraints, in many cases the accounts have not been operated upon at all after having been opened. in order to improve access and use of these accounts, banks will have to offer the services much closer to the customer either through mobile branches, satellite offices, extension counters or using intermediaries like shgs / mfis or through business correspondents using it to increase scale, access and reduce cost. also as is obvious from the results of these recent studies and surveys, the credit product that has to be offered, if the low income borrowers have to be brought into the formal system, has to be simple covering all the needs of small borrowers. i have absolutely no doubt that the simple overdraft or gcc based on cash flow / track record is the way forward to meet the challenges of providing access to the large numbers currently excluded. shgs and mfis role in fi the need for informality in credit delivery and easy access is demonstrated by the fact that shgs and mfis constitute the fastest growing segment in recent years in reaching out to small borrowers. these institutions are able to effectively address the small ticket and last mile issues. in the four years between 2003 and 2007, small borrower bank accounts ( credit ) i. e. upto rs 25000 increased marginally from 36
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. 9 million to 38. 6 million, while shgs β borrowing members grew from 10 million to 40. 5 million and mfis β borrowers grew from 1. 1 million to 8 million. in 2007 - 08, mfis have added 6 million clients increasing their outreach to 14 million as per data brought out by sa daan. role of ict in fi to be able to ensure that the challenges of banking the unbanked are met effectively and converted into growing and sustainable business for banks, there is no alternative to adoption of ict solutions on a very large scale and range. ict solutions are required to capture customer details, facilitate unique identification, ensure reliable and uninterrupted connectivity to remote areas and across multiple channels of delivery, offer multiple financial products ( banking, insurance, capital market ) through same delivery channel while ensuring consumer protection, develop comprehensive and reliable credit information system so essential for efficient credit delivery and credit pricing, develop appropriate products tailored to local needs and segments, provide customer education and counseling, enable use of multi media and multi - language for dissemination of information and advice. ict for fi β rbi initiatives i now turn to the specific initiatives of rbi in regard to ict for financial inclusion. the very first initiative was emphasizing the use of it solutions while adopting the agency or bc model for financial inclusion. a paper placed on the rbi website has envisaged a scheme with rbi support for providing satellite connectivity for remote area branches. the reports of three working groups set up by rbi to consider support to rrbs and ucbs in computerizing their operations and adopt it solutions for financial inclusion have been placed in public domain for comments. these groups have recommended that the idrbt could offer interest free loans to ucbs and rrbs for adoption of it. based on comments and response rbi will be firming up these schemes. recognizing the penetration of mobile phones ( including amongst the low income population ) and the enormous opportunities they offer in extending the banking outreach. rbi had placed a paper on mobile banking in the public domain and the guidelines are now being finalized. the nfs is able to offer nationwide networking of atms and can facilitate banking transactions including remittances through atms linked to the nfs. effective from april 1, 2009 a customer will be able to use any atm ( including other bank atms ) to operate his / her account at no cost. other initiatives include those aimed at ensuring quicker, safer currency and funds transfer. in fact rbi has put on
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third, regulatory uncertainty about the suite of capital and bail - in requirements β the supervisory review and examination process ( srep ), the minimum requirements for own funds and eligible liabilities ( mrel ), the total loss absorption capacity ( tlac ), and eba guidance on the minimum distributable amount ( mda ). uncertainty as to the actual effects that can be expected from the newly introduced brrd instruments seems to have played a role. β’ fourth, negative feedback loops between equity and debt markets, amplified by low secondary market liquidity. b. the eu response the responses of the european union to the weaknesses to the financial stability landscape that emerged have been effective, despite the initial lack of crisis mechanisms and the unfavorable and challenging environment β an environment in which fires were often being simultaneously fought on a number of fronts. initially, the response came in the form of monetary policy and a significant easing of the monetary policy stance. indeed, in october 2008, six major central banks, including the ecb, executed a coordinated and simultaneous cut in interest rates. additionally, at that time the euro - area countries set out an action plan of coordinated measures to restore confidence and improve financing conditions in the economy. these measures included the granting of government guarantees on bank debt issuance and the recapitalization of banks. with the eruption of the euro area financial crisis in 2010, and during subsequent periods when the monetary transmission mechanism was dysfunctional, the ecb increasingly implemented nonstandard monetary tools. additionally, to provide financial assistance to countries under stress, in june 2010 europe created the efsf, which was replaced by the esm in october 2012. perhaps the greatest challenge β and surprise β posed by the euro - area crisis was in the area of financial integration and banking. at the inception of the euro, it was widely - expected that the single currency would spur integration across previously - fragmented european financial markets. economists believed that this integration would be stabilizing : portfolio diversification and access to credit markets were expected to encourage risk - sharing while making national demand less dependent on national income β that is, portfolio diversification was expected to encourage consumption smoothing. and for the euro β s first ten years, that scenario unfolded very much as expected. then came a major surprise. the euro - area crisis revealed that countries within a monetary union can become subject to balance - of - payments crises β a possibility that had been almost completely overlooked by the architects of the euro
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battle of salamis against the persians led to an expansion of the democratic institutions already introduced by cleisthenes. in democratic athens, all citizens enjoyed equality before the law, as well as equality of vote and equal opportunity to assume political office. the population doubled during the years of pericles, with thousands of immigrants contributing to the demographic growth of athens. ancient greeks conducted free trade with almost every part of the then known world, from the black sea to sicily, right up to the pillars of hercules, in today's gibraltar, founding colonies along the way. this commercial activity allowed, at the same time, invaluable cultural exchanges. the athenians managed available capital according to demand and supply, even initiating large - scale public works when unemployment was high. they turned economic prosperity into a warm place for art, science and culture to bloom. on the antipode, ancient greece can also teach us lessons to be avoided : in particular, how the lack of unity, or division and rivalry, which was the case between ancient citystates, can bring about a devastating conflict such as the peloponnesian war, which crippled greek military strength, bringing the most culturally advanced greek city - state, athens, into decline. luckily, there stand monuments, like the acropolis you see outside, that remind us of all these and of some core developments in the history of democracy and human creativity, which first emerged at the time of pericles but remain valid and pertinent to this day. it is a miracle that we are able to behold such iconic monuments and be reminded of the values they represent, which are at the core of our contemporary european identity and shape what it means to be a european citizen today. 3 / 4 bis - central bankers'speeches speaking of what it means to be a european citizen today, i would like to say farewell to my dear colleague ignazio visco, since this is his last governing council meeting after twelve years at the helm of banca d'italia. with ignazio, we have travelled together a long journey in the last several years. during this journey, full of storms but also some sunny periods, we have appreciated his integrity, intellectual honesty, wisdom, judgement, common sense, diligence and positive attitude. he has remained a true european citizen, faithful to the euro, supporting it in its most difficult times. a central banker who believes that price stability, financial stability and full employment can coexist if the
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3 million recorded in 2001. the 2007 inflows were largely in form of foreign direct investment, borrowing from nonaffiliates ( loans and trade credits ) and portfolio investment. we believe that the introduction of economic reforms led to a substantial increase in private capital flows, which regrettably, we have not been able to capture on a regular basis due to budgetary constraints. mr. chairman, history has taught us that high volatility in private capital flows, if not properly monitored and managed, can induce financial and macro - economic instability in the domestic economy. evidence from south east asia indicates that capital flows engendered a financial crisis in that region in 1997 and 1998. in light of this evidence, the results of the foreign private investment and investor perception survey are intended to assist the government to effectively monitor private capital flows. accurate and reliable data on private capital investment will be helpful in understanding recent developments in the zambian economy. better information on investor perceptions will assist government in designing policies that will attract more investment into our economy. further, the results of the survey should prove useful to the private sector and other stakeholders. on the whole, the importance of timely and reliable information on capital flows in the design of appropriate policy responses by government and thus enhancing macroeconomic stability can hardly be overemphasised. adequate and consistent information on capital flows will also greatly improve balance of payments statistics for zambia and serve as an early warning system for government on potential international financial crises and other external shocks. mr. chairman, zambia, like many other developing countries, has inadequate capacity to collect, analyse and disseminate data and information on foreign private capital investment. compared with other countries in the african sub - continent, zambia has serious gaps with respect to data on foreign private capital investment. for instance, while we are now at the second phase of the survey, uganda, tanzania and malawi are in the sixth, fourth and third phases, respectively. this only reveals to us the critical need to conduct this enterprise survey more regularly. to this end, i wish to direct that, as a way forward, the balance of payments statistics committee conducts this survey annually. the bank of zambia, in collaboration with government and other balance of payments statistical committee member institutions will do everything possible to ensure that the collection of this vital information is done on an annual basis. accordingly, it is my hope that participants at this workshop will appreciate the importance of this survey and find the results useful. distinguished guests, i am
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seeing the news out of japan, that, you know, japan seems to be able to keep out of deflation, which they haven β t for a long time. even europe seems to be eeking some growth out. do β do you think everybody β s going to be doing better or is this just a blip? president dudley : well, i think that β a couple of things. just let me touch on the u. s. first. one thing that β s 1 / 13 bis central bankers'speeches interesting is post - election you β ve seen a pretty big improvement in household and business confidence, especially business confidence among smaller businesses. now it β s hard to say how much weight to put on that because historically consumer confidence goes up and down, and it doesn β t just necessarily feed into consumer spending. but the increase in business confidence is quite striking, especially for smaller businesses. and so one of the big open questions that we β re going to be assessing over the next few months is : is that improvement in animal spirits, so to speak, going to actually feed through and lead to more spending? so, i think where a year or two ago, i think our anxieties were more about the risks to growth to the downside, so as that β well, a year ago, we were worried about events in china, we were worried about uncertainties about europe. i think now the balance of risk is gradually shifting, where the possibility is that growth could actually be stronger than expected, rather than weaker than expected. the markets expect fiscal stimulus out of this administration. that β s another factor that probably will over time tilt the equation more to the upside. but on fiscal policy, it β s really hard to factor into your forecast at this point because we don β t know what it is, how big it is, or when it will happen. other than that, we have it completely nailed down. so, it β s really hard to sort of put that into your forecast. and so the way i think about the fiscal policy outlook is that we β re probably going to get some fiscal stimulus at some point. and so that β s just another factor that maybe tilts the risk to the economy a little bit to the upside. maureen o β hara : so, bill, how about we think a little bit more broadly. you talked about where β it looks like interest rates are going up, at least that β s what, you know β¦
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savenaca narube : promoting investment in fiji opening address by mr savenaca narube, governor of the reserve bank of fiji, at the opening of westpac β s mhcc branch, suva, 20 june 2008. * * * mr. john cashmore, westpac fiji chief manager management and staff distinguished guests introductory comments today marks yet another milestone in westpac β s history as they open their 19th banking site. they have certainly come a long way since they opened in fiji as the bank of new south wales on 12th august 1901. i am honored to be part of this milestone this evening. in the last ten months, westpac has opened branches in port denarau ( september 2007 ) and nakasi ( november 2007 ). westpac now has the second largest number of bank branches and agencies in fiji. that is an impressive progress. i congratulate westpac for their commitment to fiji and also for their confidence in fiji β s financial system. investment and confidence is a special thing. true, it is hard to build and very quick to fall. and generating your own confidence when the climate is hard is a tough thing to do. but it can also be self fulfilling. it can be contagious. it is always encouraging to see businesses growing. look at this complex. it was completed about six months ago. it is now a modern meeting point in the city. as they say β business must go on β whatever is the environment. no one owes us a living. investment must continue. we need that now more than ever before. investment is the locomotive of growth. without it, the economy will lose steam. so i hope that westpac β s confidence will rub off on many of us. we are doing what we can at the reserve bank to promote investment. at the end of april we raised the local borrowing limits of non - resident companies in light of the stability in foreign reserves. we listened to what the investors and the commercial banks were telling us. the change was welcomed and well received by lenders and investors. we are now going further still. we have just completed our review of the local borrowing limits of non - resident individuals. we are relaxing their borrowing too and i wish to announce the major changes. firstly, to build a new residence in fiji, non - resident individuals do not have to bring in all their funding from offshore β they can now borrow locally up to 60 percent of the project cost. secondly, we
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the case for the defence. why is inflation so high? on the first count β why is inflation so high β the case for the defence has been advanced by a number of my colleagues in recent months and so hopefully will be familiar to many of you. 1 over the past few years, our economy has been hit by a series of large price level shocks β to oil and other commodity prices, to vat, and to the sterling exchange rate β which have raised companies β costs and put upward pressure on prices. together these factors can more than account for the strength of inflation. see for example the speeches by bean ( 2011 ), king ( 2011 ), miles ( 2011 ), and posen ( 2011 ). bis central bankers β speeches indeed, recent analysis in the bank β s inflation report suggests that these factors can account for a rise in the level of consumer prices since the beginning of 2007 of between 8 β 12 %. 2 this dwarfs the extent to which inflation has exceeded the 2 % inflation target over the same period. now, if we really were in a court of law, i fear the judge may be looking down on me at this point with a degree of disdain, suggesting that this sounds like a series of excuses. β inflation is inflation β, he or she may say, β whatever its cause. your job is to keep inflation close to target β. i β ve considerable sympathy for this argument : the high and variable rates of inflation seen in recent years have affected the ability of both households and companies to plan their spending and investment decisions with any degree of certainty. but the remit of the mpc recognises that trying to keep inflation at target in the face of large shocks and disturbances β may cause undesirable volatility in output. β 3 i fear that to some this might sound like i β m resorting to technical loop - holes to bolster my defence. but that is not the case. this element of the remit has been central to the operation of monetary policy in recent years. the foremost task of monetary policy over the past few years has been to ensure that the financial crisis did not lead to a prolonged depression. to have offset these price level shocks would have meant presiding over an even deeper recession. i β m not saying that if i had had perfect foresight, i wouldn β t have changed my policy stance at all. but the hurdle for wanting to have had materially tighter policy in the face of the most severe downturn
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the labour market, based on the costs of job search, also predict a negative relationship between trend productivity growth and the natural rate of unemployment. in that setting, in which employers trade off the cost of search against the prospective surplus from a new job, lower expected growth in productivity reduces the present value of that surplus and lowers the rate of job creation. the canonical description of this β capitalisation β effect is due to pissarides ( 2000 ). bis central bankers β speeches the ons β s monthly labour market release publishes standard summary statistics about the duration of unemployment and the reasons for inactivity. but, at least since 1994, the lfs has also included a host of questions about the characteristics of employees and their jobs. these are listed in table 1. some are easy enough to answer β your age, where in the country you work and long you β ve been in your job. others, those related to respondents β qualifications, or the sector they work in, offer a long list of potential answers. there are over eighty sectors from which to choose, hundreds of detailed occupational descriptions. table 1 people are also asked about their pay. and, unsurprisingly, there are clear correlations between wages and characteristics. pay is higher in some sectors and occupations than others ; it β s also higher, at the level of the individual, for people who have better qualifications and more experience, in terms both of age and job tenure. overall, if you take the post - 1994 sample as a whole, the spread of individuals β characteristics statistically explains around one half of the variation in their pay. this distribution can also change over time. individuals β characteristics can evolve β people become more experienced, in principle they can also switch occupations or become better educated. the distribution will also shift if there are differences between the characteristics of those entering and leaving employment. we β ve already seen how large those gross flows can be. so even a relatively modest contrast between the two groups can lead to significant changes at the aggregate level. the compositional effects, which are simply the fitted values of a regression of pay on characteristics, attempt to track the effects of these shifts from one quarter to the next. in aggregate, the estimated effects amount to a β hedonic β adjustment for labour quality. chart 7, summarising the results, is a version of a graph we published in the last two inflation reports. note that, over time, the effects have tended to be positive. the average
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philipp hildebrand : principles for sound compensation practices summary of a speech by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the economic outlook 2009 ( unternehmer nw - schweiz ), basel, 23 april 2009. the complete speech can be found in german on the swiss national bankaβ¬β’s website ( www. snb. ch ). * * * most financial institutions viewed compensation systems as being largely unrelated to risk management and risk governance prior to the crisis. short - term profits were rewarded with generous bonuses with little regard to the longer - term risks taken on behalf of the firm to generate those profits. with hindsight, it should therefore be no surprise that these bonuses fueled the excessive risk - taking that has ultimately undermined the global financial system. it is important for the future stability of our financial system that compensation systems be viewed as an integral part of the risk management system in financial firms, and designed and governed with this in mind. the financial stability board ( previously the financial stability forum ) has drafted a set of sound compensation principles for large financial institutions with exactly this goal in mind. the principles were endorsed by the g20 leaders at the london summit earlier this month and aim to be widely implemented by the 2009 remuneration round.
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itself is lower than it was in 2003, although the cyclically adjusted deficit is close to 4 percent β higher than it was in 2003. since 2007, when the actual deficit was almost zero, the deficit has grown during the crisis, declined somewhat in 2010, and since then has not declined. the result is that we have a deficit of about 4 percent in a situation of almost full employment. i feel very uneasy with this kind of deficit in the current situation, since if the economy enters a recession β a scenario which we must take into account β the deficit will grow, and it will be harder to deal with it. the debt - to - gdp ratio declined from a level of almost 300 percent of gdp prior to the stabilization plan, climbed slightly to a level of about 100 percent during the recession at the beginning of the 2000s, and continued to decline since then to a level of 74 percent today. compared to other countries, we have greatly improved in this parameter due to an increase in the debt levels of many countries as a result of the crisis, but it is very important for the state of israel that the debt to gdp ratio be low. we are exposed much more than other countries to geopolitical risks, and if god forbid we find ourselves one day in a conflict with our neighbors, near or far, it is important that we not come into it with this kind of debt ratio. it is very important, therefore, to continue reducing the debt to gdp ratio. in 2012, the government adjusted the deficit path such that the deficit targets would be reduced more slowly than planned beforehand. in practice, if we grow at an average rate of bis central bankers β speeches 3. 75 percent per year, the deficit will decline even more slowly than the path decided upon by the government, based on the existing tax rates in the existing legislation β that is, even taking into account the increase in the vat and direct tax rates recently enacted. according to this estimation by the bank of israel, the deficit in the coming year will apparently be 3. 5 percent, and will reach a level of 2 percent only in the year 2020. according to this projection, debt will also decline more slowly than the government estimated when setting the legislation. the fiscal rule which guides our actions is the result of a joint effort by the ministry of finance, the prime minister β s office, and the bank of israel. it is a relatively simple rule that can be easily explained to the public. we know that the expenses
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edge risks of a hard brexit have been largely addressed. in addition to the preparations by individual firms, this has included the temporary permission by the european authorities for the uk central securities depository ( csd ) to continue to serve irish securities during the transition to an alternative eu27 csd arrangement. there are some remaining risks of consumer detriment. the irish and uk financial systems are closely connected, with uk firms and firms from gibraltar providing financial services to irish consumers, including insurance and payment services. we have worked with the european and uk authorities to ensure that those firms providing services to irish consumers are able to continue to do so in the event of a hard brexit. the vast majority of uk - based firms have taken appropriate action, but not all have to date. in this context, i am pleased that the central bank of ireland has worked with the department of finance to support the drafting of legislation to create a temporary run - off regime that will protect insurance customers in event of a no - deal brexit. in terms of financial stability risks, our assessment is that the improvements in the resilience of the financial system over the last decade provide a vitally - important buffer. taken together, the more balanced macroeconomic profile, the restructuring of the irish banking system, the muchhigher capital and liquidity ratios, the decline in the non - performing loan ratio and the more intrusive supervisory regime mean that the capacity to absorb negative shocks is much greater than in the past. conclusions while there remains much uncertainty about the final nature of brexit, the central bank of ireland ( and, more generally, the international central banking and regulatory community ) has been active since the calling of the referendum in preparing for the full range of brexit scenarios. our near - term focus is in ensuring that our contingency planning covers the unfolding situation, while continuing to work with those firms that have not yet finalised their brexit plans. regardless of the precise outcome, the intrinsic discontinuity represented by any form of brexit means that it is certain the 2020 edition of the european financial forum will be discussing a fundamentallydifferent european financial system compared to the system that has been in place for the last several decades. 1 see for example lane, philip r., ( 2019 ), climate change and the irish financial system, economic letter, vol. 2019, no. 1, central bank of ireland 3 / 3 bis central bankers
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= 100 ) ( 12 - month cumulative, billion usd ) imports by eu source : eurostat. current account balance ( cab ) source : cbrt. as you all know, food, energy and import prices also play a great role in inflation forecasts. therefore, before moving on to forecasts, i will briefly talk about our assumptions regarding these variables. the downtrend in commodity prices in international markets, chiefly oil prices, continued in the last quarter of 2015 as well. stemming mostly from the lack of demand from china and other developing economies, this trend caused import prices in the turkish economy to bis central bankers β speeches recede in usd terms. therefore, we made downward revisions to assumptions for crude oil prices and usd - denominated import prices with regard to annual averages, we reduced crude oil price assumptions from usd 54 to usd 37 for 2016. also, we revised the assumptions for annual percentage changes in average import prices downwards by 4. 9 points for 2016. we revised the assumed inflation for food prices upwards from 8 percent to 9 percent for 2016 due mostly to the effects of minimum wage adjustments on costs and demand ( chart 19 ). chart 19. revisions in oil and export prices * oil prices * ( usd / barrel ) * shaded area indicates the forecast horizon. source : bloomberg, cbrt. import prices * ( usd, 2010 = 100 ) * shaded area indicates the forecast horizon. source : bloomberg, cbrt. effective as of january 2016, some items with administered prices saw price increases. we estimate that the additional effect on the year - end inflation of the portion of these increases that remain above 5 percent will be 0. 4 points in 2016. in turn, we monitor meticulously how the rise in the minimum wage will affect the budget balance and tax adjustments. as the extent of the effect of wage developments on production costs, aggregate demand and inflation depends on the fiscal policy and the change in employment, we monitor the interaction between the rise in minimum wages and the fiscal policy closely. our mediumterm projections are based on an outlook that tax adjustments and administered prices, excluding those already announced in january, will not exceed the inflation target and will remain consistent with automatic pricing mechanisms. the medium - term fiscal policy stance is based on the medium term program projections covering the 2016 β 2018 period. conditional on this outlook, we expect inflation to improve gradually and reach the 5 - percent target in the medium term. 3. inflation and the monetary policy outlook now, i would
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food prices were the main drivers of this higher - than - forecasted rise in annual inflation. in fact, inflation excluding unprocessed food and tobacco was close to the october inflation report forecast in this period ( chart 12 ). the lagged effects of the turkish lira depreciation were particularly evident through the core goods channel. yet, the continued fall of import prices in the fourth quarter limited the rise in cpi inflation. chart 11. october inflation forecasts and realizations ( percent ) chart 12. october inflation forecasts and realizations excluding unprocessed food and tobacco ( percent ) * shaded region indicates the 70 percent confidence interval for the forecast. source : turkstat, cbrt. in the fourth quarter, despite the decline in usd - denominated import prices, cost pressures on inflation continued due to food prices and exchange rate developments. we see that these rising cost factors limit the improvement of the underlying trend of core inflation bis central bankers β speeches ( chart 13 ). furthermore, we will monitor closely the effects of the adjustment in minimum wages on overall wages and on inflation ( chart 14 ). chart 13. chart 14. ( seasonally adjusted, annualized 3 month average, annual percentage change ) ( 2003 prices, tl ) core inflation indicators sca - h and sca - i source : turkstat, cbrt real gross minimum wage * real gross minimum wage is obtained by dividing the average gross minimum wage at current prices to the consumer price index in a given year. consumer price index is taken as 2003 = 1. consumer prices in 2016 are based on january 2016 inflation report projections. source : ministry of labor and social security, turkstat, cbrt. in sum, annual inflation increased in the fourth quarter due to an ongoing rise in food prices as well as the lagged effects of the turkish lira depreciation throughout 2015. we believe that the upcoming inflation outlook will depend on both the volatility in energy and unprocessed food prices and the effects of the global market uncertainty on inflation expectations. in addition, the large adjustment made to net minimum wages for 2016 will have an impact on inflation. therefore, we expect inflation to remain elevated for some time. at this juncture, in addition to maintaining our tight monetary policy stance, fighting against the structural elements of inflation also remains important. notwithstanding the significant external shocks in recent years, we were able to limit the worsening in inflation and inflation expectations thanks to our current policy framework,
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, when institutions manage their risks appropriately, they are promoting an effective allocation of available economic resources. banks β risk analysis and evaluation, prior to granting financing, means they act as an essential filter for the functioning of the economy. they enable the correct allocation of available financial resources by distinguishing between those projects with a high probability of success and those lacking in medium - term viability. true, excessively tight lending standards may act as a brake on innovation and growth. but, as we have seen, when this filter does not work properly, and when lending standards are excessively loose, ultimately too many projects that prove non - viable are financed, destroying value for the economy. lessons from the crisis one thing the crisis has reminded us of, sadly, is that financing a firm or individual which, a priori, has little chance of meeting its payment obligations is very poor business, for three reasons. first, economically, this is a bad agreement both for the customer concerned and for the bank. second, it is too for the country β s legal system, which sees a significant increase in its workload, thereby delaying and hampering its workability. and third, from a social standpoint, what is involved is very poor business with harmful consequences for society in the form of dismissals and evictions. it is always better not to have granted a loan than to have to deal with a non - performing loan, although some error in granting loans is inevitable. moreover, looking at our real estate bubble, it is likewise obvious that any loan should be granted thinking of the likelihood of both the principal and the associated interest being repaid, instead of basing oneself on the value of the collateral. of course, the responsibility for analysing the ability to pay falls on the bank, not on the customer. undoubtedly, applying strict standards means having to say β no β on many occasions to applications for funds. and at times of heady growth, this entails very bad press and is difficult for the bank to assume, particularly if the competition is lax in its lending standards. naturally, it is tempting to imitate the competition when a strategy produces short - term profit. those banks that decide not to follow this path will undergo pressure from the market and shareholders to imitate their rivals and boost those business areas that are proving profitable at that time. risk culture plays a crucial role in being able to withstand such pressure. 6 / 13 let us not forget that runaway credit growth and the subsequent
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disintermediation will involve significant benefits for society ; but it is not free from challenges for banks, for the regulator and, naturally, for the banco de espana itself, in its role as guarantor of financial stability. among the benefits for those demanding funds, associated with a more diversified financing structure, are, on one hand, their greater stability in the face of shocks that affect specific institutions in the financial sector. indeed, the international financial crisis highlighted the greater difficulties in gaining access to funding for those firms depending exclusively on bank lending, in contrast to those with a more diversified financial structure. these problems were more acute for those firms β chiefly smes β operating with a small number of banks more harshly affected by the crisis, since the possibilities of replacing their usual lenders with new banks was not always easy owing to asymmetrical information problems. 4 / 7 on the other hand, the development of non - bank funding sources may also contribute to providing readier financing for specific investment projects ; for instance, those undertaken by innovative or newly created firms, for which the availability of bank lending may be more limited. it should be borne in mind that the launch of some of these projects may have a positive impact on firms β productivity growth. naturally, these advantages for those demanding funds may have positive effects for society as a whole, insofar as they result in higher and more stable economic growth. from the standpoint of fund suppliers, the existence of alternative means of investing their saving may result in more attractive return / risk combinations for various savers, depending on their needs and preferences. so that households and firms may benefit fully from all the advantages of banking disintermediation, they will need to have sufficient financial knowledge. this is something that the banco de espana, along with other bodies such as the cnmv, is firmly committed to through financial education programmes such as β finance for all β. evidently, disintermediation poses substantial challenges for banks. greater competition from non - bank intermediaries may affect both banks β business volumes and net interest income. this potential loss of income is significant at the current juncture, at which banks are posting modest levels of profitability, the economy is slowing and private - sector demand for funding remains sluggish. in response to this more competitive and challenging environment, banks could adopt various strategies such as greater income diversification, the containment of operating costs and increased investment in technology. from the regulatory standpoint, the
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mr. greenspan looks at some important issues arising from new information and communications technologies remarks by the chairman of the board of governors of the us federal reserve system, mr. alan greenspan, at the conference on privacy in the information age held in salt lake city on 7 / 3 / 97. it is a pleasure to be with you this afternoon as you discuss some of the most fundamental issues raised by our new information and communications technologies. the topic senator bennett has asked us all to address is privacy in the information age. the central dilemma in these discussions almost always involves fundamental choices about how to strike prudent balances among the needs of individuals for privacy in their financial and commercial transactions, as well as their personal communications ; the needs of commerce to bring us new products and new means to communicate ; and the needs of the authorities to provide for the effective administration of government and to ensure the public safety. these are not easy choices. i think we all need to have a healthy respect for all sides of the debate. even further, we need to be aware that the balances we strike in one era may need to be reexamined as technology and circumstances change. the dictionary defines privacy as the state of being free from unsanctioned intrusion. this concept, to which americans feel a very deep - seated attachment, is reflected in the fourth amendment to the constitution, which assures β the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.... β for the government to intrude on one β s privacy is in a very fundamental sense a deprivation of freedom. it is one of those deeply sensed issues that transcends people β s constitutional or legal views and delves into the realm of one β s sense of person. this is why the perceived threat to privacy from burgeoning technological advance, coupled with an increasing sense of inefficacy in the face of sophisticated new technologies, has created such a stir. the fears of invasion of privacy, as a consequence of inexorable forces seemingly out of the control of the average american, has risen to a major public policy issue. a half century ago a number of writers expressed concern at a perceived ever widening intrusion of government into the lives of individuals. they feared the ultimate collectivization of our society where individualism would be significantly diminished or expunged, and the emergence of β big brother β would come to define and dominate
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##s over the business cycle and maintains that fiscal discipline over time is the will of the political system to make the necessary hard choices on government spending and taxes. one possible means of expressing that will, would be for the congress to reinstitute a set of budget rules, possibly along the lines of the discretionary spending caps and the paygo rule originally included in the 1990 budget act ; these rules may assist in the process of making the difficult choices among competing budget priorities. however, although the paygo budget rule, for example, appeared to help keep legislation from increasing federal deficits for a number of years, paygo did not provide a mechanism to deal with the long - term budget imbalances already in place. thus, it is worth considering whether future budget rules should go beyond the scope of paygo and require more fundamental adjustments to spending and taxes. clearly, there are numerous ways in which budget policy could be adjusted to bring the budget back into balance in the short run and to maintain it over the long run. in any event, these difficult choices must ultimately be made. if left unchecked, persistent and widening federal government deficits will have an increasingly corrosive effect on the u. s. economy because, all else being equal, federal government borrowing takes up some of the funds that would otherwise go to finance capital accumulation or to purchase capital assets from abroad. a good deal of controversy has swirled around the question of whether increased federal borrowing reduces domestic investment, and presumably increases interest rates, or whether it increases u. s. borrowing from abroad. viewed from a broader perspective, however, that distinction is probably not very consequential because future national income is lower in either case. for the federal government to run a deficit in the short run as a temporary response to an emergency event, such as the recent devastating hurricanes, or a recession or a war is not the type of fiscal policy imbalance that tends to have a negative long - run effect on an economy. to the contrary, appropriate discretionary fiscal responses to these types of situations can have beneficial economic effects, as i suggested earlier in my remarks. however, it is imperative that the nation come to grips with the fiscal implications of the retirement of the baby - boom generation. creating a budget strategy and implementing policy changes to balance the federal government's budget over the long term will require hard choices, which will become more difficult the longer they are delayed. moreover, changes made to federal government spending programs and taxes to
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execute its statutory mandate, catering to the economic and financial environment and the institutions of the time in order to provide france's regions with the best possible support. in the first part of my talk, i will detail how the banque de france, in acting as an institution with a strong regional presence, has tailored its services over time to fulfil its three main policy objectives, which are to guarantee monetary stability, preserve financial stability and provide services to the economy. in part two, i will turn to today β s economic and monetary situation and show with our current measures taken to preserve monetary stability, how the fulfilment of each objective is never a given but the result from the committed action by the central bank. * * * * today, just as it has always done, the banque de france offers two main types of nationwide services : first, it guarantees monetary and financial stability, because no economy can work without a stable currency and a stable banking and financial system ; second, it supports local economies through its regional presence, serving households and companies, especially the most vulnerable, and supporting the environmental and digital transitions. let me describe each of these aspects, explaining in each case how the bank of france has adapted over the years to meet the needs of the day. the first broad set of services provided to the regions are focused on delivering monetary and financial stability. this means conducting a monetary policy that guarantees price stability in the medium term, but also supervising the payment system and ensuring the stability of financial intermediaries. maintaining a stable currency safeguards purchasing power over time and ensures the currency β s continuity across the territory, so that every individual can spend that currency anywhere and at any time and enjoy the same ability to purchase necessary goods and services. back in the 18th century, france's authorities found themselves unable to guarantee this stability. after the bankruptcy of the john law note - issuing bank in 1720 and several other failed attempts to set up a central bank, 5 the hyperinflation fuelled by monetary financing of the revolutionary wars and the ensuing default on two - thirds of france β s public debt in 1797 had destroyed confidence in the currency. 6 the most pressing task facing the consulate government was to rebuild the foundations of that trust, which it did by authorising the establishment of the banque de france in 1800 and anchoring the value of the franc through the creation of the germinal franc in 1803. in establishing the banque de france, france set
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for release on delivery 11 : 00 a. m. est january 8, 2021 u. s. economic outlook and monetary policy remarks by richard h. clarida vice chair board of governors of the federal reserve system at the c. peter mccolough series on international economics council on foreign relations new york, new york ( via webcast ) january 8, 2021 it is my pleasure to meet virtually with you today at the council on foreign relations. 1 i regret that we are not doing this session in person, as we did last year, and i hope the next time i am back, we will be gathering together in new york city again. i look forward to my conversation with steve liesman and to your questions, but first, please allow me to offer a few remarks on the economic outlook, federal reserve monetary policy, and our new monetary policy framework. current economic situation and outlook in the second quarter of last year, the covid - 19 ( coronavirus disease 2019 ) pandemic and the mitigation efforts put in place to contain it delivered the most severe blow to the u. s. economy since the great depression. economic activity rebounded robustly in the third quarter and has continued to recover in the fourth quarter from its depressed second - quarter level, though the pace of improvement has moderated. household spending on goods, especially durable goods, has been strong and has moved above its pre - pandemic level, supported in part by federal stimulus payments and expanded unemployment benefits. in contrast, spending on services remains well below pre - pandemic levels, particularly in sectors that typically require people to gather closely, including travel and hospitality. in the labor market, more than half of the 22 million jobs that were lost in march and april have been regained, as many people were able to return to work. inflation, following large declines in the spring of 2020, picked up over the summer but has leveled out more recently ; for those sectors that have been most adversely affected by the pandemic, price increases remain subdued. the views expressed are my own and not necessarily those of other federal reserve board members or federal open market committee participants. i would like to thank chiara scotti for her assistance in preparing these remarks. - 2while gross domestic product growth in the fourth quarter downshifted from the once - in - a - century 33 percent annualized rate of growth reported in the third quarter, it is clear that since the spring of 2020, the economy has
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all because there is no longer any exchange rate risk and because transaction costs are lower. austria is doing very well in international markets : at nearly 34 %, austria recorded the highest export share of gdp ever in 2000. this ratio had come to only 25 % when the country joined the eu and had risen to just under 30 % before participation in emu. not only did emu and the euro improve the external economic environment, it also required business and industry to make incisive operational and technical changes. companies had to establish new strategic positions on their markets and had to adjust to the more intense competition, which has shifted more and more to quality considerations. the euro and the single market have boosted product and service innovation in many areas and have thus added to europe's competitive strength. turning briefly to the developments during the first three years of emu, they bear impressive testimony to the fact that the smooth interplay between monetary and fiscal policy provides a solid foundation which was well suited to weathering the economic policy challenges of this period. monetary union and the euro have kept the euro area countries from being exposed to harmful intraeuropean exchange rate tensions of the type that many countries used to suffer when external shocks occurred. some of you may have not so fond memories of the ems crises of the years 1992 and 1993. it has become quite obvious that austria's inclusion in the stability - oriented economic and monetary union has protected our country from negative shocks much more adequately than was possible under past regimes. beyond emu β further political integration and enlargement emu represents a quantum leap in integration, a key step in completing the single european market. of course, competition is most pronounced within emu itself. monetary union - and only monetary union - guarantees that the single market can utilize the full potential of its economic power on the basis of a stable common currency and that the growing pressure of international competition on europe is buffered. the deepening of the european union that accompanies emu and the euro is therefore not simply the most suitable response to internationalization and globalization, but also a bulwark against any maneuvers to reverse liberalization in europe. deepening of european integration is crucial especially for small open economies like austria and luxembourg. by introducing the euro, european economic policymakers have assumed the responsibility for exploiting the opportunities and for addressing the challenges this move represents for austria or luxembourg and for europe as a whole. we must continue to observe the provisions of the stability and growth pact,
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conference banque de france β opportunities and challenges of the tokenisation of finance : which role for central banks? β tuesday 27 september 2022 concluding remarks by denis beau, first deputy governor let me first start by thanking you all for attending this conference, both online and in person. i believe this large audience speaks to the significance of the issues that we have discussed together today and the depth and quality of today β s exchanges, which covered a wide variety of topics, were impressive. it is a tall order to summarise such rich discussions in so little time. i will only try to highlight three lessons i take away from each of the roundtables and chart a possible way forward. the first lesson i take away from this conference is that we could be at a turning point in the development of the crypto - asset ecosystem. β’ over the past few years, the crypto - asset landscape has experienced a significant growth, buoyed in part by the low interest rate environment. it has expanded its initial scope and started offering more sophisticated products, getting increasingly complex and interwoven with traditional finance, with the emergence of defi. β’ however, recent tensions in the crypto - asset ecosystem, amidst a normalisation of monetary policy, raise questions about ( i ) first, its correlation with other types of risky assets and ( ii ) second, their sensitivity to changes in the monetary policy stance. the ongoing stress in the crypto - asset market is also altering the dynamics of the ecosystem, sparking bankruptcies and leading toward greater concentration. page 1 / 3 β’ in addition, the development of crypto - asset and defi comes with significant policy challenges for public authorities, that were highlighted in our discussions today : o first, they raise the question of how to regulate market players, which are not easily captured by existing regulation as they either lack central authority or may require close coordination between several regulatory and supervisory agencies due to the variety of their activities. o second, the rise of these new assets has led central banks to reflect on the appropriate balance between public money and private assets and the way in which access to public money could be ensured in the digital era through the issuance of central bank digital currency. the second takeaway is that private players identify substantial benefits associated with distributed ledger technologies and consider that an appropriate regulatory framework would help make the most of these technologies. β’ but we know from experience that public authorities need to act quickly, while this ecosystem is still nascent, to guide
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fail. " it is unacceptable that large firms that the government is now compelled to support to preserve financial stability were among the greatest risk - takers during the boom period. the existence of too - big - to - fail firms also violates the presumption of a level playing field among financial institutions. in the future, financial firms of any type whose failure would pose a systemic risk must accept especially close regulatory scrutiny of their risk - taking. also urgently needed in the united states is a new set of procedures for resolving failing nonbank institutions deemed systemically critical, analogous to the rules and powers that currently exist for resolving banks under the so - called systemic risk exception. conclusion the world today faces both short - term and long - term challenges. in the near term, the highest priority is to promote a global economic recovery. the federal reserve retains powerful policy tools and will use them aggressively to help achieve this objective. fiscal policy can stimulate economic activity, but a sustained recovery will also require a comprehensive plan to stabilize the financial system and restore normal flows of credit. despite the understandable focus on the near term, we do not have the luxury of postponing work on longer - term issues. high on the list, in light of recent events, are strengthening regulatory oversight and improving the capacity of both the private sector and regulators to detect and manage risk. finally, a clear lesson of the recent period is that the world is too interconnected for nations to go it alone in their economic, financial, and regulatory policies. international cooperation is thus essential if we are to address the crisis successfully and provide the basis for a healthy, sustained recovery.
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donald l kohn : the economic outlook remarks by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, at the atlanta rotary club, atlanta, 8 january 2007. * * * thank you for inviting me to fill in for jack guynn today to discuss the economic outlook for the new year. those are big shoes to fill. jack played a prominent and constructive role in the federal reserve system, as i know he did in the atlanta community, bringing his vast experience and uncommonly good sense to bear on a wide variety of important policy issues. as we enter 2007, the current economic expansion is now more than five years old. although it got off to a slow start, the expansion was quite strong from mid - 2003 through mid - 2006. over that period, a good deal of the slack in our nation's utilization of resources was taken up, and the unemployment rate reached its lowest level in five years. at the same time, however, core inflation - that is, inflation without potentially volatile food and energy prices - as measured by the price index for personal consumption expenditures, moved up from less than 1 - 1 / 2 percent to about 2 - 1 / 2 percent. to safeguard the gains made over the past quarter century in the achievement of price stability and to promote sustained economic expansion, the federal reserve in mid - 2004 began removing the considerable monetary accommodation it had earlier put in place. more recently, led by a sharp pullback in housing activity, economic activity decelerated in the second half of 2006 to a pace that was probably a bit below the long - term rate of growth in our nation's productive capacity. at the same time, decreases in energy prices have substantially reduced overall consumer price inflation of late, and core inflation has showed signs of slowing. my expectations for 2007 quite naturally rest on an assessment of how recent trends are likely to play themselves out. how long will the decline in housing activity hold back overall economic growth? what about spillovers from housing to other sectors? what are we to make of the recent weakness in manufacturing activity? will the recent good news on inflation persist? before venturing some guesses on these questions, i need to issue two caveats. first, events will probably unfold differently than currently seems likely, and the range of uncertainty around any forecast is considerable. that uncertainty does not, however, diminish the value of having and discussing an outlook. monetary policy must be based on our best
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tiff macklem : monetary policy decision opening statement by mr tiff macklem, governor of the bank of canada, at the press conference following the monetary policy decision, ottawa, ontario, 10 april 2024. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss today's policy announcement and our monetary policy report. today, we maintained our policy interest rate at 5 %. we are also continuing our policy of quantitative tightening. we have three main messages this morning. first, monetary policy is working. total consumer price index ( cpi ) and core inflation have eased further in recent months, and we expect inflation to continue to move closer to the 2 % target this year. second, growth in the economy looks to be picking up. we expect gdp growth to be solid this year and to strengthen further in 2025. third, as we consider how much longer to hold the policy rate at the current level, we're looking for evidence that the recent further easing in underlying inflation will be sustained. before taking your questions, let me take a moment to discuss how the economy is evolving. we have revised up our outlook for global growth. us economic growth again exceeded expectations, and while growth is expected to slow later this year, economic activity is stronger than previously forecast. in canada, growth stalled in the second half of last year and the economy moved into excess supply. the labour market also cooled from very overheated levels. with employment growing more slowly than the working - age population, the unemployment rate has risen gradually over the last year to 6. 1 % in march. there are also some signs that wage pressures are beginning to ease. economic growth is forecast to strengthen in 2024. strong population growth is increasing consumer demand as well as the supply of workers, and spending by households is forecast to recover through the year. spending by governments also contributes to growth, and us strength supports canadian exports. overall, we forecast gdp growth in canada of 1. 5 % this year and about 2 % in 2025 and 2026. the strengthening economy will gradually absorb excess supply through 2025 and into 2026. cpi inflation eased to 2. 8 % in february, and price increases are now slowing across most major categories. inflation rates for durable goods, clothing, food, and services 1 / 2 bis - central bankers'speeches such as recreation and travel have all declined. however, shelter cost inflation is still very high and remains the biggest contribution
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pierre duguay : bank of canada β s perspective on the stability of the canadian financial system opening statement by mr pierre duguay, deputy governor of the bank of canada, to the house of commons standing committee on finance, ottawa, 5 march 2009. * * * good morning. thank you for inviting me here to discuss the bank of canada β s perspective on the stability of the canadian financial system. as we have consistently emphasized, stabilization of the global financial system is a precondition for economic recovery, both globally and in canada. to that end, policymakers around the globe have acted aggressively and creatively by initiating a series of unprecedented actions aimed at stabilizing the global financial system. central banks throughout the world, including the bank of canada, have provided unprecedented liquidity to keep the financial system functioning. because the crisis we are facing is global in nature and began outside our borders, most solutions must be found at the international level. we are taking part in discussions with our international colleagues on ways to strengthen financial stability globally. i would note that there has been a great deal of interest worldwide in the resilience of canada β s financial institutions in the face of the global economic crisis. unlike their counterparts in other major economies, canadian banks have not been materially affected by the financial crisis. they have managed to raise capital during this troubled period to support continued lending and to make up for some of the decline in the demand for securitized products as well as the exit of non - bank lenders which had relied on securitization for financing their activities. in contrast, banks in most other major economies have suffered significant losses and have required significant capital injections from their governments. thus, canada has maintained much healthier credit conditions since the onset of this global recession than have been seen in other major countries. still, the canadian financial sector has felt the effects of the global turmoil which has increased funding needs while at the same time raising the costs and the uncertainty of term funding. in response, the bank of canada has made significant efforts to support liquidity in financial markets. our actions aimed at stabilizing the canadian financial system since the global crisis began 18 months ago have been unprecedented and significant. the bank of canada has moved aggressively by expanding the provision of term purchase and resale agreements ( pras ) to a total of $ 41 billion at its peak in december, and $ 35 billion currently. term pras provide liquidity to key market participants for terms of
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##virus pandemic, energy prices soared. global supply chains were disrupted. at the same time, the lifting of lockdowns meant households were able to normalise consumption. the war in ukraine further exacerbated the situation. inflation increased significantly worldwide. it rose in switzerland, too, although later and to a lesser extent than elsewhere ( slide 6 ). initially, swiss inflation was mainly driven by rising import prices, particularly for energy. rising import prices spilled over to domestic inflation ( slide 7 ). given the marked inflationary pressure, it was time to tighten monetary policy. we stopped buying foreign currency and let the swiss franc appreciate. this dampened imported inflation. in june 2022, we raised the snb policy rate by 50 basis points to β0. 25 %. we started to sell foreign currency in the fourth quarter of 2022 to support the tightening effect of interest rates. for 2022 as a whole, our foreign currency sales totalled approximately chf 22 billion. in 2023, we even sold foreign currency worth some chf 133 billion. to put this into context, chf 133 billion corresponds to 17 % of switzerland β s gdp. the combination of rising interest rates and foreign currency sales was effective in quickly bringing inflation back into the range of price stability. the appreciation of the swiss franc dampened imported inflation in particular, which initially played a significant role. the increase in interest rates had a broader impact, curbing both imported and domestic inflation. 9 without the use of foreign currency sales, the snb would have had to raise the policy rate to a higher level. our decisive action contributed to keeping medium - term inflation expectations anchored. cf. fritz zurbrugg. β competitiveness of swiss companies β the snb's contribution β, speech at the swiss cfo day, 13 january 2016. specifically currencies against which the swiss franc is traded. cf. thomas jordan ( 2024 ), β the swiss national bank β s monetary policy response to the post - covid period of high inflation β in monetary policy responses to the post - pandemic inflation, centre of economic policy and research. page 5 / 8 fifteen years of foreign exchange interventions β an assessment i began my remarks by saying that i would look back at our monetary policy over the past fifteen years. what is my assessment? i would like to focus on three aspects. the first covers the side effect of foreign exchange interventions : the large balance sheet. the
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the escalated political tension was also something we had not anticipated. in particular, the damage it has inflicted on the tourism sector will significantly shave off one significant source of external revenue the economy has relied on. still, we see the economy β s growth momentum to remain in tact. here i am not alone in believing so. the latest set β s ceo survey released last week showed that the majority of listed companies β ceos remained confident in the growth prospect of the thai economy. obviously, this is a difficult time for the economy. but you have to remember that we are no strangers to difficult challenges, some much worse than what we are facing. most importantly, as i repeatedly said on different occasions, thailand possesses strong economic fundamentals and room for maneuvering the right policy mix that makes us resilient against economic shocks. allow me to elaborate on some of these. first, thailand β s external position remains strong. our external debt to gdp has hit an alltime low since 1980, recording 29. 4 percent last year. our foreign reserves doubled within three years reaching over 100 billion us dollar at present day. the amount of foreign reserve has by far exceeded the short - term external debt by more than four times. this provides us an ample room to safeguard against instability from volatile capital flows and exchange rate movements. second, the government β s fiscal position continues to improve as reflected by a falling trend of public debt to gdp. this gives the government the financial flexibility to tackle economic problems and stimulate the economy if necessary. it is no coincidence that credit rating companies often stated the strength of our fiscal and external position in their underlying reasons for affirming thailand β s sovereign ratings. in fact, to cite james mccormack, the head of asia sovereign of fitch ratings, at the firm β s last week annual thailand conference, unless political uncertainty significantly undermines thailand β s future growth prospect, it is unlikely that thailand will be downgraded, for the country β s sovereign credit fundamentals remain sound. third, the banking sector remains healthy and strong enough to weather the current global financial turmoil. the bis ratio remains high and the ratios of npls to total loans continued to decline. together with the implementation of ias39 accounting standard in 2006 - 2007 and the adoption of basel ii by the end of this year, the banking sector would be less prone to adverse shocks. finally, the soon - to - be - implemented second phase of the financial sector master plan will further improve efficiency of
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requirements throughout the credit cycle and recently as a specialized tool to provide an analytical grounding for the decisions we have made on capital distributions during the covid event. then i will briefly review the recently released scenario for the 2021 test and discuss other changes for the upcoming stress testing cycle. the 2020 stress tests we now use stress testing in two important but different ways : to set capital requirements during normal times and to assess capital adequacy during exigent times. in march of last year, the board of governors finalized the stress capital buffer requirement, which uses the fed β s stress test results to set capital requirements for large banks, and by doing so, simplified our overall capital regime. while this new framework has the same goal as the previous comprehensive capital analysis and review ( ccar ) framework β using forward - looking analysis to help ensure that banks have sufficient capital to survive a severe recession while still being able to lend to businesses and household β it integrates our stress testing regime with our ongoing capital requirements so that large banks now have a single suite of dynamic and risk - sensitive capital requirements. while that framework is simpler, it is no less stringent than the ccar framework β a framework that 1 / 5 bis central bankers'speeches contributed to a more than doubling of the common equity ratio at banks between 2009 and 2019. at the time we made the stress capital buffer final last march, we estimated that the stress capital buffer would have further increased capital requirements for the largest and most complex banks. by design, the new framework better captures systemic risk by requiring those banks to establish a buffer to absorb losses they β d take in a severe recession in addition to their g - sib surcharges. it is useful here to pause and put stress testing in the context of bank supervision in general. both supervision and stress testing specifically have roles during normal times as well as times of stress, but those roles are somewhat different depending on the circumstances. like all supervision, stress testing conducted during normal times of solid economic growth and financial stability is aimed at helping ensure banks remain in safe and sound condition. we use it to set the capital buffers, which give firms incentives to hold capital during normal times, so they are prepared to weather downturns. during periods of economic and financial turmoil, the goals shift to understanding banks β exposure to the turmoil and to ensuring that banks can support households and businesses by continuing to lend. the modern bank stress testing regime was born in the solvency crisis of 2009
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doing good research : ( i ) first, there must be support from the top, and in our case from the central bank governors. without this support, any attempt to build a good research department will most likely fail. i would like to say that the presence of us governors in this conference is a testament of our support for research in our central banks. reserve bank of fiji for us at the rbf, two significant initiatives were implemented as part of our collaboration with griffith university. we have set up a research unit in our economics group with the aim to produce more research papers. selected staff are rotated to the unit as an opportunity to undertake research and produce working papers. in addition, the rbf now provides staff with a cash reward of $ 1000 if their research is published as either working papers or journal articles. ( ii ) second, there must be highly trained research staff and a system of measuring quantity and quality of research output. investing in the continuous development of our central bank staff is important and i know that a significant part of our central bank budgets is allocated to training and development. we must continue with this and have as a priority the need to build highly trained research officers. however, a real challenge faced by our small central banks is attracting and retaining research capacity and capability as many of our staff are so inclined to leave us for universities that pay more and conduct more research. more collaboration with academic institutions and research institutes such as the one we now have with griffith could help address this. going forward, we have to establish a system of measuring the quantity and quality of our research outcomes. credibility and quality of research is crucial and good evidence through a policy proposal supported by good research is highly likely to be considered for decision making. research must also be forward looking in nature to be relevant when the issues it addresses are faced by policy makers. ( iii ) third, there must be a productive and rich research environment for good research to be possible. one way to ensure this is making our central banks open to external research from academia, the fruits of which we are witnessing today through our collaboration with griffith university. there is room therefore for more collaboration, which brings me to the second key message that i wish to share today : 2. extending our research collaboration beyond the griffith university my second key message is that we should extend our research beyond the current collaborations with griffith university. our role as central banks has never been more important than it is today. we have the core responsibility to promote macroeconomic and financial
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news / speeches second, risk management for the market to understand where climate risks and opportunities lie, disclosures need to go beyond the static to the strategic. that means assessing the resilience of firms β strategies to transition risks. this is hard. only half of tcfd supporters systematically conduct scenario analysis and, of those that do, three fifths don β t disclose it. fortunately, a number of promising initiatives are currently in train to build best practice. first, tcfd case studies β from rio tinto to unilever and citi β detail characteristics of good scenario analysis. second, the tcfd knowledge hub provides guidance, research, tools, standards, frameworks and webinars. third, the bank of england will become the first regulator to stress test its major banks and insurers against different climate pathways, including the catastrophic business β as - usual scenario, the ideal β but still challenging β transition to net zero by 2050, and the late policy action β or climate minsky moment β scenario that could bring a sudden recognition of the scale of stranded assets. our stress test of the world β s leading international financial centre will show how major financial firms expect to adjust their business models, and what the collective impact of these responses could be on the wider economy. it will reveal the banks β and by extension companies β that are preparing for the transition to net zero as well as those who have not yet developed strategies consistent with america β s pledge or the uk β s legislated commitment to net zero. to take this approach global, we will share it with the 50 other central banks and supervisors in the network for greening the financial system ( ngfs ) so that they can stress test their own financial systems, which cover two thirds of the world β s emissions. finally, return. the paris agreement calls on the financial sector to reorient financial flows in line with the two degree target. achieving this transition will require sustainable investment to go mainstream. to do so, sustainable investment must do more than exclude incorrigibly brown industries and finance new, deep green technologies. sustainable investing must catalyse and support all companies that are working to transition from brown to green. all speeches are available online at www. bankofengland. co. uk / news / speeches to date, approaches to measuring and managing the financial implications of climate change for investments have been inadequate. carbon footprints are not forward - looking, divestments only focus on
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remarks given at a panel to launch the third annual america β s pledge report, at the 25th annual conference of the parties mark carney governor of the bank of england us climate action centre, madrid 10 december 2019 i am grateful to jennifer nemeth for her assistance in preparing these remarks. all speeches are available online at www. bankofengland. co. uk / news / speeches introduction the accelerating america β s pledge report comprehensively documents the scale of change that is needed across our economies to put emissions on a trajectory consistent with building a net zero economy. that will require a more sustainable financial system. changes in climate policies, new technologies and growing physical risks will prompt reassessments of the values of virtually every financial asset. firms that align their business models with the transition to net zero will be rewarded handsomely. those that fail to adapt will cease to exist. now is the time to ensure that every financial decision takes climate change into account. for that change to happen, we need to focus on the three rs β reporting, risk management and return. first, reporting in 2015, g20 leaders tasked representatives from the public and private sectors to review how the financial system takes into account climate risks. we established a task force on climate - related financial disclosures ( tcfd ), chaired by mike bloomberg. four years on, the tcfd has generated a step change in both the demand for and supply of climate reporting. the demand for tcfd disclosure is now enormous. current supporters control balance sheets totalling $ 120 trillion and include the world β s top banks, asset managers, pension funds and insurers. the supply of disclosure is responding, with four fifths of the top 1100 global companies now disclosing climate - related financial risks in line with some of the tcfd recommendations. on every recommended metric in tcfd, disclosures have been steadily increasing. three quarters of major investors surveyed are now using available tcfd disclosures when investing. mike bloomberg β s path - breaking initiative on climate disclosure is creating the platform to bring sustainable to the finance mainstream. now we must build on this foundation by : first, over the next year, enhancing both the quality and quality of disclosures to make tcfd standards as comparable, efficient and as decision - useful as possible. and, by cop26, exploring pathways to make tcfd disclosure mandatory. all speeches are available online at www. bankofengland. co. uk /
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to the increase in the volume of intra - emerging markets trade. although tradable products can be transported to markets of any distance owing to advancements in transportation infrastructure and technology worldwide, distance is no less important than it was previously. due to increased competition among countries, factors such as distance and transportation costs continued to be among the leading determinants of competitiveness. various academic studies also confirm that the distance elasticity of trade is on the rise. as it is known, complementary value added chains have been formed particularly among asian countries, and having benefited from the proximity of neighbor countries and their individual advantages in different fields, these countries have experienced a high - speed development process through regional cooperation, where low - costs - for - all have boosted the competitiveness of all economies in the region. the β zero - problem β policy turkey has been trying to formulate in recent years with neighbor countries, the steps taken to lift visa requirements, and above all, the active part turkey played in improving relations among the countries of the region, all pave the way for regional collaborations that are likely to generate favorable economic outcomes in future for all countries of the geographical area we live in. this conference that the central bank of turkey hosts today is a step toward improving relations among the banking sectors of turkey, syria, lebanon and jordan in the short - term. nevertheless, in the long - run, it is expected to contribute to efforts towards a common market surrounded by the persian gulf, the red sea and the mediterranean with the participation of the region countries. the banks association of turkey, central bank of syria, the banks association of lebanon and the banks association of jordan will be signing a regional cooperation agreement in the field of banking shortly. this agreement aims to enhance cooperation among the banking systems of these four countries and to improve communication channels between them. thanks to this agreement, cross - border trade and investments among these countries will be supported and facilitated by this cooperation between our banks. turkey signed free trade agreements with syria, jordan and lebanon in 2007, 2009 and 2010, respectively. moreover, visa - exemption agreements were made between turkey, syria and jordan in 2009 and between turkey and lebanon in 2010. besides, these four countries established a high - level strategic cooperation council in 2010. the regional cooperation agreement to be bis central bankers β speeches signed at the shamgen banking conference will complement these agreements and enhance their effectiveness. the turkish banking sector, which was restructured following the 2001 economic crisis, managed to overcome the global
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such periods it would be appropriate to support the data from the h index with other indexes that have low fx rate pass - through ( for example ; evaluating them with service prices inflation ). hence, the central bank will not use only one indicator to assess the main trend in inflation and will openly inform the public of the type of the relevant indicator and the degree of its importance. moreover, after reaching a satisfactory number of observations, new indices can be compiled based on different techniques and the sca can be updated. public sector β s role in the inflation targeting regime in the inflation - targeting regime, developments in the public sector are a matter of concern from the monetary policy perspective. the cbrt certainly cannot control polices implemented by the public sector. however, the fact that the size of the public sector relative to the economy is still large makes it necessary to closely monitor the developments in this area. in accordance with its law, a central bank, which focuses on price stability, has to monitor developments in budget and fiscal policy and has to react to the possible repercussions of these policies on inflation. policies of the public sector have the potential to affect the inflation outlook through various channels. the first channel comprises expectations. further enhancement of fiscal discipline through its continuity will increase the effectiveness and predictability of monetary policy by extending the borrowing maturities and reducing risk premiums and the volatilities in risk premiums and facilitate the management of inflation expectations. pricing behavior of goods and services produced or controlled by the public sector itself or the indirect taxation channel has a direct effect on inflation. in this framework, pricing goods and services produced by the public sector rationally and enhancing the quality of fiscal discipline is crucial in terms of the predictability of inflation. another channel, which affects inflation and inflation expectations, is the incomes policy of the public sector. one of the main determinants of expectations for price and wage inflation in turkey is the increase in wages made by the public sector to its own employees. wage increases in the public sector may set a precedent for the private sector. in this context, the consistent trend of the incomes policy with the inflation target is significant in terms of achieving the inflation - targets more easily and quickly. one of the main components of total demand is the public sector β s direct purchase of goods and services. therefore, while evaluating developments regarding the inflation outlook, the central bank carefully monitors public expenditures as well. the central bank takes into consideration the budget projections while setting the inflation
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updates on the monetary, external and banking sectors and our outlook for these sectors, but it also allows for an exchange of ideas, where feedback is welcome, and critical questions can be asked, providing us with additional input when we consider our reform initiatives and policy decisions. i have read that to find equilibrium between continuity and change one must : first have a deep understanding of the operating context ; second take a holistic approach, and third, for success and sustainability of policies, work with all facets of the environment. i will present my message following this outline. first, the operating context the philippines is recognized among one of the fastest growing and most resilient economies in 1 / 5 bis central bankers'speeches the region and the world, enjoying a sweet spot of high growth and manageable inflation complemented by a strong and resilient financial system. gdp growth averaged 6. 4 percent in the first semester of 2017. as of the second quarter of 2017, the philippines posted 74 consecutive quarters of uninterrupted growth ( i. e., q1 1999 to q2 2017 ) or a span of 18. 5 years, with growth accelerating in recent years. the government has set a growth target of 6. 5 to 7. 5 percent for this year, and 7. 0 to 8. 0 percent for 2018 up to 2022. we believe these targets are attainable, given strong macroeconomic fundamentals, rising government spending on critical infrastructure and human capital development, increasing private sector investments, and strong domestic consumption on the back of rising incomes of the country β s young and educated workforce. this strong economic performance did not happen overnight. rather, it is the result of meaningful reforms pursued since the 1997 asian financial crisis. the list of reforms is long and wide ranging. among its highlights is the adoption in 2002 of the inflation targeting framework. since 2009, we have consistently achieved our inflation target, except only in 2015 β 2016 when inflation went below 2 % due to unusually low oil prices. this track record has reinforced the credibility of the bsp β s inflation targeting framework. with its sound macroeconomic fundamentals, the philippines β economic outlook in the years ahead continues to be promising. inflation for the first 8 months of this year averaged 3. 1 percent, well within the target range of 2. 0 to 4. 0 percent for this year. we have often been asked why we have not yet raised policy rates given that inflation is trending higher this year and also given
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amando m tetangco, jr : the philippine economy β amidst global headwinds, leveraging on domestic tailwinds to stay the course speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the foreign correspondents association of the philippines ( focap ) media forum, manila 29 november 2013. * * * good morning. in the american tradition, today, the day after thanksgiving day, is called β black friday β β the β official β first day of christmas shopping. picture herds of early birds lining up retail stores to catch the biggest sales. consumer watchdogs in america would be detailing on monday whether this year β s black friday recorded a larger sales number than previous years. undoubtedly, the result of the surveys would provide the fed with additional input as they decide whether to taper sooner rather than later. the numbers could also help answer the question of whether the fed has been successful in steering domestic consumption enough to sustain positive economic growth. so far, so good β¦ in the last few years, external factors, particularly, the fed signals have exerted greater impact on the domestic market. this has been the case on two fronts β 1 ) financial market volatility and, 2 ) external trade. the other external risks we have been watchful of are the tepid recovery in europe, the impact of abenomics, and the growth story in china. so far, our calibrated use of our economic policy tool kit β both traditional policy tools and macroprudential measures β has been successful in taming financial market volatility and in supporting domestic aggregate demand to help make up for any weaknesses in external trade. just to cite some indicators. q3 2013 growth at 7. 0 percent is the 59th consecutive quarter of positive gdp growth since 1999. the last five consecutive quarters all registered growth rates of 7 percent or more. this is not a fluke. the philippine growth story has structural roots. inflation has been within target for the last four years. our current account has consistently been in surplus for over a decade now. our gross international reserves have been at record highs. and our banking system balance sheets remain strong, with npl ratios continuing their decline to levels lower than pre - 1997 crisis. shall we, however, continue to live in this goldilocks world β where everything seems to be just right β where the porridge
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my view. they should not be used to finance future budgets long after a crisis has passed. yet i am well aware that germany β s debt brake is very strict in terms of its general thrust. and precisely when low debt ratios have been achieved, i would consider it acceptable to loosen the rules moderately. to this end, the bundesbank has put forward stability - oriented reform options. appropriate fiscal rules are also indispensable for the euro area. what we need here are fiscal limits to shield monetary policy. in this way, national and european rules complement each other. and that brings our walk to the grove where different plants form a whole β just like europe does. ladies and gentlemen, you are no doubt aware of the current discussion to reform the european union β s fiscal rules. the european commission has presented a reform proposal based on which the member states intend to reach a consensus by the end of the year, if possible. however, the commission β s original proposal does not look promising. it includes extremely complex calculations, far - reaching assumptions as well as negotiations with member states on individual adjustment plans. how this proposal would reliably bring down debt levels was not apparent to me. i therefore welcome the fact that the federal government is committed to a more ambitious approach. the finance ministers are currently hard at work debating this topic, and although it is not yet clear how far these talks have progressed, it does look as if some significant improvements have been made to the commission β s proposal. thus, there will probably be some specific minimum requirements for member states β expenditure plans. this means that the objective of reducing high debt ratios will be pursued more rigorously than under the commission β s proposal. this is welcome news, even if the devil is in the detail. the exact values still need to be hashed out. in my view, three other aspects are key to making a success of this reform. first, implementation of plans and targets needs to be improved upon. this applies to the member states, but also to the commission in its capacity as the main monitoring body. second, it should be ensured that high structural deficits and debt ratios are reliably reduced. if they fail to be reduced, this should not be excused by the fact that overly optimistic expenditure plans have been adhered to. third, there should not be too much discretionary scope as concerns important decisions. for example, the decision whether or not a procedure should be opened or intensified needs to be reliable and
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instructed that we should review the housing reform and the real estate development experiences in full scale so as to identify the broad target and tasks in the future. i think we should focus on the following aspects in studying the housing financial system : first is the products system. a variety of financial products should be developed to serve different purposes and customers. currently, we don β t have such housing financial products that are targeted at special groups of people in the society, such as low - income families and entry - level staffs. even in commercial housing financial field, bank loans are the major products, so risks are excessively concentrated in the banking sector. we should promote housing financial products innovation to ward off risks. second is the market system. housing financial market should consist of different layers, including not only the indirect credit market, but also direct financing market which provides both direct financial instruments and marketplace to defuse relevant risks, such as credit maturity mismatch and liquidity problems. development of the housing financing should also rely on the development of the capital market and money market. third is the organization system. housing financial market should comprise not only financial institutions providing direct financing to the customers, but also institutions that involve in housing construction, trading and consumption such as the property appraisal agencies, loan insurance ( guarantee ) institutions, accounting offices, law offices and rating institutions etc. iii. research should be conducted down to the earth to formulate a proper development blueprint. both academics and governments have made great efforts to improve china β s housing financial system by studying international experiences, with some policies achieving good results while others entailing further studies. starting in 2003, the pbc has focused on resolving the strategic issues of housing financial development and communicated with the ministry of construction, the china banking regulatory commission and have reached important consensus. in 2005, the pbc began to cooperate with the world bank in relevant research and study program aimed to learn from the mature experiences of other countries. this seminar represents a further endeavor in this direction. i would like to give my personal views about the comprehensive research project : first, we must learn the essence of other countries β experiences, not only the surface. attention should be paid to successful experiences and failure lessons. the housing financial system of china and development strategy should be designed through summarizing experiences and exploring the embedded rules. second, chinese social, financial and economic situation should be fully considered and market development principles should be observed when mapping out our housing financial system and the development
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patrick honohan : speeding up the economic correction remarks by mr patrick honohan, governor of the central bank of ireland, at the annual meeting of the irish economic association, dublin, 26 april 2012. * * * after five straight years of decline in, for example, employment and in aggregate personal consumption expenditure, the irish economic correction is proving to be quite long - drawn out. even if, on these indicators the turnaround will come in 2013, as is forecast by most analysts, it is not unreasonable to wonder whether more could and should be done to accelerate the correction. members of the irish economic association are collectively well - placed to contribute to this debate and for this reason i would like to take the limited time at my disposal this evening to touch on three dimensions of the adjustment which might be thought to moving slowly : ( i ) the property market ; ( ii ) the banks and ( iii ) the fiscal position. given the limited time, i can only be very selective, with the intention to promote debate rather than to present settled findings. 1. property prices β taking their time to reach the bottom there are a good number of open questions about the residential property market. why is it that prices have been taking so long to reach their new equilibrium? one reason of course relates to the willingness of banks to allow arrears to accumulate without foreclosure. this reduces the supply of properties on the market. ( impatient buyers who want to occupy may be prepared to buy even though they know the price is above equilibrium. there may be more of these than of impatient sellers, given the patience of banks. patient buyers ( waiting for equilibrium prices ) and owner / occupiers availing of moratoria and who hope to stay in occupation will not transact. the end result : very few transactions and those that do occur are disproportionately at above equilibrium prices. ) until the march data published today, prices have nonetheless been falling β and in recent months faster than before ( according to the cso series on the prices of properties where the purchase is financed by banks, which refers to loan drawdown date and as such lags contracted prices ). when will the price equilibrium be reached, and when will transaction volumes reach steady state levels? given elevated levels of uncertainty, will the relative price of housing β as a risky asset β converge to a price that undershoots that which would prevail in less uncertain times? even if aggregate availability of credit
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supply chains for production, distribution and retailing. models and forecasting tools can be used to estimate the impact of long - run changes to trade arrangements. however, they are less suited for predicting the short - run effects and potential disruption arising from a breakdown in those arrangements. the scale of disruption would also be influenced by the ability of firms and retailers to respond and adjust. policy responses or mitigating actions would also help to ameliorate the situation. nevertheless, it is clear that a no deal scenario would have very severe and immediate disruptive effects, which would permeate almost all areas of economic activity. certain sectors would be disproportionately affected, particularly agriculture and food. border regions for example, would also be heavily affected. we calculate that a disorderly brexit could reduce the growth rate of the irish economy by four percentage points in the first year, albeit this figure is subject to much uncertainty. however, as a result of domestic demand and the strong non - uk multinational sector, our assessment is that there would still be some positive growth in output over the coming years β even under a no - deal scenario. this would be materially lower than in the central forecast i outlined earlier β and would be closer to one per cent growth in both years. a fast - growing economy is desirable as long as growth is sustainable. however, sometimes the economy can grow too fast and overheat. this happens when an economy reaches the limits of its capacity to meet demand from individuals, firms and government. one element of this is the concept of β full employment β, which occurs when almost everyone who wants to work has a job. when this happens, there is very little available slack. in other words, the amount of unused resources, or spare capacity in the economy β is very limited or non - existent. the problem with overheating is that it tends to result in a harmful downturn. 8 temporary surges create dynamics that are difficult to reverse. for example, wages can rise quickly to unsustainable levels. overheating can make households and firms over - optimistic about their future income prospects, and lead them to take on too much debt. if this future income fails to materialise, readjusting to a sustainable growth path can be painful. the result can be bankruptcies, job losses, wage reductions and cuts to public services. i mentioned earlier that our central forecast suggests some moderation in growth over the coming years. however
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njuguna ndung β u : mobile and agency banking in kenya address by prof njuguna ndung β u, governor of the central bank of kenya, at the technical cooperation among developing countries programme on β mobile and agency banking in kenya β, kenya school of monetary studies, nairobi, 6 may 2013. * * * mr. saleh usman gashua, secretary general, afraca ; prof. kinandu muragu, executive director, ksms and afraca β s sub - regional chair for east africa ; facilitators ; distinguished guests and participants ; ladies and gentlemen ; it is my pleasure to officially open this knowledge exchange programme on mobile and agency banking in kenya. on behalf of the kenya school of monetary studies ( ksms ), which is co - hosting this programme, let me extend a warm welcome to you all to kenya and in particular to ksms, a leading regional training institution in financial matters. i sincerely hope that you will enjoy kenya β s hospitality and tourist attractions during your stay in kenya. ladies and gentlemen : at the outset i would like to commend afraca for its continued efforts towards enhanced agricultural and rural financing environment. forums like this allow afraca members not only to learn from each other β s experiences but also to challenge each other on possible policy solutions to increase agricultural and rural financing. as you may be aware, financial inclusion has lately assumed a central place in financial regulators mandates and is a public policy. the more formally financially included an economy is, the greater the likelihood of attaining financial developments and financial stability. in this regard, afraca β s vision of achieving a rural africa where people have access to sustainable financial services for economic development is very relevant to the financial inclusion objectives of afraca β s members. ladies and gentlemen : afraca β s decision to host you for this knowledge exchange on mobile and agency banking in kenya is a well thought out decision. this is because over the last 6 years millions of people, most of whom were financially excluded, have been brought into the formal financial sector through successful rollout of innovative mobile phone financial services products ( mfs ). kenya has witnessed increased competition and diversity in the mobile phone financial services space with more mobile phone operators launching mobile money products. financial institutions have also increasingly partnered and integrated their operating platforms with those of mobile phone financial services platform to leverage on the convenience and efficiencies they present. as a result, the
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unit costs for some of the financial products have been lowered significantly. ladies and gentlemen : the potential of mobile phone technology to bridge the financial access barriers of distance and cost seems un - rivalled in africa. in recognition of this, the alliance for financial inclusion ( afi ) brought together policymakers and regulators from 18 african countries that are afi members to launch the african mobile phone financial services policy initiative ( ampi ) in february 2013. the aim of ampi is to share experiences and develop policy solutions for extending financial inclusion to the continent β s large unbanked populace through the use of mobile phone financial services. ladies and gentlemen : allow me now to briefly share with you the central bank of kenya β s role in propelling financial inclusion through mobile phone financial services. even before the enactment of the national payment systems act, the central bank of kenya took a proactive role in facilitating consultations on proposals by the telecommunication companies to introduce mobile phone money transfer services. the central bank of kenya continuously supported the rollout of innovative products driven by mobile phone technological platforms bis central bankers β speeches using a β test and learn β approach that allows innovations to take place while ensuring that the necessary safeguards are in place to mitigate the potential risks. this approach has allowed cbk to partner with both financial service providers and telecommunication providers as they seek to introduce innovative solutions into the market that are reliant on technology. this approach has seen an : a ) increase in mobile phone participants. close to 20 million people are served by over 60, 000 telecommunication companies agents handling over usd 54. 4 million worth of mobile phone financial service transactions per day in kenya. these have achieved, with the stability and integrity of the financial system remaining intact. b ) introduction of agent banking by both banks and deposit taking microfinance institutions. the aim was to increase the level of formal financial inclusion in un - served and underserved areas. this has led to close to 17, 000 approved bank agents β facilitating over 45 million transactions valued at over kshs 232 billion ( usd 2. 76 billion ), mainly leveraging on mobile phone technology. c ) evolution of the mobile phone money transfer system to provide bill payments, savings / deposit mobilization, and credit application, all operated in the same platform with lower costs to the public. d ) adoption of mobile phone technology by other sub - sectors such as pensions, insurance and capital markets to provide convenience and efficiency to their clientele. the information capital built within mobile phones is an
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joachim wuermeling : brexit - implications for uk branches of german banks speech by prof joachim wuermeling, member of the executive board of the deutsche bundesbank, at the embassy of the federal republic of germany, london, 14 february 2019. * * * 1 introduction ladies and gentlemen, from the perspective of a bank and from my perspective as a banking supervisor, the future regime under which banks and companies in general will operate after 29 march 2019 remains unclear. and whether we like it or not, a hard brexit has become increasingly likely. 2 implications of uk branches becoming third country branches this means that β given what we know at the moment β uk branches of german banks ( and ssm banks in general ) will need to become third country branches. certainly, the pra β s temporary permissions regime buys time. nevertheless, there is no alternative to conversion into third country branches. the pra has already received some applications for third country branch authorisation in the uk. for german banks, unlike other ssm banks, there is no formal requirement for the home supervisor to approve a third country branch. however, given the aim of establishing a level playing field among all current and future ssm banks, you should expect the ssm to address certain requirements via other supervisory measures where necessary to ensure that the future set - up of the new third country branches is in line with ssm expectations. this means that the ssm will not accept empty shells, neither from incoming nor from outgoing banks. a third country branch will not be allowed to perform central functions for its ssmdomiciled group. and any outsourcing must not hamper the efficient and effective supervision of ssm entities. not all ssm banks are currently fully compliant with the ssm β s respective supervisory expectations. in particular, all banks must ensure that they have relocated sufficient staff to the eu27 entities. eu business must be booked from within the eu27. this will require significant asset transfers in several cases. sufficient trading and risk - management staff as well as technical infrastructure are needed on site at the eu27 entities to ensure adequate risk management. 3 split of responsibilities between pra and ssm making the transition from the eu28 to the eu27 as smooth as possible for the financial sector will require close cooperation between the ssm and the pra. the details of such a split of responsibilities are currently being negotiated. i am convinced that london will remain an important financial centre after brex
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partners. our exchange rate policy, which entails a flexible, market determined exchange rate, is motivated by the need to ensure that our balance of payments is sustainable. our interventions in the foreign exchange market, such as that which we carried out last week, are intended only to dampen volatility in the exchange rate, and not to impede adjustments in the exchange rate which are necessary to maintain external balance. finally, i want to address the issue of inflation. the outturn for inflation in 2016 has been better than we had feared it would be at this time last year, when inflationary pressures were building up. annual core inflation declined during the first half of 2016 and for the last four months it has settled down at an average of approximately 5 percent, which is in line with our policy target for inflation. the better than expected inflation outturn in 2016 is attributable to a combination of the tightening of monetary policy by the bou in mid 2015, when we raised interest rates, and the relatively stable exchange rate since october of last year. when we look at core inflation outturns over a longer horizon, we can see that they have been very close to our policy target. over the last four years, annual inflation has sometimes been above 5 percent and sometimes been below, but it has averaged 4. 9 percent. i hope that you will agree that this demonstrates the effectiveness of our inflation targeting monetary policy framework. to conclude, ladies and gentlemen, i believe that the prospects for macroeconomic stability in the near to medium term are currently very good. in 2017 we can look forward to real gdp growth which is close to the economy β s medium term potential growth of around 5 percent per annum. with inflationary pressures firmly under control we can also be confident that annual core inflation will continue to trend around our medium term target of 5 percent. thank you for listening.
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persistently strong negative interactions of production, income, and expenditure, the expansion in the output gap seems unlikely to cease despite the expected effects of the comprehensive economic stimulus package. furthermore, the continued decline in wages and the recent appreciation of the yen may exert downward pressure on prices. hence, prices are likely to be on a downtrend for some time. in the financial markets, responding to the further monetary easing by the bank of japan on september 9, short - term interest rates declined as a whole after mid - september. however, since the end of september, the japan premium has expanded and interest rates on euro - yen deposits this report was written based on data and information available when the bank of japan monetary policy meeting was held on october 13, 1998. the bank β s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on october 13, as the basis of monetary policy decisions. have rebounded slightly reflecting intensified market concern toward japanese financial institutions β funding in foreign currencies over the year - end. in the meantime, due to heightened uncertainty over the economic outlook, long - term interest rates declined considerably. stock prices continued a downtrend reflecting the concern over the worldwide stock market plunge, the further deterioration in economic indicators, and the persistent uncertainty over the resolution of the problems with japan β s financial system. in october, stock prices recorded historically low levels since the bursting of the economic β bubble β. meanwhile, in early october, the yen surged against the dollar with the emerged uncertainty over the outlook of the us economy. with regard to corporate finance, while funding needs for real economic activities seem to be decreasing, some firms, especially large ones, are seeking to secure ample on - hand liquidity to prepare for unexpected situations. reflecting such increase in credit demand, the growth rate in m2 + cd has slightly recovered since the summer of 1998. however, japanese financial institutions have become more cautious in extending loans, facing up severe fund - raising environments and deteriorating business conditions of borrower companies. while especially large firms are steadily increasing the issuance of commercial paper and corporate bonds, small and medium - sized firms and relatively low - rated ones continue to face difficult conditions for fund - raising in capital markets. the influence of these severe financial conditions on business activities and on the economy continues to warrant careful monitoring.
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, because they see, for instance, their insurance policies and retirement schemes at risk of not being fully honored. at the same time, low growth implies low return from real investment, and this creates perverse incentives to search for yield taking risk on board ; this may jeopardize financial stability. one main lesson comes from these considerations. the most effective and long - lasting solution to tackle the declining trend of real interest rates is to act forcefully and preemptively to support growth. support remains necessary from the demand side ; but in the longer run it must come from the supply side, by identifying and implementing those reforms that, encouraging investment, may boost productivity and support job creation. we need to prove robert gordon β s prophecy wrong. the consequent increase in potential economic growth would raise the real interest rate and push nominal interest rates into a safer territory. reinhart, c. m. and rogoff, k. s. ( 2009 ), β this time is different : eight centuries of financial folly. β princeton, new jersey : princeton university press. bis central bankers β speeches
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understand in detail how financial markets operate. effective and efficient financial markets do not happen automatically. the precise structure of each financial market, its trading rules, the mix of market participants and the constraints they face, how and how fast information is transmitted, all part of the microstructure of that market, do make an important difference. i think that fact has now become more widely recognized by economists. but it was not the case just a couple of 1 / 3 bis - central bankers'speeches decades ago, when most macroeconomists almost routinely assumed in their models that financial markets would function perfectly in the background. i believe that has changed - witness, for instance, the growth of macrofinance in recent years - and that change has certainly been an improvement. a few words about the program and interagency work now, let me say a few words about the first financial market this conference will focus on, the market for u. s. treasury securities. the u. s. treasury market clearly remains the largest and deepest government securities market in the world. but it has changed a lot. to quote a recent speech by our former fed colleague nellie liang, who is now the under secretary for domestic finance at the treasury, " the market has changed significantly over time, with changes in technology, participants, and regulations, and treasury debt outstanding has grown substantially. " 1 some episodes of stress in the treasury market, including a flash event in 2014 and, more recently, the treasury repo market disruptions of september 2019 and the socalled dash - for - cash episode in 2020, have focused the attention of researchers and u. s. government agencies on the plumbing of the market and on the composition and behavior of its participants. for example, an interagency working group, composed of staff from the u. s treasury, the sec, the cftc, the new york fed, and the board of governors - several members of the group are here - has been studying a broad range of ideas to enhance the resilience of the market. the u. s. treasury has also spearheaded initiatives to enhance data transparency. and the sec has sought comments on several proposals that could materially alter the structure of the market. the federal reserve does not regulate markets, but we obviously have a special interest in the treasury market, in part because some of our policy tools operate through that market and because of how important treasury market functioning is to financial stability. and the recent discussions on the
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to banks reduces libor, other borrowers will also see their payments decline. because interbank markets are global in scope, the federal reserve has also approved bilateral currency liquidity agreements with 14 foreign central banks. these so - called swap facilities have allowed these central banks to acquire dollars from the federal reserve that the foreign central banks may lend to financial institutions in their jurisdictions. the purpose of these liquidity swaps is to ease conditions in dollar funding markets globally. improvements in global interbank markets, in turn, promote greater stability in other markets at home and abroad, such as money markets and foreign exchange markets. the provision of short - term credit to financial institutions exposes the federal reserve to minimal credit risk, as the loans we make to financial institutions are generally short - term, overcollateralized, and made with recourse to the borrowing firm. in the case of the currency swaps, the foreign central banks are responsible for repaying the federal reserve, not the financial institutions that ultimately receive the funds, and the fed receives an equivalent amount of foreign currency in exchange for the dollars it provides foreign central banks. although the provision of ample liquidity by the central bank to financial institutions is a timetested approach to reducing financial strains, it is no panacea. today, concerns about capital, asset quality, and credit risk continue to limit the willingness of many intermediaries to extend credit, notwithstanding the access of these firms to central bank liquidity. moreover, providing liquidity to financial institutions does not directly address instability or declining credit availability in critical nonbank markets, such as the commercial paper market or the market for asset - backed securities. to address these issues, the federal reserve has developed a second set of policy tools which involve the provision of liquidity directly to borrowers and investors in key credit markets. for example, we have introduced facilities to purchase highly rated commercial paper at a term of three months and to provide backup liquidity for money market mutual funds. in addition, the federal reserve and the treasury have jointly announced a facility β expected to be operational shortly β that will lend against aaa - rated asset - backed securities collateralized by recently originated student loans, auto loans, credit card loans, and loans guaranteed by the small business administration. unlike our other lending programs, this facility combines federal reserve liquidity with capital provided by the treasury. if the program works as planned, it should help to restart activity in these key securitization markets and lead to lower
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francois villeroy de galhau : secular stagnation and growth measurement speech by mr francois villeroy de galhau, governor of the bank of france, at the secular stagnation and growth measurement conference, organized by the bank of france, paris, 16 january 2017. * * * accompanying slides ladies and gentlemen [ slide 1 ], i am very pleased to welcome you all to paris, for this conference on β secular stagnation and growth measurement β. we should always be cautious when using expressions as categorical as β secular stagnation β, and which describe the long term : alvin hansen, who coined it in 1938 with his famous β full recovery or stagnation β, lived long enough β until 1975 β to see thirty years of almost full recovery, instead of stagnation. nevertheless, this risk, popularized again recently by larry summers, is a matter of concern for central bankers. why? because a persistent slowdown in trend output growth could make the economy more vulnerable to shocks that push the natural interest rate below the effective lower bound. whether secular or lasting for many years, very slow growth and inflation also challenge the efficacy of conventional monetary policy tools. they can affect the sustainability of public and private debt. and beyond central banking concerns, they can also alter the functioning of our social models. let me just clarify that i will not speak about monetary policy today, as we are in our β silent period β before the governing council meeting. allow me to say simply that some of the more recent comments about a β come back of inflation ", which would allegedly put the governing council under strain, seem greatly exaggerated. so, where do we stand? the slowdown in per capita growth in advanced economies can actually be traced back to the 1970s [ slide 2 ]. it worsened in several stages, the latest starting in the mid2000s, after the ict revolution and before the great recession. the issue is that this prolonged slowdown raises questions about future potential growth, largely due to uncertainty about productivity trends. to assess the risks, i would like to elaborate on the three hypotheses that form the basis for today β s conference [ slide 3 ] : first, are we simply underestimating growth? second, is the slowdown a demand phenomenon? third, is it a persistent phenomenon due to a slowdown in the pace of innovation? 1. are we underestimating growth? new technologies usually lead to a mismeasurement of output.
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have managed to sustain much of their distinct culture and commitment to improve the quality of life for all their people. 7. conclusion my remarks focused on the post - crisis recovery of the asian economies, with a view to drawing lessons from the asian economic recoveries for the african renaissance, and to understanding how asian countries have managed to sustain their culture despite their economies β rigorous globalization programs. available evidence suggests that the asian economies have definitely re - established a path to high and sustainable economic growth, and are restoring their trade with the world and the african continent. the african renaissance process will benefit greatly from an enhanced african - asian trade and cooperation at various levels : culturally, scientifically, politically and economically. there is a lot to be learnt from how japan and other asian countries have been transformed through political leadership and foresight, acquisition of skills and technology, and a contribution of cultural norms and aggressive international competitiveness. one major conclusion to be drawn is that a robust embrace of globalization is not inconsistent with african culture, values and norms. annexes - tables of imports and exports table 1 african trade with japan ( us $ millions ) japan β s imports from africa angola botswana congo, dem. rep. of lesotho malawi mauritius mozambique namibia seychelles south africa swaziland tanzania zambia zimbabwe 10. 4 9. 77 82. 92 0. 05 49. 98 5. 96 25. 98 0. 52 2, 197. 83 11. 31 49. 36 174. 16 148. 46 15. 73 7. 97 80. 62 48. 41 14. 4 34. 27 1. 71 2, 541. 86 10. 91 64. 67 221. 84 178. 8 22. 49 8. 47 82. 47 26. 45 17. 36 18. 35 3. 27 2, 832. 36 11. 27 64. 89 192. 11 161. 57 3. 18 6. 09 53. 31 33. 41 24. 47 21. 69 3. 36 2, 802. 94 14. 6 58. 92 138. 53 188. 73 19. 95 2. 44 44. 41 0. 01 46. 07 27. 99 20. 97 5. 26 2, 403. 34 10. 43 67. 69 124. 55 155. 26 sadc total 2, 766. 69 3, 221. 19 3, 441. 05 3, 349. 23 2, 928. 37 africa 3, 934. 58 4, 530. 59 4, 900. 67
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an address by fundi tshazibana, deputy governor of the south african reserve bank, at the central bank of eswatini, mbabane, 17 november 2023 global shifts and regional spillovers β how are we performing? introduction ladies and gentlemen, thank you for the opportunity to address you today at this event hosted by our colleagues at the central bank of eswatini. the relationships between our respective central banks go back a long way β after all, the common monetary area ( cma ) of southern africa is the oldest existing currency union in the world, dating back to the beginning of the 20th century. the deep economic ties between the economies in the cma, and our pegged exchange rates, underscore a high synchronisation in our economic cycles, especially in responding to the impact from global shocks, trends and spillovers to the african region β a central theme of my talk today. the past three to four years have seen many global shocks, and their ramifications continue to reverberate. in fact, we are still uncertain about the long - term effects these shocks will have on the world economy, trade and capital flows. while the covid - 19 pandemic may no longer be a major health concern, we still face a world of relative price shifts, high inflation, re - organisation of supply chains and increasing geopolitical risks. encouragingly, both the global economy and our regional context have shown some resilience to these shocks. but some effects might come with a lag and complicate the task we, as central banks, face in maintaining price stability and financial stability. these are some of the issues i will try to address today. some encouraging global developments we are all well aware of the inflation surge experienced globally in 2021 and 2022, driven by supply and demand mismatches that emerged as economies reopened in a staggered manner after the covid - 19 - related lockdowns. during this period, advanced economies experienced inflation levels not seen since the early 1980s. to limit the permanent release of the inflation genie out of the bottle, advanced economy central banks had to act decisively by raising rates to levels last seen before the 2008 global financial crisis. 1 in emerging market and developing countries, most central banks had to tighten too, though the degree of the policy response varied considerably based on idiosyncratic factors. the good news is that in the past year or so, inflation rates have declined around the world. however
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and are preparing their it systems with the help of external consultants. in terms of regulation, as i already noted, the bank of thailand has begun implementing ias 39 for the impairment of assets or npl since december last year. by june this year, commercial banks have set an additional provision of about 90 billion baht, with their bis ratios remaining comfortably well above the minimum requirement at 14 percent. we at the bot are studying the remaining issues of ias 39 pertaining to supervisory policies and financial impacts on the banking sector. and our policies on components of capital and related reports are scheduled to be prescribed by the end of next year. ladies and gentlemen, implementing basel ii and ifrs has been a challenging experience. for basel ii, the most difficult issue is arguably going to be the application of the principles embedded in pillar 2 where supervisors have the ability to require banks to hold capital in excess of the minimum. since the amount of required capital has a direct impact on business performance, it is therefore quite a challenge for supervisors to be requiring banks to hold different amounts of additional capital. for accounting standards, the most recent challenge is the accounting methods for sophisticated financial products, such as cdo and structured notes, in which differences in financial assets β classifications can result in different financial impacts. for example, held - tomaturity classification conceals profit or loss until maturity, while trading classification charges profit or loss to financial statements in every accounting period. the interpretation for a suitable classification relies significantly on the intention of bank management as well as on the judgment of external auditors. the importance of this issue, as we know, has reemerged more demandingly following the sub - prime crisis in the us. another practical challenge in implementing both standards is the use of complex financial models to measure risks in banks β portfolio. in order to confidently use the models, there must be sufficient data, appropriate risk measurement techniques, and a rigorous validation process. at present, the most important concern is the lack of data. for example, for credit risk measurement, a certain amount of data on default is required. such data typically are not readily available, and this is also the case here in thailand. in addition to the lack of data, the ias 39 also allows the use of fair value for all financial assets and liabilities, or the fair value option. although this concept is attractive, there are still many concerns from a regulatory point of view. the fair value option may be inappropriately used and may result
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critically examine varied aspects of the electronic payments evolution and to embrace the enabling requirements for payments efficiency. the focus of these groups is as follows : the review of financial legislation & the regulatory framework this is aimed at adopting the level of regulation required to provide adequate oversight of unregulated entities that are growing in prominence and engaged in offering new fintech products. overhaul of the payments infrastructure to modernise the payment system to address the issue of persons wanting more immediate access to their money and reduced clearing times. this is inclusive of enhanced data imaging, cheque truncation, and retail and large - value payment settlement. given the need for a more analytical focus, we also need to collect more granular data on transactions to allow market participants and regulators to better understand customers β behaviour, so as to deepen the innovation in financial services. analytical framework for fintech the central bank β s main goal is to understand and assess the mechanics, limitations and possibilities of new technologies, especially as we review options for modernising our own payment system architecture. this framework is aimed at keeping the central bank abreast of developments and to leverage lessons that can be learnt from other emerging - market economies that have made greater progress in many respects. for example, india has biometric identification cards linked to e - accounts and in kenya, social security benefits are received on smart phones. what institutional agreements, access to consumer information and security protocols were required for these types of initiatives? should we envision a reality where countries migrate to a system where all citizens are issued with e - wallet accounts, to promote epayments for financial transaction involving government? how should these accounts be backed by central banks and should they accrue interest? for the central bank, other critically important questions to be explored include : how can this new technology enable the further digitalisation of our economy? what role does 2 / 5 bis central bankers'speeches government and regulators need to play? at this defining moment for innovation in financial services another very popular question is, β do distributed ledgers represent an evolution or revolution? β to frame our thinking, we need to also touch on two follow - on questions : is this change likely to be disruptive? what is yet to be determined about this new technology? advocates for distributed ledgers suggest that the technology could create disruption within the financial services industry by making processes more efficient, whether related to cross - border payments or digital identities, making it the next biggest innovation since the internet. from a regulatory perspective
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β which, by the way, deviate from the basel capital framework. still another example concerns capital requirements across different investors. the proposed insurer securitisation capital requirements have been set using a spread risk approach calibrated to 99. 5 % value at risk. by contrast, the bank frameworks are based on a credit risk approach calibrated to 99. 9 % value at risk. finally, closer to home, the ecb, bank of england, and esma are all involved in loan - level data reporting requirements for abs, where there appears to be significant but not perfect overlap. one might reasonably respond that coordinating such an approach would be challenging, that deadlines are fixed by legislation, and that it is difficult to coordinate simultaneously at the global, eu, and national levels β especially given the different mandates and scope of the various parties involved in regulation. however, i believe all of the actors are present and pieces in place to go down this route. indeed, the european commission, the ecb, the bank of england, the three european supervisory agencies, and the european systemic risk board, cover the near totality of eu abs considerations under discussion at the moment. they also possess many legal powers to reframe the regulatory debate in a more holistic and sequentially - sensible manner. would it be too challenging to regularly align views at least at the eu level, and to speak with a common voice in global fora? this is already beginning, but much more could be done in my view. transparency and standardisation requirements my second proposal concerns transparency and standardisation requirements for abs products. i wholeheartedly support disclosure for abs. this is because abs will always have the potential to be highly complex, which implies much more room for opacity than other standard financial products. as i mentioned, much has already been achieved or envisaged in the area of abs transparency : the loan - level data requirements, the proposals by esma to have minimum common information for abs in a single portal, and reforms mandated in the prospectus directive. yet we could still streamline the reporting requirements : for example, abs investor reports could be standardised to allow a consistent set of information to be provided across transactions and across time. these same investor reports could also be aligned, in terms of data cut - off dates, with loan - level data submissions. this would provide greater means for market participants to verify the accuracy of data provided by issuers and exert market discipline
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with some caveats. first, these aggregate statistics can mask some important variations, and there are some local markets where, as in the prior boom, both house prices and mortgage growth are quite strong. similarly, there exist substantial differences across households in their financial situation and their ability to improve their balance sheets. borrowers with little equity, low credit scores and slow income growth face difficulties refinancing into low rate mortgages. as a result, this subset of the population has been less able to deleverage and still faces bis central bankers β speeches relatively high debt service costs, which constrains their consumption, investment and saving behavior. so, even within what looks to be a stable overall mortgage market, there are some things that we must continue to monitor. second, there are other difficult challenges that many households face, particularly with respect to a subject we β ve discussed on previous occasions β student loans. on balance, though, households are in a much better position today than they were in 2008. now, i β d like to turn things over to our economists, beginning with andrew haughwout, who will provide a more detailed discussion of household sector finances. bis central bankers β speeches
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funds market at rates below the ioer rate, and can arbitrage away any significant price gap that emerges from the activity of non - depository institutions that can buy and sell federal funds, but cannot hold reserves at the fed. thus, through the ioer rate, the federal reserve can effectively control the fed funds rate. indeed, even the opportunity cost of making the loan is similar in both instances. a bank that has excess reserves and decides to extend credit forgoes the chance to earn the ioer on the money lent out. a bank that borrows reserves in the fed funds market in order to extend credit pays the fed funds rate in order to do so. the ioer and fed funds rate are likely to be similar. bis central bankers β speeches so we have the means to tighten monetary policy when the time comes, but do we have the will? i think there should be no doubt about this. it is well understood among all the members of the fomc that allowing inflation to gain a foothold is a losing game with large costs and few, if any, benefits. in this regard, some have argued that fed officials might be reluctant to raise short - term rates because such increases would squeeze the net interest margin on the fed β s system open market account ( soma ) portfolio. although it is true that a rise in short - term interest rates would reduce the fed β s net income from the extraordinary high levels seen in 2009 and 2010, 4 this will not play a significant role in the fed β s monetary policy deliberations. fed policy is driven by the objectives set out in the dual mandate, and the net income earned by the fed is the consequence of the policy choices that advance those objectives. the federal reserve β s net income statement does not drive or constrain our policy actions. in short, we act as a central bank, not an investment manager. it is also worth pointing out in passing that a failure to raise short - term interest rates at the appropriate moment based on our dual mandate objectives would also be a losing strategy with respect to net income. inflation would climb, bond yields would rise and the fed would ultimately be forced to raise short - term rates more aggressively, or to sell more assets at lower prices to regain control of inflation. this would almost certainly result in larger reductions in net income than a timelier exit from the current stance of monetary policy. so what does this all imply for monetary policy? first, barring a
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